In a letter to U.S. Trade Representative Charlene Barshefsky, Grassley reversed his support for Saudi Arabia's entrance saying they and the OPEC cartel have created a "stranglehold on the U.S. economy," which violates the free market principles of the WTO.
"In the past month, Iowa gasoline prices have taken their biggest jump in ten years," Grassley said. "OPEC has created a harsh duty that is applied to every bushel of corn, soybeans or any other agricultural products produced in the United States. I cannot support Saudi Arabia's admission to the WTO until it reverses its policy in support of unjustified and damaging fuel price hikes."
Iowans are now paying $1.38 on average per gallon for their gas, an increase of 17 cents from last month and 48 cents higher than February a year ago. Diesel prices in Iowa are averaging $1.45, which is 12 cents more than last month and 43 cents higher than a year ago.
OPEC members supply more than 40 percent of the world's oil and possess 77 percent of the world's total proven crude oil reserves. Members include Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela and Iraq.
Fuel prices began rising last March when OPEC agreed to cut oil output to eliminate a worldwide oversupply. Although all of OPEC's members must decide to restrict production, the smaller producing countries usually follow the lead of the larger producers such as Saudi Arabia, according to Grassley.
The United States and Saudi Arabia are currently engaged in fairly intensive negotiations concerning trade as Saudi Arabia tries to gain WTO membership. Progress has been made on Saudi accession, but it's not yet in the final stages.
The hopeful news is that representatives of Mexico, Saudi Arabia and Venezuela have hinted they would like to increase production, which would lower prices. They are due to meet next week, ahead of an OPEC conference in Vienna called to discuss any renewal of the current production quotas.
But even if Saudi Arabia and the rest of the OPEC cartel agree next month to boost output, gasoline inventories in the U.S. will remain low for a few weeks.
"It seems to me that Saudi Arabia wants to have its cake and eat it too," Grassley said. "Their decision to steer the bandwagon and force through higher oil prices comes at the same time they want to join the World Trade Organization. Why would they risk membership by trying to squeeze consumers worldwide?"
In the past week, Grassley has spoken out against the unfair production quotas in letters to the Washington representatives of OPEC members. And he has urged a sharp rebuke against OPEC from President Clinton and the International Monetary Fund. Grassley also called on Energy Secretary Richardson to support tapping the Strategic Petroleum Reserves for U.S. consumers.
Grassley is chairman of the Senate International Trade Subcommittee.