Congress Blames the Hedge Funds, Part II: Indonesia to OPEC…’See ya!’
Indonesia to Pull Out of OPEC By TOM WRIGHT May 28, 2008 6:41 a.m. JAKARTA, Indonesia — Reduced to the status of a marginal net oil exporter, Indonesia will quit the Organization of the Petroleum Exporting Countries at the end of this year, Energy Minister Purnomo Yusgiantoro said Wednesday.
Asia’s only OPEC member, Indonesia still exports natural gas, but its aging oil fields and lack of fresh investment in exploration have undermined the country as a crude producer and forced it to slash costly domestic fuel subsidies as global oil prices soar.
“Today we decided that we are pulling out from OPEC,” Mr. Purnomo said. “We are an (oil) consuming country.”
—The Wall Street Journal
What does the Koninklijke Nederlandsche Maatschappij tot Exploitatie van Petroleum-bronnen in NederlandschIndië have to do with the Shell Transport and Trading Company?
Both companies discovered oil in colonial Indonesia way back in the 1800s. They merged in 1907, and today you know them as Royal Dutch/Shell.
Back in the day, Indonesia was a pretty big deal when it came to world oil supply, thanks to those early oil discoveries by the Dutch and the Brits and the fact that Indonesian crude was what is known as “light and sweet,” meaning low in sulfur and easy to refine into gasoline.
Indonesia joined OPEC in 1962, two years after the Organization of Oil Exporting Countries was formed to maximize the long-term value oil for the countries that are fortunate enough to export the stuff in large quantities.
It is dropping out in 2008.
That’s right: Indonesia no longer exports oil, a fact we have highlighted here in NotMakingThisUp as far back as August, 2005 [See “Instability Adds Up,” August 25, 2005].
For the record, Indonesian oil production peaked in 1977 at 1.7 million barrels day, most of which was exported. The absence of 1.5 million barrels a day of light, sweet crude, much of which ended up in American cars, is the equivalent of shutting down Prudhoe Bay.
And that is a fact the geniuses in Congress might want to consider before they waste a lot more time than they usually waste—holding hearings on Roger Clemens, for example—pursuing a witch-hunt against hedge funds and commodities traders.
But, of course, since it won’t help them get re-elected, they probably won’t.
Jeff Matthews I Am Not Making This Up
© 2008 Not Making This Up LLC
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