At OPEC's Second Summit on September 27-28, member nations blamed high oil prices on taxes, middlemen and bottlenecks, in that order. What they did not say was that changes within OPEC itself also have much to do with the price increases. As in the past, the militant Moslem nations -- Iran, Iraq and Lybia - which favor keeping production down and prices higher, are pitted against the pro-U.S. Saudi Arabia. Venezuela represents the big change. When President Hugo Chávez took office in February 1999, Venezuela went from being OPEC's most notorious violator of the organization's assigned quotas to its most disciplined member, after which other oil exporters followed suit.

Chávez's activist role has thrust Venezuela into a leadership position in OPEC. His initiative in calling for the summit, his promotion of the "band system" in which prices are allowed to oscillate between $22 and $28, and his insistence on including the problem of the foreign debt in the meeting's closing document have helped convert him into a third-world paladin. The Parisian daily, Le Monde, wrote that the Venezuelan leader has passed from being an advocate of "a peaceful revolution against his nation's oligarchy and corrupt political class to the main spokesman for an offensive - this time at the planetary level -- against savage globalization."

The summit held in Caracas, unlike OPEC's regular meetings which deal exclusively with oil prices, was designed to answer charges against the organization and shore up its image. Since early 1999, average oil prices have increased from $10 to $30 a barrel, laying the organization open to charges of manipulating the market.

Other ingredients in the world-wide oil crisis are also relatively new. The three previous oil shocks of 1973-74, 1979-81 and 1990-91 were about armed conflict and religious and nationalistic fanaticism: the Yom Kippur War, the Islamic revolution in Iran, and the Persian Gulf War. In contrast, the sharp increases in oil prices over the last year and a half reflect the inherent instability of the global economy. OPEC's effort to achieve stable prices can thus be seen as a response to global capitalism's disruptive tendencies.

OPEC's founding document in 1960 called for stable prices as a corrective to a depressed market, but now the organization recognizes that this objective can work two ways. It can mean driving prices up or down by increasing or decreasing production. OPEC president Alí Rodríguez of Venezuela pointed out that the organization "has matured enough to avoid past errors when prices were allowed to skyrocket and then plunged."

In an effort to enlist international cooperation for the goal of stable prices, OPEC members drafted the "Declaration of Caracas," which calls for "channels of communication between oil producing and consuming nations to achieve market stability." The declaration also urges "developed nations to recognize that the greatest environmental tragedy confronting the world is human poverty."

In order to make the proposed dialogue a reality, OPEC nations will be meeting with oil importing ones in Saudi Arabia on November 17-19. Venezuela's Vice-Chancellor Jorge Valero told In These Times that unlike previous meetings of its kind this one will involve people with decision-making power. "In the past, the developed countries sent technicians and the ministers stayed home."

These concrete efforts enhance OPEC's credibility and make the term "just price" seem more than a hypocritical, face-saving slogan. Speaking at the summit, Chávez attempted to mock the notion that crude oil prices are currently exorbitant. Amidst the laughter of several otherwise stoical looking Iranian delegates, Chávez pointed out that a barrel of Coca Cola was 303% more than that of oil, and he then went on to read off the prices of a barrel of suntan lotion, shampoo, high-quality wine and other commodities. Chávez questioned the decision of the Clinton governent to sell oil reserves, created to protect U.S. strategic interests, in order to force prices down. Chávez, an army officer who likes to draw parallels between military and political strategy, remarked "In the science of war, you use reserves only in extreme circumstances."

Turning to Europe, Chávez provided statistics showing that taxes throughout the continent (which are considerably higher than in the U.S.) contribute more to prices at the gas pump than crude oil. England, where taxes account for 80 percent of the price of gasoline, tops the list.

Amazingly, OPEC's argument is widely accepted in Europe, as militant protests against fuel prices throughout the continent were directed mainly at respective governments. This reaction represents a far cry from general sentiment in the 1970s when angry demonstrators burnt posters of Arab sheiks. That OPEC production has declined from over 50% of the world's output to less than 40% makes it less vulnerable to accusations of constituting a monopolistic "cartel." Nigerian delegate Emmanuel Diya pointed out that "in effect, OPEC is telling the developing countries 'look, we are willing to cooperate in reducing prices, but we expect you to reduce taxes.'"

OPEC spokesmen at the summit also targeted middlemen who sign contracts for sales in the future, a practice which also drives prices up. These traders make money off fears - both well founded and unfounded -- of future shortages. According to Venezuelan oil expert Mazhar Al Shereidah, the psychological factor related to the market, which these traders exploit, adds about $6 on to each barrel. OPEC spokesmen denied that oil exporting nations are undersupplying the market, and instead attributed shortages to bottlenecks between points of production and consumption. No new refineries, for instance, have been built in the U.S. in the last twenty years, and those in existence now operate at 98% capacity. The minimization of inventories in order not to tie capital up also produces occasional bottlenecks. Such "rationalization" (known in the industry as KILL - "keep inventories low and lean") is a byproduct of recent mergers of such giants as Exxon and Mobile, as well as British Petroleum and Amoco.

Chávez's adversaries at home argue that the Second Summit was a mere repetition of the first one held in 1975, and that the organization has not advanced at all in twenty-five years. Thus they claim that Chávez's proposal to establish an OPEC bank as a substitute to the IMF for poorer nations is a mere embellishment of the "OPEC Fund," created at the First Summit. If none of the proposals of the "Declaration of Caracas" come to fruition and oil prices continue to fluctuate widely, Chávez may want to apply to OPEC what he announced on his return from the UN's Millenium Summit in New York in September. On that occasion he swore he would not attend another UN meeting if nothing came of the ambitious proposals to eradicate extreme poverty that the conference had just agreed upon.

Nevertheless, that the Second Summit takes OPEC to where it was in 1975 is not entirely negative. It was that meeting which got the "North-South" dialogue off the ground. At the time OPEC was a trailblazer, as third-world exporters of other raw materials and agricultural commodities emulated the oil exporting organization. In the 1980s, however, with U.S. political and economic supremacy no longer in dispute, the third-world movement petered out. If the movement is now revitalized, it will have the advantage of not being caught in the Cold War crossfire of two superpowers. It will also be in a position to link up to the popular campaign to check globalization's inhumane and disruptive features. Thus the implications of what Chávez calls the "relaunching of OPEC," goes far beyond oil prices, and is of vital significance for developed and developing nations alike.

Steve Ellner has published extensively on Latin American politics. He is a frequent contributor to "In These Times."

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