Has anybody seen OPEC?

This bear market, is now ready to take some blood from OPEC. Already countries are already feeling the pinch. In tonight's WSJ:

Big oil-producing countries are showing signs of distress as the global credit crunch and falling crude prices begin to squeeze government budgets and delay projects.

Fears that the boom days are fading appear strongest in Iran and Venezuela, whose governments have come to rely on oil prices to prop up otherwise shaky economies. Both countries this week led a chorus within the Organization of Petroleum Exporting Countries calling for an emergency meeting of the cartel, now set for Nov. 18, to weigh a production cut.
http://online.wsj.com/article/SB122357560511419739.html?mod=testMod

A production cut? Are they kidding? The overbuilding in Dubai and Abu Dhabi, the infrastructure and government entitlement programs in Saudi Arabia, and the $500,000 license plates are over. Dubai is already on a debt binge:

Dubai doesn't have big reserves of hydrocarbons. Instead, it has been bankrolling much of its building boom through international debt markets. With those all but shut these days, analysts are warning of a slowdown if global markets don't free up soon.
http://online.wsj.com/article/SB122357786070619869.html

They aren't going to get it. In the same article PFC said that "Saudi Arabia requires an oil price of $55 a barrel, more than double from eight years ago, according to PFC estimates."

What planet are they on? Did they calculate the costs of their new rebuilding programs? Saudia Arabia needs $80 oil. And they aren't going to get it. We'll see oil in the $70's tomorrow.

According to PFC estimates, Russia needs $92 oil, and Iran needs $90. Anyone notice the Russian market has fallen over 80%? Those prices are fantasy. Did they count in graft, or the cost of weapons, or the Dacha's in France? It was only a few years ago that the Baku-Ceyhan pipeline opened up, after being 15 years of drawing, planning and building. Who did that benefit most? Russia. And Putin, with these riches, soon nationalized or took control of the assets in Russia. But loyalty came with a price. Where did all that extra oil revenue dollars go? Just look at what is going down now, and you have that answer.

These oil producing countries, in their inexorable greed, allowed prices to be manipulated on the futures market. Why didn't they hit the bids if they thought oil was too high? They misjudged the market, just like they misjudged the health of the banks with their billion dollar investments. They were like the Central Banks, who caused this financial mess in the first place by jacking up short term rates much too high, and taking their time lowering them, doing it at meetings instead of doing it when it was needed. OPEC did the same, except it wasn't interest rates but oil. They had their OPEC meetings, just like the Fed had theirs. But it was the same game-always too little, and always too late. OPEC was more interested in photo shoots and interviews with pretty American journalists than in reading the economy's tea leaves.

Now you have worldwide downward momentum in the economy, and a complete mistrust of the system, and a complete mistrust of the leaders in charge. So OPEC now thinks that they can keep a stranglehold on prices with a production cut? What gall and terminity. And what stupidty. Do they think the world will trust them? Do they have any idea of what the average worker in America has already sacrificed? How about the value of his house, and the value of their pensions and 401K's? Now the average worker is about to sacrifice his credit and his job. So what is OPEC bringing to the table? Where is their sacrifice? Don't they owe us one? Don't we provide security for the passage of oil through the Straights of Hormouth?

They need to let oil fall, to help re-lubricate the economy, and quit worrying about production cuts, and think, for once, of others, than for themselves. And let oil seek a lower level before any more damage occurs in the worldwide economy. And they need to do it now.

Maybe OPEC should have a ham and egg breakfast with a blue collar worker, and let him explain to them the difference between a contribution and a commitment. The chicken gives the contribution, and the pig gives the commitment.

It's time for them to cross the road.