Return to Transcripts main page

CNN Live Sunday

Will OPEC's Production Leveling Affect Summer Travel?

Aired July 03, 2001 - 17:32   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
STEPHEN FRAZIER, CNN ANCHOR: You will also see some savings at the gasoline pump, just in time for the Fourth of July holiday. AAA estimates nearly 32 million people will take to the roads this Fourth, and they will be able to fill up their vehicles for a lot less than they might have just last month.

AAA says the average price for a gallon of regular unleaded gas is $1.52, down 20 cents from one month ago.

This comes as OPEC prepares to meet this week in Vienna to discuss production levels, and for more on how OPEC's decision could affect your summer travel, we are joined now by Peter Coy, associate economic editor at "Business Week." He joins us from New York.

Mr. Coy, thanks for coming in today.

PETER COY, "BUSINESS WEEK": Sure, glad to be with you.

FRAZIER: We have been talking now for months about the fact that the difficulties at the pump and the price increases were not due to OPEC, but refining flows and other issues here in this country.

COY: Right, and that's exactly what turned out to be the case because back when the oil -- gasoline prices were really high, there was plenty of crude around, but it was just that the refineries couldn't meet the demand. But they've had more time, now, they had a few months to catch up and at this point, the inventories of gasoline are above normal. That's why prices have come down so much.

FRAZIER: So, then does mean that OPEC is less important than it once was?

COY: OPEC is still crucial, and we could find out in the months ahead that OPEC will reassert power. They may decide at the meeting Tuesday to keep oil supply oil production right about where it is, and in spite of calls from the United States and other countries for them to boost production and over time, that could result in oil prices and gasoline prices going back up. It's hard to say.

FRAZIER: It's been interesting, they have made overtures to non- OPEC oil-producing countries to join them at this conference. This time around, Norway is planning to do that.

COY: Yes, I mean, the more that OPEC can bring in, the more countries, the more strength it has, and right now, OPEC has about 40 percent of world oil production. If they could get that up to 50 percent or more, they would really have a strangle-hold on world oil supply.

FRAZIER: Where would they like prices to be compared to where there are now in terms of their sale price of, I guess they call it crude?

COY: Right, their basket of prices right now, according to them, is a little over $24. They have said that a band between $22 and $28 a barrel is acceptable to them. It's come down from the high end of the range now down toward the lower end of the range. But because it's in that range, they don't plan to make any change in production now.

FRAZIER: Would you say that politically, OPEC is holding together? They had some renegade members, didn't they. who would just pump whatever they needed to get their revenue up?

COY: Right. So far, they've shown a surprising amount of cohesion, and we'll see how long that continues, you know. As prices dip toward the lower end of range, you could see more dissent. On the other hand, when they get to the high of the range, you can also see people breaking away. This seems to be a range where except for renegade Iraq, of course, it's hard to know what's going to happen. Probably not a lot at this meeting Tuesday.

FRAZIER: Well, that's reassuring news then, because we began introducing you with a comment about what OPEC would mean for people who are hitting the road this summer. It sounds like whatever happens now will be too far back in the pipeline, if you'll excuse a pun, to affect us this summer.

COY: I guess so. I would guess that gasoline prices, if anything, could come down further in the weeks ahead a little bit.

FRAZIER: Do you see anything else on the horizon, any other of these refining are issues that could affect things in a big way?

COY: Well, there's always a chance of a big explosion at a refinery. We had some of those last spring that really caused a crisis in the markets, but because gasoline are now -- the supplies in the tanks you see along the highways are above normal, it's a good sign that it would take a series of crisis, a whole set of bad events at once to cause a real crisis of supply of gasoline.

FRAZIER: We'll pray for a quiet summer. Peter Coy from "Business Week," thank you for joining us. Good to see you again.

COY: Yes, good to see you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com