Today (9/11/2008), I saw an article on msn.com (link: http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/11/the-death-of-opec.aspx) stating that Saudi Arabia walked out on the OPEC meeting protesting proposed production cuts. Suffice it to say, my curiousity was aroused.

I have always despised cartels or monopolies of any kind. They have always represented an authoritarian entity that abuses people at their leisure. In doing so they risk causing serious damage to an economy for unjustifiable greed. This includes the oil companies of the United States. Don't be fooled into thinking they are competing against each other. They are a shadow monopoly.

We have seen that with the skyrocketing oil prices that peaked at $147 a barrel in July 2008. Since then, they have plummeted to about $100 per barrel because of lessening demand, slowing and weak global & U.S. economies, and much less rampant speculation. Here is the link to the speculation analysis: http://money.cnn.com/2008/09/10/news/economy/oil.ap/index.htm?cnn=yes

With Saudi Arabia balking at production cuts, along with the absurdity of dictators like Hugo Chavez of Venezuela and the maniacs in Iran, this signals that oil will become cheaper still and possibly represents the breakup of an monopolistic cartel. At the very least, OPEC is weakened and unable to put the pricing stanglehold on the rest of the world without the power and influence of Saudi Arabia. Saudi Arabia is essentially the primary player in that cartel and what they say usually goes.

At the very least, Saudi Arabia is recognizing that affordable oil is key to their security and stability. They are not necessarily doing the United States any favors, but by extension, their decision favors the U.S. If oil becomes too expensive, they will feel the brunt of a global economic meltdown, and with that, alternative fuels and technologies will more quickly prevade the marketplace, thus cutting into their market share.

If Saudi Arabia is actually removing itself from OPEC, it is sure to spawn a domino effect that will destroy the cartel and bring more legitimate competition into the marketplace.

With that, I hope that Saudi Arabia has started a ripple effect that will destroy OPEC and make life a little easier on the rest of the world instead of predatory capitalists (a.k.a. stealth socialists) who are raping our economies and pillaging our wallets.

Alan W.