OPEC Doesn’t Work, Time For OCIC

That would be “Oil Importing and Consuming Countries”.

The German newspaper Die Welt reports on how OPEC has failed to put an effective ceiling on oil production for the last couple of years.

That’s bad news for the climate. Lower prices for gasoline mean less incentives to buy an electric vehicle.

The article shows this graphic on production volume:

oil

It shows that Russia has the largest production right now, but Saudi Arabia and the United States are not far behind.

If you are concerned about climate change, the United States has the worst record of any country in the years of the Obama presidency. They increased their oil production from about five million barrels a day in 2010 to around nine million in 2016.

In a world after the Paris agreement, it should be obvious that the last thing we need is more oil. That grey curve in the graph above is deeply offensive. Oil production needs to go down everywhere, not double in a couple of years. The United States should be ashamed of this record, which is, again, the worst of any country.

Back to OPEC. It doesn’t work right now. The last couple of meetings have resulted in no production limits. And of the largest polluters only Saudi Arabia is a member. Russia and the United States are not, though Russia was an observer at the latest conference without result.

So there is a need for an alternative. Set up OCIC.

It would work like the existing Emission Trading Scheme of the European Union.

Set up a ceiling on oil imports to the OCIC area (which may start out with only the EU, as the ETS).

Put the import quotas on the market and let the market decide who gets to actually deliver any oil.

Reduce the quota by a fixed margin each year.

The effect of this would be to artificially increase oil prices, just like OPEC did when it actually worked.

That in turn will help to get consumption down, accelerate the transition to electric vehicles and keep more of the precious resources in the ground for future generations (which won’t be able to burn them, but will still be able to use them as raw materials in the chemical industry).

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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