OPEC declared yesterday that crude prices were too low and that they were going to cut production to ensure that their various despotic leaders could continue to exercise their favorite hobbies of driving Bentley’s and oppressing their citizens. Their flawed logic maintains that cutting production would drive up prices and produce more revenue - this despite the fact that prices have fallen in large part due to increasing inventories driven up by a decline in consumption as folks drive less and global economies start to slow down. Pushing crude prices up will only exacerbate their demand side problem.

Setting that aside, most analysts don’t believe it the cuts will ever materialize given the fact that the largest players we’re talking about here include countries like Venezuela and Iran. OPEC has become less a cartel and more a group of clowns sitting around playing liars poker, each trying to convince the others that they are cutting all the production they can and that everyone else needs to take a larger share of the cuts.

The Saudis are the only ones showing real business acumen. They have declared that they are not going along with what would have been an otherwise unanimous decision. In announcing that Saudi Arabia will meet the market's demand. We will see what the market requires and we will not leave a customer without oil, the Saudi’s not only look like the good guys, they are also helping to limit damage to global economies and ensuring that our heroin-like addiction continues - they’re the street corner pusher with the heart of gold. They’re showing that they are clearly the brains behind the operation.

The markets are clearly unimpressed with the Saudi-less OPEC bluster, as crude is trading lower this morning and nearing the $100/bbl mark.

For the socially backward and politically aggressive third world countries that make up the bulk of OPEC membership, declining revenues equal social unrest and a threat to their leaders’ continued existence. These guys can’t afford a decline in cash flow. While siphoning off huge amounts of cash to fill bank accounts in Geneva, these leaders are spending beyond their meaning on military equipment that their undereducated armed forces can’t even maintain, while doling out just enough money to keep their citizens complacent despite the economic disasters brought on by failed socialist economic policies. It’s clearly quite possible that Hugo Chavez may ultimately find that for him, crude oil really is the devil’s excrement.