All of this makes sense, but what is often overlooked in the analysis of oil prices is that the members of OPEC have the ability by simply cutting their supplies by a modest quantity to stabilize the prices at significantly higher levels. Once oil prices started to slide, OPEC could easily have cut supply and abruptly ended that downward movement. The eleven member group, which supplies about 40 percent of the world’s crude, has sufficient market power to do that.

A supply reduction would have been in the best interest of the OPEC members. Indeed, some of them, including Venezuela, Algeria and Nigeria, argued for such reduction and have proceeded to voluntarily cut their own supplies even in the absence of an OPEC agreement.

Thus far, what has prevented OPEC from reaching a consensus on supply reductions is that the government of Saudi Arabia, far and away the largest producer, and the lynchpin of any OPEC decision, has declined to join the calls for a reduced production. On its face, this Saudi action appears to be inconsistent with the desert kingdom’s economic self interest. That conclusion is shortsighted. Greater long term Saudi interests have been served by the failure to join in production cuts. The Saudi government is well aware that a critical election will take place in the United States early in November which will determine whether the Bush administration maintains control of Congress and hence its ability to govern in its preferred manner; or whether the Democrats will take control of at least one house of Congress, thereby crippling the administration’s programs.

There is no question that the Saudis view themselves as better served by having President Bush retain control of Congress. While pursuing what are our nation’s own interests in Iraq and elsewhere in the Middle East, the Bush administration has made it clear that they will do what it takes to avoid having Sunni regimes that control oil rich nations such as Saudi Arabia overthrown by the Shiite tide sweeping westward from Iran. Should the Republicans lose control of Congress, the administration would be hampered in pursuing these Middle Eastern objectives.

Thus, one can speculate that the Saudis have withheld support for reduced production in order to provide a benefit to the Bush administration. This result is being achieved. American people are paying less for gasoline, and they are feeling better about their economic situation. Whether this will translate into votes in November, and if so how many, remains to be seen. However, it is a factor.

There is now some doubt whether the Saudis will continue with their approach of opposing production cuts for the three weeks until the election. Two offsetting factors are that the price slide has been steeper than oil producers had anticipated, and second, pressure is mounting on the Saudis by other members of OPEC to agree to some cuts. As a result of this pressure, OPEC has schedule a meeting for October 19 in Doha. It is likely that the Saudis at this meeting will go along with some modest cuts in production which will push the price of crude higher. However impact will not be felt at the pumps in the United States until after the election.

It is an absurd situation to have the world’s most powerful nation operate at the whim of Middle East despots. We have no one to blame but ourselves. The only solution is to avoid American dependence on foreign oil. The technology is there. The will is not.