With economies in complete disarray on a global basis, one of the few bright spots has been the massive correction in oil.  It was widely speculated that oil was in a bubble and that speculation turned into a stark reality with oil dropping below 50% off its July 11^th high of $147.27.  The downward pressure came from the demand side of the equation as receding global economies are using less oil and the short-term forecast continues to point to lower demand.  The past 12 months never saw such a bright light on the stranglehold that oil producing nations have had on the world’s leading nations. This brought much needed discussions on the future of energy and what needs to be put in place to have alternative energy replace fossil fuels long-term.   This helped fuel investment into a struggling alternative energy sector and took this alternative investment into the mainstream.  OPEC has always been viewed as the villain but with record gas prices they became a single source of pain for much of the western world’s angst.  With an almost unlimited source of money, you would think that OPEC would hire a public relations firm to help them with their image.  I am sure that they don’t deem this necessary because OPEC feels as if they are untouchable by holding the one asset that everyone needs.  So what do they do in the worst financial crisis in history?   They cut production to try and raise prices.  Nothing like adding fuel to the economic inferno that is taking place and giving people yet again, another symbol to point their angst.  So, in my opinion OPEC missed one of their greatest P.R. opportunities on record.  What If OPEC came out and said that they understand the economic situation at hand, and that they feel it is their duty as an organization that sells a major input into the global economy to do their part by keeping oil low to help aide the recovery.  By doing this, it would allow OPEC to have something new in their pocket the next time they cut production to raise prices, a little bit of moral high ground.   It would allow them to frame themselves as a responsible member of the global community, and one that is fair and just.  Do I believe that they are fair and just?  Absolutely not, their vilification is justified and they should have been broken up years ago when oil purchasing choices were more available.  However, that is the perfect example of what good public relations is, turning a self serving organization like OPEC into a humanitarian organization.  Public image may not seem so important to OPEC while they are in control, but if they continue to nudge the sleeping giant they might not like what happens when he wakes up!

Copyright: Dominic Mazzone, Regent Global Funds 2008

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