2004-4-8
This is Bob Doughty with the VOA Special English Economics
Report.
Last week, the Organization of the Petroleum Exporting Countries
decided to reduce oil production by about four percent starting
April first. Oil ministers from eleven member nations met in Vienna,
Austria to approve the cut.
OPEC says low oil supplies are not the cause of current high
prices. It blames oil market traders and world conditions. OPEC says
oil supplies are increasing and it must take action. The
organization says its goal is to keep prices between twenty-two and
twenty-eight dollars a barrel.
The decision by OPEC comes at a time of record high fuel prices
in the United States. In March, oil reached thirty-eight dollars a
barrel. That is the highest price since the Persian Gulf War in
nineteen-ninety-one.
More price increases will especially hurt the United States. This
is because oil is traded only in dollars. Other countries exchange
their money to buy oil in dollars. But recently, the value of the
dollar has decreased against the euro and the Japanese yen. Europe
and Japan can buy more dollars with their euros and yen. That means
they can buy more oil too. This difference in the value of the euro,
yen and dollar makes oil more costly for the United States.
Experts say OPEC nations will find
it difficult to cut production. They point to the fact that OPEC
countries already produce one-and-one-half million barrels a day
more than the agreed limit. Experts say only Saudi Arabia could
greatly cut production. This reduction would not meet the cuts
required by OPEC.
Also, two of the top three exporting nations, Russia and Norway,
are not OPEC members. These and other nations could increase exports
to meet world needs. Still, OPEC's announcement has caused changes
in the price of oil in recent days.
Oil, or petroleum, is the most actively traded product in the
world. The biggest oil trading centers are in London, New York and
Singapore.
Oil is sold by the barrel. A barrel contains
one-hundred-fifty-nine liters. The International Energy Agency
records the world's energy activity. It says oil provides about
thirty-five percent of the world's energy. That is down from
forty-five percent in nineteen-seventy-three. But oil remains one of
the most important goods in the world economy.
This VOA Special English Economics Report was written by Mario
Ritter. This is Bob Doughty.