NO MATTER HOW many times the oil cartel sticks it to Washington, the administration never seems to learn the lesson.OPEC, as one industry analyst puts it, follows "topsy-turvy economics." The Carter administration indulges in wishful thinking when it anticipates normal behavior by OPEC.
As a consequence, the administration regularly underestimates the inflationary impact of probable OPEC pricing decisions. "All of our projections are much too optimistic," one energy policymaker admits.
The Carter administration's current basic forecast for a sharp decline in the overall dougle-digit inflation rate is based on three key expectations: first, an economic recession; second, a decline in interest rates; and third, a sharp reversal of the terrible events of 1979, when OPEC -- in stages -- boosted oil prices by 100 percent.
At one press conference recently, President Carter suggested that even if oil prices rise by another 20 percent, the overall consumer price index would fall. That gives OPEC another 20 percent just for the asking.
Despite an oil surplus of somewhere between one and two million barrels a day, and the onset of world recession, another major oil cartel price move is generating that seems likely to push world prices well over the current $30-a-barrel average.
SOME CARTEL states, like Kuwait, already have boosted the effective rates of oil sold under contract to as high at $38 a barrel (compared to the $27.50 "official" Kuwait price). At the same time these states are cutting production.
In a familiar ballet, the more aggressive OPEC states typically boost the price, while the Saudis warn that the price is too high -- and ultimately, the Saudis yield to the pressure.
William L. Randol of Salomon Bros. sees recent price hikes by Kuwait, Nigeria, Qatar and others as the first stage of the process. The more aggressive members of the cartel push the Saudis to raise their $26 benchmark price to the world level as a concession to OPEC "solidarity." That sets the stage for further outsize increases by the leading militants in the cartel.
This "topsy-turvy" economics is possible only because the consuming world gutlessly has allowed OPEC to control the market, and failed to take the steps necessary to curtail petroleum use and to find adequate substitutes. U.S. policy and planning is so immobilized that European countries, seeking to place large orders for coal as a substitute for oil, find our port facilities totally unable to handle the greater demand.
Meanwhile, the arrogance of the OPEC producers defies all reasonable attempts, such as those made by the Brandt Commission, to find a deal or compromise that will serve the long-term needs of the consuming countries as well as OPEC.
The latest policy line of the Arab wing of OPEC -- the Organization of Arab Petroleum Exporting Countries -- is that oil producers shouldn't be too concerned by the recessionary impact on the West of reduced oil supplies.
THUS, DR. USAMEH Jamali, director of OAPEC's economics department, says that the West will not necessarily "be shaken" if real economic growth tumbles to, say, 1.5 percent. "Indeed," says Jamali, "until greater equality is established among the peoples of this shrinking planet, growth rates in the more advanced countries should not exceed the growth rates of their population."
Further increases in per capita consumption on the part of industrial nations "as a whole could be construed as a threat to the future well-being of peoples in less-developed countries," Jamali continues.
The phrase "as a whole" is the operative phrase. Arab strategy, as outlined by Jamali, is not only to curb oil production, but to link actual output "more directly to (OPEC) needs and to the terms of trade they receive for the exchange." Boldly, he argues that OPEC's bargaining power is greatest with countries "with a dearth of alternative sources of energy, such as Japan."
Thus, OPEC is shrewdly maximizing tghe political powers of its oil supplies, guided primarily by self-interest.The impolite but accurate descriptions is: blackmail.