Go for an oil consumers' co-operative group
Sir, James Pinkerton suggests that “The world should get ready for a Nato-style oil alliance” (April 20), and although he makes it implicit that the Organization of the Petroleum Exporting Countries is the “enemy, he does not really explain what the alliance should be up to. Let me make three suggestions. First, forget about the NATO simile - too militaristic - and go for a simple Oil Consumer Co-operative. Second, the OCC should then start some serious introspection so as to realize that its biggest enemy, unchecked oil demand, is thriving behind their own lines. Finally it should look seriously into the alternative of offering the oil producing nations long-term supply and purchases agreements based on prices that are reasonable for both sides.
LEFT OUT:
For instance if the price offered on a 50 years arrangement was 40 dollars per barrel, with adjustment for inflation, plus or minus 50% of the difference with the spot market, this would provide the producers with a floor of 30 when the spot hits 10 dollars, and conversely “only” charge consumers 70 when the spot rises to 100 dollars. Such an arrangement would not only stimulate new oil investments but also keep the hawks (those who love the NATO part) from trying their solutions, as wars mostly tend to erupt while fighting over bargains, like oil priced at its marginal extraction cost.
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