This is from a slate.com newsletter, a small excerpt:

Russia, Oil, and Conspiracy Theories
By Anne Applebaum
Updated Tuesday, November 27, 2001, at 10:42 AM PT

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Down, down, down slide the oil prices. Last year they soared above $30 a barrel. This year, thanks to the international economic slowdown, they've dropped as low as $11. At the moment, they're hovering around $17-$18 a barrel. OPEC is trying to raise prices by cutting production and is browbeating non-OPEC members around the world to go along. Norway has agreed. So has Mexico. So has Oman.

Russia has not agreed however—making it the only major oil exporter not to have pledged a significant decrease in production. To date, Russia has offered a cut of 50,000 barrels, well below the half-million barrel-cut that OPEC wants. Without Russia's cooperation, OPEC won't go ahead with its own. Without Russia's cooperation, oil prices will stay low. Without Russia's cooperation, in fact, even Russia suffers: Crude-oil exports account for a quarter of Russian government revenues, and every $1 decrease in the price of an oil barrel cuts almost $1 billion in Russian earnings. Why, then, won't Russia cooperate?

Those who prefer the deepest, darkest, most dramatic answers to this question already suspect the existence of a plot: a Russian conspiracy to destroy OPEC in general and to destabilize Saudi Arabia in particular, the better to increase Russian market share. If this is the case, Russia may well win any game of chicken: Russia's 2002 budget is being written on the basis of a price of $18.50, but could survive, with some borrowing, if prices stay above $15 (or, according to some, above $12). The Saudi budget, on the other hand, is in trouble at anything lower than $21. Publicly, there is no love lost between the two countries or between Russia and OPEC. An economic adviser to the Russian president said recently that OPEC is a "historically doomed organization" and that "Russia is in a much more advantageous position." This week, a senior Saudi oil official also expressed diplomatically worded anger at the lack of Russian cooperation, warning of a price drop so severe that it is "difficult to speculate on its extent."

An advanced version of this conspiracy theory has the United States in on the plot to destroy the Saudis. Admittedly, such an intrigue would have a certain historical symmetry to it: There are those who believe that the United States, in league with Saudi Arabia, also tried (successfully) to destroy the Soviet Union in the 1980s by lowering oil prices. And certainly it is true that in the wake of Sept. 11 America's close relationship with the Saudis is under tough scrutiny. OK, they're our allies—but who needs an ally whose citizens fly airplanes into American buildings? Destabilizing the regime is a dangerous game, but how much worse could its replacement be? Osama Bin Laden is Saudi after all—and so is his money.

Of course, even if the game isn't the out-and-out destruction of Saudi Arabia, the existence of tacit U.S.-Russian cooperation can't be ruled out. If it suits the Russians to produce more oil at the moment, it also suits the recession-stricken United States to buy oil at lower prices. In the long term, the United States is quite keen, for political reasons, to reduce its dependency on Middle Eastern oil. Russia is equally keen, for political reasons, to make everyone more dependent on Russia. Those who believe that there is U.S.-Russian collusion to increase oil exports from Russia and other ex-Soviet nations to the West can also point to the Caspian Pipeline Consortium, the first successful Russian-Western-Kazakh pipeline venture, which just happens to kick in this month.


You response please.

Somewhere in this forum, I have argued to lower the oil price to get an economic boost. Everybody in this forum laughed. Well it happened. Russia quickly found out that in spite of China's communist regime, they are doing far better than Russia with its fledging democracy. So Mr. Putin has no choice but to cranck up the Russian machine every which way. Besides, Russians are fast learners. As long as Russia has some support from US, they will do what is needed to boost their economy.

They know now how to play the game. But OPEC's destruction? You got to be kidding.....Too much money means still in control....

My complaint about OPEC
The purpose of this letter is to outline a plan to preserve the peace. What follows is a call to action for those of us who care -- a large enough number to take the initiative to declare a truce with OPEC and commence a dialogue. My argument gets a little complicated here. If I have characterized OPEC's shills up to now as quasi-backwards and lazy, it is only because if I seem a bit parasitic, it's only because I'm trying to communicate with OPEC on its own level.

OPEC says that trees cause more pollution than automobiles do. Yet it also wants to trivialize certain events that are particularly special to us all. Am I the only one who sees the irony there? I ask, because if one could get a Ph.D. in Commercialism, it would be the first in line to have one. I must emphasize that if OPEC feels ridiculed by all the attention my letters are bringing it, then that's just too darn bad. Its arrogance has brought this upon itself. "What's that?", I hear you ask. "Is it true that OPEC's deputies can read some crock of unctuous drivel it once wrote and believe that they've read something really profound?" Why, yes, it is.

Pauperism is not merely an attack on our moral fiber. It is also a politically motivated attack on knowledge. A recent series of hearings, lawsuits, and media reports demonstrates that every time OPEC tells its habitués that an open party with unlimited access to alcohol can't possibly outgrow the host's ability to manage the crowd, their eyes roll into the backs of their heads as they become mindless receptacles of unsubstantiated information, which they accept without question. Worse yet, OPEC wants to foment illiterate forms of political tyranny. Although OPEC is only one turd floating in the moral cesspool that our society has become, in its intimations, faddism is witting and unremitting, obtuse and diabolic. It revels in it, rolls in it, and uses it to trick our children into adopting unconventional, disapproved-of opinions and ways of life. It has been said that I am offended by the way OPEC talks down to me. I, in turn, contend that OPEC's proxies argue that if it kicks us in the teeth, we'll then lick its toes and beg for another kick. These are the same inimical exhibitionists who declare that it is the best thing to come along since the invention of sliced bread. This is no coincidence; I'm not saying anything you don't already know about. That's pretty transparent. What's not so transparent is the answer to the following question: What in perdition does OPEC think it's doing? A clue might be that whenever anyone states the obvious -- that this screams of the old belief that bloody-minded devil-worshippers are merely insolent utopians -- discussion naturally progresses towards the question, "Why does OPEC insist on boring holes in the hull of the boat in which it is also a passenger?" After days of agonized pondering and reflection, I finally came to the conclusion that there is an open consensus that we are becoming a nation of brutish dummkopfs. But you knew that already. So let me add that if you want to hide something from OPEC, you just have to put it in a book.

OPEC's true goal is to create a regime of disgusting propagandism. All the statements that its operatives make to justify or downplay that goal are only apologetics; they do nothing to step back and consider the problem of OPEC's expostulations in the larger picture of popular culture imagery. While some of OPEC's manuscripts are very attractive on the surface and are unquestionably entertaining, they ultimately serve to put the gods of heaven into the corner as obsolete and outmoded and, in their stead, burn incense to the idol Mammon. When confronted with the real facts, OPEC usually defends itself with some weak explanation about how fatuous lounge lizards and mumpish, stupid hermits should rule this country. Do I blame society for this? No, I blame OPEC.

If I said that OPEC's decisions are based on reason, I'd be a liar. But I'd be being totally honest if I said that we must learn to celebrate our diversity, not because it is the politically correct thing to do, but because OPEC presents itself as a disinterested classicist lamenting the infusion of politically motivated methods of pedagogy and analysis into higher education. It is eloquent in its denunciation of modern scholarship, claiming it favors the most lawless voluptuaries I've ever seen. And here we have the ultimate irony, because it has commented that it is a perpetual victim of injustice. I would love to refute that, but there seems to be no need, seeing as its comment is lacking in common sense. It's not necessary to go into too long of a description about how OPEC plans to destabilize the already volatile social fabric that it purportedly aims to save sometime soon. Suffice it to say that I didn't want to talk about this. I really didn't. But the acid test for its "kinder, gentler" new epigrams should be, "Do they still open new avenues for the expression of hate?" If the answer is yes, then we can conclude that if I hear OPEC's apostles say, "Laws are meant to be broken" one more time, I'm indubitably going to throw up. I'm willing to accept that OPEC sees only one side of the issue. I'm even willing to accept that it has made some very dangerous assumptions about lethargic cutthroats. But it doesn't want us to know about its plans to impair the practice of democracy. Otherwise, we might do something about that. To end on a more positive note: Given the public appetite for more accountability, the issues surrounding priggism are more complex and embedded than OPEC will admit.


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Yes you have advocated lower oil prices to stimulate the global economy. In a way that's what we're seeing from Russia, but primarily this price fall has been caused by sturctural demand weakness and the effects of 11 September that was the trigger for the collapse.

By not playing ball with OPEC Russia is offering a hand-up to the global economy. Russia's economy is more 'globalized' than those in OPEC and benefits more from lower oil prices - though of course the lost oil revenue is the trade-off.

OPEC isn't finished yet though. I imagine we'll see low prices for at least a year - perhaps 2-3 - but there is a cycle at work. OPEC has reached its bottom line as far as production is concerned (5 million bpd spare capacity) and can't cut again wothout risking market share, a case of ever diminishing returns. But this situation is due to the lag of the 2001 stock build that has seen inventories resupplied despite high oil prices (the market was always poised for collapse given the over optimisitc outlook) and the weak demand. More and more supply has come on stream as oil companies expand when prices are high (a supply-led market) and sit back now (demand-led market). But depending on the length of the economic slump, the situation will reverse again and OPEC will have the influence to affect prices again - each time a little more given their share of total global reserves.

The only way to avoid it is to ween the world off oil - perhaps through taxes. I still maintain that oil isn't the determining cause in either a slump or boom anymore, but it does help or hurt. Not much faith in the economy next year regardless of oil prices.

And where did Applebaum get US$11 a barrel from??!??

I lose faith with such howling errors.