THIS past weekend's failure by members of the Organization of Petroleum Exporting Countries (OPEC) to reach a comprehensive agreement on oil production and prices should not lead to complacency -- or smugness -- on the part of the Western community. Most experts are basically in agreement that today's energy equation -- ample surpluses and falling prices -- will not last into the next decade. Why is that? A variety of reasons. But chiefly, because oil production by non-OPEC producers is expected to decline during the 1990s, while energy demand is once again expected to grow, as many countries, particularly industrially developing third-world nations, expand their economies. And most world oil reserves continue to be found in the Middle East and among members of OPEC.
In that regard, then, the current disarray within OPEC needs to be kept in measured perspective. The importance of falling world oil prices, certainly, is not to be dismissed out of hand. Low, or declining, oil prices help hold down the rate of inflation within industrial nations. And low oil (and energy) prices are helping to shore up the financial posture of many energy-consuming companies that have come upon shaky times during the current period of tepid world economic growth.
OPEC ministers will meet again July 22 at Geneva to attempt to work out a formal production and pricing agreement. Whether they will succeed in preventing future price declines seems problematic at this point, given the world energy surpluses. But even as the Western community enjoys the current price/supply situation, nations should be thinking in terms of the long outlook. That means:
There should be renewed efforts within the Western nations and Japan aimed at ensuring energy conservation. That is particularly evident during summer months, when so much gasoline is used.
There should be continuing selective tax policies designed to encourage development of alternative energy sources.
In the United States, it is important to move ahead with completion of the Strategic Petroleum Reserve. Not to do so, to leave the reserve only partly finished, seems unwise in light of Iran's efforts to persuade other OPEC producers to make deep cuts in production.
Meantime, it would also seem in the best interests of the world community that OPEC reach an accord on production and pricing that shored up prices just enough to prevent any type of free fall in pricing. Any sharp drop in prices, after all, would be counterproductive for Western nations, no matter how much they may think they enjoy seeing OPEC ``humbled.'' OPEC nations have large investments within the Western community. They buy Western goods and services. As much as some Western nations may personally harbor harsh feelings about OPEC, the bottom line is that in a global economy as tightly interlinked as today's economy, all nations share a responsibility in ensuring world economic stability.