OPEC from myth to reality.

Although September 11, 2001, initially created the world's sympathy for the United States and a sense of international solidarity, the U.S. invasion of Iraq and Bush's foreign policy drastically transformed such perception. (18) The United States is viewed as an arrogant, hypocritical power that has a narrow interest and money driven conduct that uses moral discourse and international mechanisms as tools to accomplish selfish means. The most important consequence of the events of the last five years has been the loss of legitimacy of U.S. leadership and foreign policy, which may signal the decline of the "superpower." September 11 and Hurricane Katrina revealed dramatic internal U.S. weaknesses comparable to the Perestroika revelations in the former Soviet Union. (19) These last years have shown that not everything is perfect and shiny in Fantasy Land.

One of the challenges that lie ahead consists of building hope. Universally accepted values must guide individuals in redesigning many relationships for the sake of mankind's sustainable future. An international organization designed primarily to maintain minimum prices of crude oil in the international markets and which may behave under the traditional role of "holding conferences," "issuing declarations," and "resolutions" is not apt to perform a significant role in shaping a new international framework and economic environment. The many limitations of the U.N. system confirm this theory. Creative efforts are required to design modern organizations that may overcome the narrow mindsets of "sovereign states," improve the international system of checks and balances, and contribute to the well being of populations with only nominal or paper-like representation both at the national and the international levels.

Production, distribution, and marketing of oil and gas resources to satisfy consumer needs could be treated primarily as technical issues to be addressed by experts. Adequate and stable supply of petroleum resources could become a matter of international treaty law that would provide a smooth passage to a new energy era for both producers and consumers. If initially, energy resource issues were dealt with between a western entrepreneur and a monarch, and then shifted to a multinational company-sovereign approach, energy security now demands more than a sovereign-to-sovereign agreement, thus requiring a true global international solution in which an organization like OPEC may lead the way.

Thirty years from now many of the consuming nations may drastically change their energy needs. If so, the day under the sun for oil producing nations will be gone. A new OPEC may be the only forum at which, in addition to country-based issues, global issues are also analyzed and considered. The strategy of consumer nations of diversifying their suppliers may mean that nonOPEC oil exporting countries may profit while the transition is implemented. However, that strategy would again miss the multiple global effects of such approach, while it is still uncertain whether the level of nonOPEC oil reserves may suffice.

In the midst of overwhelming volumes of information, market participants lack adequate data to make objective decisions and subjective factors fuel speculation. (20) A first class multidisciplinary, professional, highly technical, and transformed international organization may provide the answers to many of the challenges that lie ahead.

This paper addresses some of the main challenges and issues to be discussed if OPEC's transformation is desired. The nature and scope of this document is limited and many issues may only be raised. However, the importance of the issues involved justifies a thorough process through which OPEC's reform is launched and discussed.

A potential OPEC-academic effort could be instrumental in creating, from an independent serious research analysis foundation, a process that would enable a profound review of such reform and serve to prepare the draft instruments for consideration by OPEC member countries and the Organization's Conference. One of the advantages of such approach would be to enable some creative formulas that while embedded on profound knowledge of the oil and gas industry, could only come from an academic as opposed to a politically biased and interested environment.

A. Energy Dependency, Foreign Policy, and the U.S. Example

Undoubtedly, oil and gas and energy supply issues are no longer a matter reserved to a few petroleum industry businessmen. Control of limited resources and access to a diverse supply of oil are essential to the United States, China, Europe, and Japan, and therefore, for the rest of the world. (21) Understanding that petroleum and energy policies are now a critical component of foreign policy is particularly important when considering the main issues that should focus the attention of an organization devoted to coordinating the petroleum policies of its members. The United States as the largest oil consumer offers a good example. (22)

For over forty years, access to Persian Gulf oil and the security of oil supply has been "vital" to U.S. national security to the extent that oil dependency has been compared to "the Achilles heel of the most powerful country on Earth." (23) References to an imminent energy crisis abound. (24)

Energy security is also an issue for China, (25) the world's second largest consumer, (26) as well as for Japan (27) and Western Europe. (28) Further, energy security is now a global defense security concern. For example, one of the many issues to be considered when assessing global defense security regards nuclear energy and the promotion of nuclear power generation without creating nuclear waste and enhancing many countries' bomb capabilities.(29)

Profitability of the oil producing countries may no longer be an issue that exclusively interests such nations. The economic growth of countries such as China, Japan, the United States, and Europe depend on a sustained flow of crude oil at stable prices. (30) In order to maintain a minimum level of production for oil supply to meet a stronger demand, producing countries require capital and an incentive to increase their upstream industries. (31) Thus, international dependence prevails not only in terms of producer-consumer relations, but also in terms of capital investment and resource exploitation to meet the needs of many different populations. (32) Therefore, more than ever global dialogue between energy-supplying countries and energy-consuming countries is needed, and has become a basic component of many countries' energy strategies. (33)

The United States role as the "father" of the oil and gas industry, substantive oil producer, and current largest consumer has determined international petroleum transactions. (34) Thus, understanding the most important issues for the world's greatest oil and gas consumer is essential. The world, international relations, U.S. foreign policy and international petroleum transactions were very different in 1960 than now. This is revealed by comparing the State of the Union delivered to Congress by the U.S. President on the year when OPEC was formed and most recently in 2006. (35) The differences are profound and range from a policy of noninterference in the internal affairs of other nation-states to the military invasion of Iraq; from a concern for developing countries to a disregard for poor people wherever they may be found; from restraint of consumption to arm twisting if necessary to satisfy consumption; from peace and the effort to maintain peace to war and being "on the offensive"; from a "Free World" to a world where no one may be truly free. (36)

In 1960, U.S. foreign policy was conceived in terms of the "Soviet Union against the Free World," (37) Alaska and Hawaii had recently joined the American union, (38) and the signature of a treaty for the peaceful and scientific research of Antarctica was viewed as a model multilateral international agreement for cooperation. (39) Concern for a better life for "emerging nations" was considered not only an issue for the United States but also for every other nation who shared its "Free World" values. (40) Eisenhower believed that the "industrial countries [were] ready to participate actively in supplementing the efforts of the developing countries to achieve progress." (41) He also believed in the importance of living within your own means, which required "restraint in expenditure, constant reassessment of priorities and maintenance of stable prices to prevent inflation. (42)

In 2006, when thousands in New Orleans had not yet recovered from the huge damages caused by Hurricane Katrina, and the world noticed that poverty also exists in the United States, the President proudly conveyed the message that the American economy was healthy, vigorous, and growing faster than other industrialized nations, despite being "addicted to oil." (43) He reported on its "war on terrorism" and against radical Islam, as "being on the offensive" in Afghanistan and Iraq (44) and made a pledge to replace more than 75% of U.S. oil imports from the Middle East by 2025. (45) It is very difficult to reconcile this image of America with the Wilsonian approach of the "city upon a hill," opposed to all forms of colonialism and under which "[t]here is only one possible standard by which to determine controversies between the United States and other nations, and that is compounded of these two elements: Our own honor and our obligations to the peace of the world" (46) or to Carter's pledge that "our power will never be used to initiate a threat to the security of any nation or to the rights of any human being." (47)