Word: opec
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...barrel Wednesday, an almost 10 percent increase in the space of a week that has Wall Street jittery and President Clinton warning producer nations against continuing to choke the supply. The price has more than trebled over the past year, after oil-producing nations inside and outside the OPEC cartel agreed to cut back production in order to drive prices back up. "Even though we're not nearly as dependent on oil today as we were 30 years ago, it still accounts for 40 percent of our energy use, and last year - when prices were depressed - it accounted for some...
...move could force an OPEC vote to increase global oil supplies when it meets March 27. "You've got three big oil producers saying they'll increase production, so OPEC will obviously be paying attention," says TIME financial correspondent Adam Zagorin. "OPEC realizes that the market demands a supply increase, but they're interested in doing this in a coordinated way - of building a consensus, so that some countries don't drastically increase production and slash prices." OPEC is also said to be concerned about sparking a recesssion, which would be likely to cause an uncontrollable dip in oil prices...
...remains to be seen is how quickly relief will come to the pumps. U.S. oil stores are so depleted that any crude oil production increase could take months to translate into better news at your local service station. So even if the increases begin immediately after OPEC meets, industry analysts don't believe they will have an impact on the U.S. market in time for the summer driving season. The only hope for a earlier decreases: President Clinton's recent indication that he might increase the domestic oil supply by lending the U.S. strategic oil reserves to major gasoline distributors...
Economic self-interest - and a good deal of prodding from a White House worried about spoiling Democratic election prospects in the fall - looks likely to impel OPEC to finally curtail spiraling oil prices. Fuel costs began to skyrocket last March when the group implemented a 7.5 percent cut in crude oil production that was also respected by nonmember oil-producing nations. The Clinton administration has been hands-off until now, saying it'd let the market self-adjust, but prices have just hit a nine-year high - with American emergency crude oil stores at a 25-year...
...economy coughs, the world splutters. "OPEC is aware that if energy prices keep going up it'll hurt the world economy, and that's not in their interest," says Zagorin, noting that the producers also fear the possibility of an oil price collapse. "So they're going want to have an orderly, coordinated plan for easing the supply cuts." When Richardson comes to town, for its own sake, OPEC is likely to listen carefully...