How Times Have Changed: $100/bb Oil “Too Low”?

Remember the days when western governments pressured OPEC to boost production, to keep oil prices below $100 per barrel?

Seen at the Wall Street Journal (subscriber link):

Meeting for the first time since March, OPEC ministers on Tuesday will face a quandary: With the world economy still on the ropes, do they really want to be seen slashing oil production in an effort to keep prices above $100 a barrel?[…]

[Saudi King Abdullah] said he would like to see prices fall below $100 a barrel, while others suggest that the kingdom wouldn’t object if crude edged into the mid-$80s range — about where it was for the earlier part of this year. Saudi officials declined to talk about their thinking ahead of the Vienna summit.

Others within OPEC, though, will surely gripe if prices tumble that far. Traditional price hawks Iran and Venezuela have been vocal in saying they want the cartel to begin slashing production now, arguing that the world is oversupplied and that the once-outlandish price of $100 a barrel should become the new benchmark. Plummeting prices could cause distress within months in Venezuela and Iran, whose leaders rely heavily on windfall oil profits to maintain their political positions.[…]

But there are risks for OPEC pursuing such a high oil-price policy. Prices of more than $100 a barrel keeps consumers firmly on the prowl for ways to cut oil consumption. It also helps pay for the pursuit of alternative energy sources, like crop-based biofuels and hard-to-extract heavy oil in places such as Canada, that compete head-to-head with OPEC oil.

Consumers in wealthy nations are employing a variety of tools to escape high oil prices, from abandoning gas-guzzling sport-utility vehicles in the U.S. to using more public transport in Japan, and the impact keeps adding up.

I suppose that it would be naïve of me to point out that if the free market were allowed to operate, a natural equilibrium would be found for both price and production.