WASHINGTON -- U.S. Energy Secretary Sam Bodman says oil costs are still high and world petroleum demand remains strong, despite OPEC's decision to cut its oil production in an effort to curb the steep drop in crude prices.
The Organization of Petroleum Exporting Countries agreed to lower its oil output by 1.2 million barrels a day beginning on Nov. 1, its first cut in more than two years, in response to crude prices falling about 25 percent since mid July.
"Despite the recent downturn in crude oil prices, they remain at historically high levels, clearly indicating a global demand for petroleum products," Bodman said in a statement on the OPEC output cut.
Bodman reiterated the Bush administration's position that the free market should determine oil supply, demand and price levels. "As past experience has shown, market intervention is not beneficial for (oil) producing or consuming nations," he said.
He pointed out that OPEC's production cut comes at a time that U.S. gasoline prices are falling and crude inventories are high. The federal Energy Information Administration reported that U.S. weekly oil stocks at 336 million barrels are about 42 million barrels above the five-year average for this time of year.
Still, Bodman said the United States must reduce its dependence on foreign oil and the Bush administration will push for the development of alternative energy sources such as cheaper-made ethanol and hydrogen.
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