Depending on oil from nations in the oil cartel OPEC is costing Americans hundreds of billions of dollars every year, according to a new report that claims domestic consumers paid a $335 billion premium for OPEC oil in 2011.
“The average price of a barrel of oil in 2011 was a bit over $90.46. Taking the IEA’s break even cost of $40 a barrel as likely profitable for all producers, then one can impute a $50 a barrel transfer payment, which is about a third of a trillion dollars since the U.S. consumed a little less than seven billion barrels,” reads a report by the group Securing America’s Future Energy, which aims to reduce America’s dependence on foreign oil.
“If we presume oil could have been $40 a barrel, rather than $90, then the $50 premium was paid. Consumption in the U.S. averaged 18.4 million barrels a day or 6.7 billion barrels in 2011, then the premium paid was $335 billion,” the report continues.
The report notes that OPEC’s activities cost U.S. households $115 billion in 2007 alone, and were estimated to have cost Americans more than $500 billion in 2008 due to higher gasoline prices.
“At times, this means a transfer of wealth from oil consuming nations to oil-producing nations totaling hundreds of billions of dollars more than what the competitive-market price of oil would suggest,” Securing America’s Future Energy claims in the document. “That is, the international market for oil is not a free market.”