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Cato Daily Dispatch for December 6, 2004

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

OPEC Poised for Record Revenues This Year

"Strong oil prices and high output will push this year's oil revenues for the Organization of Petroleum Exporting Countries to their highest level ever in nominal terms," the Financial Times reports.

"The 20 percent surge in oil income since last year is the result of record prices and the highest output level in a quarter of a century. Industry analysts and officials forecast OPEC's 2004 oil revenues will be about $300 billion, roughly double the annual average revenues throughout most of the 1980s and 1990s. The cartel has increased production to more than 30 million barrels a day to meet the steepest increase in annual demand in 28 years."

In "OPEC Is No Friend of Ours," Jerry Taylor, Cato's director of natural resource studies, writes: "OPEC apologists contend that the cartel assists in stabilizing oil prices. The record, however, suggests otherwise.

"... If OPEC disappeared tomorrow, oil prices would drop to somewhere around $8 a barrel and gasoline prices would almost certainly be south of $1 a gallon. A price collapse of that magnitude would do more for consumer welfare and the overall health of the American economy than almost anything that's been put on the table by President Bush or his Democratic Party rivals. Accordingly, the OPEC cartel should be resisted, not embraced, and policy should aim at undermining it, not propping it up."

NASA to Get $16 Billion Budget

"Without a separate vote or even a debate, House Majority Leader Tom DeLay (R-Tex.) has managed to deliver to a delighted NASA enough money to forge ahead on a plan that would reshape U.S. space policy for decades to come," the Washington Post reports.

"President Bush's 'Vision for Space Exploration,' which would send humans to the moon and eventually to Mars, got a skeptical reception in January and was left for dead in midsummer, but it made a stunning last-minute comeback when DeLay delivered NASA's full $16.2 billion budget request as part of the omnibus $388 billion spending bill passed Nov. 20."

Space: The Free Market Frontier, edited by Cato Adjunct Scholar Edward Hudgins, includes essays by several leading experts, including astronaut Buzz Aldrin, who detail how the United States can move from the federally run, inefficient, and inaccessible space program to a free-market system.

"To move from the current situation of limited access to space and to truly make space a place for humans to work and play and live, it is useful to consider how we arrived at the current situation, what signs hold the promise of a commercial market future, and what policy changes might make space the next commercial market frontier," writes Hudgins. "The obvious way to open space to all is for NASA to back out of civilian space activities and let the private sector do what it does so well in other areas of the economy: reduce costs and develop new, innovative products and services."

North Korea Converted Nuclear Material into Bombs

"Nearly two years after international nuclear inspectors were ejected from North Korea, the director general of the International Atomic Energy Agency says he is now certain that the nuclear material his agency once monitored there has been converted into fuel for four to six nuclear bombs," the New York Times reports.

"The assessment by the energy agency's chief, Mohamed El Baradei, in an interview in Vienna at its headquarters, aligns with the private assessments of many American intelligence officials. But it goes well beyond anything that the Central Intelligence Agency or President Bush and his aides have said in public. Some Bush administration officials have said they are not eager to update their public assessment of North Korea's abilities, out of a concern that it could create pressure for action - either greater efforts to force the collapse of the North Korean government, or greater concessions in negotiations, as North Korea has demanded."

The best strategy for the United States in response to North Korea is to reduce the U.S. military presence in South Korea and Japan and to give those countries the green light to begin developing nuclear weapons, according to Cato vice president for defense and foreign policy studies Ted Galen Carpenter in "Options for Dealing with North Korea."

"Since North Korea is already one of the most economically isolated countries in the world," he writes, "sanctions are unlikely to dissuade Pyongyang from pursuing a nuclear weapons program."

Jonathan Block, editor, jblock@cato.org