OPEC chief blames ill dollar

Angry oil consumers taking aim at OPEC should be looking for a mirror instead of a “scapegoat,” the head of the oil cartel said yesterday.

Chakib Khelil, president of the Organization of Petroleum Exporting Countries, blamed record high oil prices on turmoil in the U.S. economy — especially the declining dollar — and panned new legislation by congressional Democrats aimed at lowering Americans’ energy bills. It has OPEC in its cross hairs.

“OPEC will always be the scapegoat for all kinds of people,” Mr. Khelil, also energy minister of Algeria, told reporters gathered at the Hilton Washington hotel on the sidelines of the U.S.-Arab Economic Forum. He said he hadn’t read the bill, introduced with fanfare Wednesday, “but every time the oil prices increase, we hear all kinds of legislation trying to be passed.”

“There is a direct correlation between the decrease in the value of the dollar and the increase in oil prices,” Mr. Khelil said. “A week ago the dollar improved by a few percent and we saw that directly expressed in the oil price. The oil price went down.”

He said the declining dollar is encouraging speculation in the commodity markets, further boosting the price of oil.

Crude oil jumped to another record yesterday, crossing $124 a barrel for the first time in intraday trading. Light, sweet crude for June delivery ended up gaining 16 cents to reach a settlement record of $123.69 on the New York Mercantile Exchange. But prices shot up to $124.61 in after-market electronic trading.

The Consumer-First Energy Act would grant the U.S. attorney general powers to “bring enforcement action against any country or company that is colluding to set the price of oil, natural gas, or any other petroleum product,” according to a summary by Senate Majority Leader Harry Reid, Nevada Democrat.

“Enacting this provision will make it clear to nations that participate in the oil cartel that engaging in conduct designed to fix the price of oil is illegal under U.S. law,” Mr. Reid said.

Mr. Khelil said the legislation could prevent government officials from OPEC countries from gaining entry to the U.S.

“It will make it difficult for dialogue. U.S. representatives will have to come to our countries,” he said. “We shouldn’t have a problem giving them visas to discuss the issues.”

The legislation would also target speculation in commodities trading, cut tax breaks for oil companies and force them to pay taxes on their “windfall” profits, freeze government purchases of oil for the Strategic Petroleum Reserve and target any suspected gas price gouging.

“I wish people would pass the same legislation when the oil price goes down to $6 and $8 [per barrel],” Mr. Khelil said.

The world purchases 84 million barrels of oil per day, of which OPEC supplies 40 percent.

President Bush plans to visit Saudi Arabia next week as part of a tour of Middle Eastern nations, where he is expected to push oil producers to increase output.

But that won’t affect the price of oil, Mr. Khelil said.

“There is nobody asking for oil that has not been supplied oil right now,” he said.

“Geopolitical events are still there. Is that going to change the tensions with Iraq? Is that going to change the tension in the Middle East? Is that going to change the problems in Nigeria? It’s not. Is that going to change the devaluation of the dollar? It’s not.

“If it’s not, then increasing supply is not going to have any effect. Psychologically it might have, maybe a small bump, and then it’s going to pick up again,” Mr. Khelil said.