EXACTLY WHAT was agreed to this week at the 57th meeting of OPEC ministers is not yet clear. The cartel members announced a new base price of $32 per barrel, but Saudi Arabia -- which sells one-third of OPEC's oil at $28 -- apparently does not plan to adhere to it. "I have agreed to nothing," said Saudi Oil Minister Yamani. "I will not raise my prices." How other producing nations will apply the new price is also uncertain, so it is too soon to predict exactly how large an increase will be caused in U.S. gasoline and heating oil prices.
Despite the ministers' best efforts to paint a picture of full agreement, this meeting failed -- as its recent forerunners have -- to reunify OPEC's crude oil prices. These now range from Saudi Arabia's low of $28 to Algeria's high of $38 per barrel. The meeting also did not reach its other major goal: Persuading Saudi Arabia and Iraq to cut back their level of production.
Though the agreed price increase was smaller than many had feared, and though the meeting revealed continuing deep strife within the cartel, there is little in the outcome from which Americans can draw comfort. Major disagreements over how much to produce and how much to charge may embarrass cartel members, and OPEC's ability to raise its prices does not depend on unity. It rests instead on the continuing reality of a tight market.
Just how tight the market is was a subject of hot debate at the OPEC meeting. Many of the members argued that OPEC is producing a million barrels a day more than the world needs, and called for a comparable cutback in production. Though it is true that many of the West's oil stockpiles are at record levels, there is no surplus. By any realistic measure, consumption is still equal to production.
Indeed, recent analyses of the world oil market -- based on extrapolations of current trends -- all project substantial shortfalls. The International Energy Agency -- which has been more accurate than most -- foresees a gap between oil need and supply of 2 million to 4 million barrels a day by 1985 and double that amount by 1990. The Congressional Budget Office projects an even larger gap, with the corresponding lowest likely price at $84 a barrel at the end of the decade. Yes, you read that right.
While it is tempting to blame a lot of our current energy woes on politically motivated OPEC price increases, the facts point elsewhere. Decontrolled domestic oil, after all, sells for more than much of OPEC's, as does oil produced in many other non-OPEC nations. The simple truth is that until the world's oil demand can be brought below the oil supply, prices will continue to rise, possibly high enough to precipitate a major worldwide recession. In the next few years, that reduction in demand can only come from conservation and increases in energy efficiency.