"The power of the OPEC cartel will only be broken if the US and China cooperate in developing alternatives to oil for transportation," Institute for the Analysis of Global Security co-director Dr. Gal Luft told "Globes" in an interview. He said that this could be achieved by developing fuels based on natural gas and coal, such as methanol.
"So long as the transportation industry is based on oil, OPEC will continue to sit in the driver's seat of the global economy, no matter how much oil is produced in the world," said Luft.
Luft, an adviser to the US Energy Security Council, says in his new book, "Petropoly: The Collapse of America's Energy Security Paradigm", that the global price of oil is set by the budget needs of the governments of the Arab oil producers which control OPEC.
Petrology, co-authored with Anne Korin, was praised last week by "The Washington Post" Book Review.
Luft says that the oil and gas hydrocracking revolution in the US will not bring down the price of oil or OPEC's power, because OPEC would reduce output to create an artificial oil shortage to keep prices at their current level. OPEC, dominated by Saudi Arabia, Iran, and Venezuela, currently produces 30 million barrels of oil a day, 40% of global consumption of 85 million barrels of oil a day.
International Energy Agency chief economist Dr. Fatih Birol told "Globes" that higher fuel subsidies in Arab countries meant that some governments are forced to sell oil at $90 per barrel to keep their budgets balanced.
Published by Globes [online], Israel business news - www.globes-online.com - on January 9, 2013
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