Markey: Times Too Tough for OPEC to Cut Supply

Chairman Sent Letter to Bush Asking for Political Pressure on Oil Cartel

WASHINGTON (October 24, 2008) – In a prescient letter sent yesterday to President Bush, Rep. Edward J. Markey (D-Mass.) asked the president to use whatever political means he had left to pressure OPEC into not cutting the supply of oil during this tough economic period and as the winter heating season begins. OPEC today announced they will be cutting supply, which could have serious ramifications for millions of Americans already struggling to keep up with bills in the face of job losses and rising expenses.

“During President Bush’s 2000 campaign, he said America should ‘jawbone OPEC’ into increasing supply,” said Rep. Markey. “Unfortunately for American consumers and our economy, it’s clear that when it comes to OPEC, the president’s jawbone is broken.”

The letter to the president is included below:

October 23, 2008

The Honorable George W. Bush
President
The White House
1600 Pennsylvania Ave., NW
Washington, DC 20500

Dear Mr. President:

News reports indicate that the Organization of the Petroleum Exporting Countries (OPEC) has scheduled an emergency meeting tomorrow in order to cut petroleum production. OPEC’s current president, Chakib Khelil, was quoted as saying that he expects the cartel to decide in favor of a “significant” production cut at the meeting –as much as 2 million barrels per day. Any increase in energy prices right now would further compound our economic troubles and adversely impact American families. As a result, I am writing to urge you to use every tool at your disposal in order to pressure OPEC to not reduce production.

While oil and gas prices have declined in recent weeks, American consumers and our economy are still feeling the strains of the record prices we saw this summer. Earlier this year, oil hit record highs of nearly $150 per barrel and gas averaged more than $4 per gallon nationwide. Consumers have been spending more on everything from gas to groceries and are in desperate need of relief.

American consumers are also facing an impending home heating crisis this winter. According to the Energy Information Administration’s (EIA) Short Term Energy and Winter Fuels Outlook, “Average household expenditures for all space-heating fuels are projected to be $1,137 this winter (October 1 to March 31), a 15-percent increase over the estimated $986 spent last winter.  The largest increases will be in households using heating oil and natural gas.” With consumers already facing home heating costs that will be significantly higher than last year, any additional increase as a result of OPEC cutting production could mean that many families will face choices between purchasing food or purchasing fuel this winter.

Meanwhile, according to the EIA, OPEC member nations have already earned an estimated $821 billion in net oil export earnings through September and could ultimately earn more than $1 trillion in 2008. It would be unconscionable for OPEC to cut production as our economy is reeling and its countries are already seeing profits gush into their pockets.

I strongly urge you to take immediate action to help American consumers and our economy by pressuring OPEC to keep production at current levels at their meeting tomorrow.
                                                Sincerely,

                                                Edward J. Markey
                                                Chairman

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Contact: Eben Burnham-Snyder, Select Committee, 202-225-4081

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