Energy Secretary John Herrington is leaving office firm in his conviction that the Organization of Petroleum Exporting Countries is doomed.
"In the long run, the OPEC cartel cannot survive," Herrington said in a recent interview marking the end of his nearly four-year tenure. "Cartels do not work. They have never worked in history."Several of OPEC's larger members have new incentives to produce oil, rather than comply with last month's decision by the cartel to limit production to 18.5 million barrels a day.
Herrington cited the following examples:
-Venezuela has a major stake in the Citgo chain of service stations and despite previous support of OPEC, the South American nation's "future is here, not with OPEC."
-Saudi Arabia is buying service stations and a refinery from Texaco, "and that's a major change."
-"We've got two countries who have been at war for eight years (Iran and Iraq) with 40 billion to 50 billion dollars in war debt, and a reconstruction budget that is going to be horrendous, with one thing to sell - oil."
Herrington contends that ownership of U.S. distribution facilities by overseas producers should be welcomed because of the incentives it gives producers to bring oil to market.
"It's good for the United States and it's good for Saudi Arabia. No. 1, it's a guaranteed market for Saudi Arabia and No. 2, it's a guaranteed supply for us," Herrington said.