News

After OPEC's announcement that they were going to essentially force gasoline prices back up after the drops they have been having, Saudi Arabia (the most powerful member of the group) pulled out of the organization.

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Saudi Arabia walked out on OPEC yesterday. It said it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.

As the world's largest crude exporter, the kingdom in the desert took its ball and went home.

As the Saudis left the building the message was shockingly clear. According to The New York Times, “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate said. “We will see what the market requires and we will not leave a customer without oil."

Linky.

This is huge for a couple of reasons. Not only does the announcement show that gas prices weren't being subsidized to garner support for the November elections like many thought, but it also means that the group that held a stranglehold over oil production since the 1970s may be done for.

I do wonder, however, if there is more to this than it seems.

Bacteria that thrives in oil sludge may be to blame for the pipeline problem. I think it is BP's fault myself due to not maintaining the pipelines throughout their life. With record profits and the consumer being gouged, the least we should expect is a steady flow of oil.

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The affected five kilometre stretch of pipeline carries oil from BP's Prudhoe Bay oilfield in Alaska to the Trans-Alaska Pipeline, which connects all of Alaska's oilfields to seaports. On Sunday, BP announced plans to begin shutting down its 400,000-barrel-a-day Prudhoe operations while it replaces 25 kilometres of suspect piping. BP officials say the best guess so far is that bacteria colonised part of the pipe and corroded the metal. A similar problem probably led to a 750,000-litre oil spill in another part of BP's Alaska pipeline in March 2006.