Indonesia Drops Out Of OPEC

Sole Southeast Asian Member Of Oil Cartel Can't Afford Membership, Exports Too Low

(CBS/AP)  Indonesia is leaving the Organization of Petroleum Exporting Countries because declining production and investment have made it difficult to meet even its own needs, the energy minister said Wednesday.

Purnomo Yusgiantoro told reporters it no longer made sense for Indonesia, the only Southeast Asian member of OPEC, to stay in the cartel.

"Even though we are sometimes a net importer and sometimes a net exporter, we are a consuming country," he said. "Indonesia is pulling out of OPEC."

Indonesia is the region's largest oil producer, but the nation of 235 million people has had to import for years because of aging wells and disappointing exploration efforts. A weak legal system and red tape has scared foreign investors away, even as domestic consumption rises.

Purnomo said the decision to leave OPEC was made by the Cabinet of President Susilo Bambang Yudhoyono, which is being forced to slash fuel subsidies due to soaring global prices. In the last few days, consumers have seen prices at the pump jump by around 30 percent.

"We are not happy with the high oil price," he said.

Meanwhile, oil prices dropped below $127 a barrel Wednesday, extending a decline of more than $3 in the previous session on a growing sense that soaring prices have cut demand for gasoline and other fuel.

Late afternoon in Singapore, light, sweet crude for July delivery was down $1.93 at $126.92 a barrel in electronic trade on the New York Mercantile Exchange. The contract fell $3.34 to settle at $128.85 a barrel Tuesday, the first day of trade after the Memorial Day holiday.

Indonesia's move means the country will loose its vote at OPEC, a 13-member body that has used its vast production capacity to influence global oil prices during times of crisis. The government could rejoin if it is able to boost exports in the future, Purnomo said.

Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said it will save Jakarta the $3.1 million annual membership fee, but cost it some prestige on the international scene.

"I don't see any substantive loss, other than on the prestige," he said. "They have been an oil importer ... they really have not had much influence within the OPEC organization."

Last month, Yudhoyono said his nation needed to concentrate on increasing domestic production, which has dropped to less than 1 million barrels a day from just over 1.5 million barrels a day in the mid-1990s.

Indonesia, which heavily subsidizes oil to protect the poor, has been faced with a budget crisis with global oil prices now hovering at around $130 a barrel.

It began reducing fuel subsidies in 2000, but still spends billions of dollars to help consumers cover the costs of gasoline, diesel and kerosene, which is used by low-income families for cooking.

Purnomo said the government's long-term policy is to eliminate subsidies altogether because they undermine market forces and encourage smuggling to other countries. He said another hike was not expected this year, however.

Last week's increase triggered small but rowdy protests by students and workers, but was hailed by economists who said Yudhoyono had taken the biggest step he could without threatening economic growth.

Others argued that with the government still subsidizing 57 percent of retail transport and cooking fuels, it did not go far enough.

OPEC was formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Indonesia joined in 1962.

[forthepeopl1]

Former White House Press Secretary Scott McClellan writes in a new memoir that President Bush relied on an aggressive "political propaganda campaign" instead of the truth to sell the Iraq war, it has been reported.

The Bush White House made "a decision to turn away from candor and honesty when those qualities were most needed" - a time when the nation was on the brink of war, McClellan writes in the book entitled "What Happened: Inside the Bush White House and Washington''''''''''''''''s Culture of Deception."

The way Mr. Bush managed the Iraq issue "almost guaranteed that the use of force would become the only feasible option," the book contends, according to accounts Wednesday in The New York Times and Washington Post.

"In the permanent campaign era, it was all about manipulating sources of public opinion to the president''''''''''''''''s advantage," McClellan writes.

White House aides seemed stunned by the scathing tone of the book, and Bush press secretary Dana Perino issued a statement that was highly critical of their former colleague.

"Scott, we now know, is disgruntled about his experience at the White House," she said. "For those of us who fully supported him, before, during and after he was press secretary, we are puzzled. It is sad - this is not the Scott we knew." its call, under cover to make millions on you all, all the while laughing at all you suckers, dana

Perino said . the president said oh well, the truth hurts for a second, see all better now.

[quija55-2009]

it just makes the rich richer and the poor poorer.everthing goes up but the cash to spend it on.know wonder people are kill and stealing. big buck grov.and oil companies. should spend their money.
Start Pumpin oil out off our well and keep it in our country.

[Keypinitreel1]

Break up the Oil Cartel.... The dollar competes with Euros..let some Opec countries compete for Dollars and Euros