26 February 2016
He did say OPEC had met with non-OPEC producers, but it was a short meeting. According to the minister, "We asked 'what are you going to do?' They said nothing. We said the meeting is over."
What al-Naimi was illustrating was the myth about oil and the free market. Alberta is a relatively conservative place, despite its NDP government, so belief in the free market is strong. And nowhere is it stronger than in the oil industry.
But the fact is that the free market has more often than not been no more than a minor, even trivial, influence on the price of oil. When OPEC first began to flex its muscles in the 1970s, it became the main determinant of oil price, merely by turning the taps. Its power has declined but it obviously still has considerable clout. It was OPEC, not a free market, that first drove oil from three dollars a barrel to thirty practically overnight. It was that bane of neoliberals—government interference in the marketplace.
The Saudis made us rich and now they are making us poor. Such are the whims of sheikhs, not of a free market.
Posted by Bill Longstaff at 5:12 pm