OPEC expected to boost output, but not enough to cool sizzling prices

LONDON - Americans fret about the cost of heating their homes. French truckers blockade roads to protest high gasoline prices. Asians debate how to fight inflation stoked by costlier oil.

Consumers worldwide are angry about high energy prices and fearful of worse to come.

Still, ministers from the 11-member Organization of the Petroleum Exporting Countries aren't expected to provide much comfort at a meeting Sunday to consider whether to produce more.

Analysts predict OPEC will agree to raise its official output by no more than 800,000 barrels a day - just 3 percent of each member's production quota.

They say such an increase would do little if anything to rein in oil prices, which have more than tripled in the past 20 months and have continued rising this week to new post-Gulf War highs.

''There's no comfort factor anywhere,'' said John Toalster, an independent energy consultant in London. ''It's a severe situation, no doubt about it.''

Since OPEC slashed output in March of last year, oil prices have surged to levels that threaten to derail the locomotive of global economic growth - the United States - and snuff out fragile recoveries in Asia and Latin America.

Crude prices that languished at less than $11 a barrel in December 1998 bounced above $34 a barrel this week on commodity exchanges in New York and London.

As a result, developing countries are finding that higher bills for imported oil are eating into resources for social programs and investment. Citizens of wealthier nations are feeling the pinch too, in the form of pricier visits to the gas station and soaring prices for heating oil.

OPEC secretary general Rilwanu Lukman suggested Thursday that the group's members will agree in Vienna to increase their production of crude.

''If we're satisfied the market needs more crude oil, we will put more in if we are in a position to - and we probably will,'' he told the British Broadcasting Corp.

OPEC, which pumps a third of the world's oil, has an official daily output of 25.4 million barrels excluding Iraq, which exports its crude under a special U.N.-monitored program.

However, the cartel's members are now producing 674,000 barrels a day above their quotas, said Leo Drollas, chief economist at the Center for Global Energy Studies in London.

Drollas said an increase of 500,000 barrels a day was ''in the cards'' in Vienna, but he warned it would only serve to legitimize the bulk of OPEC's current overproduction and would do nothing to cool prices.

Markets need between 800,000 and 1 million additional barrels each day for prices to ease below $30 a barrel, he said.

An increase of this size could only come from Saudi Arabia, the No. 1 producer in OPEC and the world. Except for perhaps Kuwait and the United Arab Emirates, no other OPEC member has the spare capacity.

Saudi Crown Prince Abdullah told President Clinton in New York on Wednesday that his country was committed to pushing prices down to around $25 a barrel. He said OPEC would raise output by around 700,000 barrels a day, according to a source familiar with the talks.

Saudi Arabia and its OPEC partners recognize that high prices can backfire on them in the long run. If prices stay high, importers will seek out cheaper substitutes for oil, and non-OPEC producers will find it profitable again to pump from high-cost wells. Given the brittle balance of supply and demand, a glut of oil could send prices crashing.

That seem a distant possibility for now. In France this week, irate truckers blockaded fuel depots. Officials from 21 Pacific Rim countries met Thursday in Brunei to discuss ways of coping with the rise in oil prices.

OPEC has tried to deflect criticism for steep energy prices by pointing out that many rich countries charge heavy taxes on gasoline.

In addition, U.S. heating oil is expensive and supplies are tight because many refineries are holding off from buying enough oil to meet the expected demand this winter.


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