OPEC to cut back despite high prices

OPEC yesterday approved a 4 percent cut in production starting today, despite soaring oil and gasoline prices in the United States.

Saudi Arabia — the world’s biggest oil producer and, in the past, the chief U.S. ally in the 11-member cartel — pushed for the cut, citing its expectation that demand and prices will subside at the start of spring as they usually do.

President Bush, under fire from his presumptive Democratic opponent Sen. John Kerry for doing little to combat high oil prices, was “disappointed” with the decision, which came despite behind-the-scenes lobbying by the administration, said White House spokesman Scott McClellan.

“Producers should not take steps that harm American consumers and our economy,” he said.

Economists say the high oil prices will slow growth in the U.S. and world economies and could absorb half of Mr. Bush’s $72 billion of tax cuts for households this year.

The White House said it had talked to Saudi Arabia and two other U.S. allies, Kuwait and the United Arab Emirates, both of which had suggested postponing the cut in light of the unexpectedly robust demand for oil in the United States and China.

But comments by the oil ministers after their meeting in Vienna, Austria, yesterday suggested that U.S. efforts were far from convincing.

Kuwait’s energy minister, Sheik Ahmed Fahd al-Sabah, said he withdrew a proposal to delay the cut because it failed to muster the required unanimous support within the Organization of the Petroleum Exporting Countries (OPEC), which pumps one-third of the world’s oil.

Saudi Oil Minister Ali al-Nuaimi told reporters that record-high U.S. gasoline prices, which are near $1.80 a gallon, are not the result of a shortage of oil on the world market, but rather of “the growing number of cars” on American highways and a 28-year lapse since the last gasoline refinery was built in the United States.

“When we speak with U.S. officials, they know precisely what’s happening on the market and that OPEC has nothing to do with the rise in prices,” he said.

Mr. al-Nuaimi also blamed the near 13-year high in New York oil prices, which closed at $35.76 a barrel for premium crude yesterday, on speculators who are betting that demand for oil will be steady or rise rather than fall as it usually does in the spring.

OPEC President Purnomo Yusgiantoro attributed the high prices to tight supplies of gas in the United States, not shortages of crude oil, from which gasoline is refined.

“Crude is not a problem … the U.S. gasoline market is,” he told reporters in Vienna. He pointed out that gasoline prices usually follow oil prices higher, but this time the opposite has been occurring in the United States.

Gas prices at the pump hit a record high last month, and some analysts are predicting that oil will follow with a record of more than $41 a barrel in the months ahead, as the country gears up for its peak summer driving season.

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