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Energy Secretary Chu’s OPEC learning curve

When asked about oil policy and OPEC’s March meeting at a Platts Podium yesterday, a clearly uncomfortable and ill prepared Energy Secretary Steven Chu told reporters that he felt like he’s been thrown “into the deep end of the pool.”
It could have been poor staff work. Surely, if not Chu himself, someone at DOE should have anticipated an OPEC question or two.


Chu has been energy secretary for scarcely a month, and his background as a Nobel Prize-winning experimental physicist and director of the Lawrence Berkeley National Laboratory hardly provided the necessary experience for dealing with international oil politics. Nevertheless, it was surprising that in his first major press briefing Chu should fumble questions about OPEC that energy reporters routinely ask every energy secretary prior to every OPEC meeting.
Chu did not know what the Obama administration would urge OPEC to do at its meeting. He said he would learn “more about this in order to figure out what the US position should be and what the president’s position is.” He also said he would do what he could to encourage price stability.
But Chu said his focus as secretary would be on matters he has “control over” – developing alternative energy technologies. Perhaps that is a proper and more a productive role for an energy secretary — focusing on research and development, energy efficiency, and green energy technologies — rather than as a hat-in-hand supplicant, asking the cartel to maintain or increase oil supplies in the interest of stabilizing or moderating prices.
OPEC is an opaque organization, but on occasion it appeared to respond positively to lobbying by US energy secretaries. However, OPEC will do what’s in its own best interests regardless of entreaties from US officials.
Last May, President George Bush visited Saudi Arabia where his request for more oil to help lower high US gasoline prices was declined by the Saudis. Just prior to Bush’s trip, Jon Alterman, director of the Middle East program at the Center for Strategic & International Studies, predicted that the Saudis “will be polite, but they’re not going to really put themselves out to help the president.:”
Of course, the Obama administration is not going to abandon the field and discontinue efforts to lobby OPEC to avoid policies that lead to price spikes and volatility. Eventually, Chu will be up to speed and he, or some designated senior department official, will be the administration’s point-person dealing with OPEC.
However, the next time Chu is asked about OPEC perhaps he can resort to the Bush administration’s once and always default position — “Our view is the market needs to be adequately supplied.” It was boilerplate, but media outlets treated it as real news and the Bush administration skated by. But until the US curbs its profligate oil use, and that appears to be a priority for Chu, its responses to OPEC may be limited to boilerplate.

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