(March 27) – “Not since OPEC members met in 1991 in the wake of Iraq’s destruction of Kuwait’s oil fields has a gathering of the world’s oil cartel — in Vienna in March — attracted the world’s interest,” writes Peter Cook in today’s Globe and Mail.

“That will, of course, change today. OPEC (the Organization of Petroleum Exporting Countries) is again being called on to save the Western world from its oil dependence and the incipient inflation that goes with it — a situation that has arisen because the oil glut that a grateful Saudi Arabia engineered after Saddam Hussein was thrown out of Kuwait has been gobbled up.

“Plainly, relief will be offered at today’s meeting because overpriced oil is not in OPEC’s best interest either. But the devil will be in the details. How much will production rise? Who will be entrusted to raise it? And when will it happen? Higher oil prices do not hold the rest of the world ransom as they once did. The use of oil is down. And, as Federal Reserve Board chairman Alan Greenspan has pointed out, it is mildly helpful that U.S. consumers are having to spend more on oil because that acts as a drag on growth. Take a look at the supercharged spending and borrowing done by U.S. consumers and it is pretty hard to see moderation. But if the extra $50-billion (U.S.) Americans are paying for foreign oil, compared with one year ago, were available to them on their regular visits to the shopping mall, things would be even more immoderate.

“The same is true in Europe, where oil is made more expensive because it is priced in U.S. dollars. Subtract the extra that is being paid to OPEC and you would have a faster growing European economy. The same also in Japan and Canada, Southeast Asia and Latin America. All of which should tell us something about the future behaviour of the global economy, and perhaps even of global stock markets.

“Beyond its own surprising resurrection, what OPEC has demonstrated in recent months is that the threat of demand-led inflation is with us and continues to dictate what central banks do. Interest rates are rising almost everywhere in the oil-consuming world and could rise faster if, in Vienna today, the restraint of higher oil prices is eased leaving rich-world consumers feeling richer.

“Other factors are also at work. Recent budgets in Ottawa and London have come up with tax cuts. The same is promised in Paris and Berlin. And, in the race to be the next president of the United States, the swing factor appears to be a candidate’s declared willingness to spend or give away more of Washington’s tax revenue than the other.