Economic nonsense

OPEC may override call for production cut :: Business Week:

Chavez played a key role in getting OPEC members to abide by production quotas that have helped reverse prices from roughly US$10 (euro8) a barrel when he took office in 1999, which subsequently quadrupled Venezuela's oil export revenues.

Chavez may well have been key in getting OPEC members to abide by quotas in 1999. Today, however, quotas are irrelevant as crude oil production and refining is running close to 100%. And that is because of the success of the liberalization of markets in India and China due to the defeat of Chavez-like thinking in those countries.

It's disturbing that the Business Week article does not cite the key role of the economic success of India and China in explaining the current high price of crude. Instead, the article cites SG Securities analyst Frederic Lassere in Paris:

Maintaining or boosting output does little to address the factors behind the current run-up, which include a lack of refining capacity, a larger global run on commodities, and geopolitical tensions, Lassere said.

No mention of India and China's surging demand for oil. (And, the run up of what? The lack of refining capacity would not explain a run up of crude prices.)

I wonder what Iran's Gulf neighbors think about this:

Kamal Daneshyar, chairman of the Iranian Parliament's Energy Committee, told Dow Jones Newswires on Monday that Tehran could retaliate for any sanctions by closing the Strait of Hormuz, a major oil shipping route, which he said could drive prices as high as US$250 (euro195) a barrel.