Gas Prices Will Stay at Current Level

OPEC president Chakib Khelil publicly announced the decision to cut back oil production based on the price drop from $147 to $102 per barrel. Usually cutbacks are more discreet, with this announcement quite the surprise. Also a surprise was that Russia sent Igor Sechin, a senior and influential deputy prime minister to OPEC's Wednesday meeting. There is only speculation as to the reason Russia sent such a senior official to this meeting, with the tension between the West and Russia over the Georgia invasion as the probable motivation.  Most oil-producing countries are happy with the current price per barrel, held steady by OPEC's production ceiling quotas, yet Saudi Arabia has been producing 750,000 bpd above its given quota, which leads the other countries to believe that Saudi Arabia is content with $90 to $100 price range. Meanwhile, Libya, Venezuela and Algeria are worried that this overproduction will cause an oversupply.

The Pentagon has proposed a $9 billion sale of air defense systems and helicopters to the United Arab Emirates, which includes a Terminal High Altitude Area Defense missile and radar system. It is expected that Congress will approve the deal within 30 days. While this deal between US companies (Raytheon, Lockheed Martin, etc.) and the UAE has been several years in the making, in recent years, the UAE has acquired several advanced weapons systems from several countries.

Though the AP did not join these two stories together, a connection between the two is glaringly obvious. Gas prices - and food prices as a result - will stay at the current level, and enforced by the military might of oil producing countries. The squeeze will never ease.