From: Mike Lorrey (mlorrey@yahoo.com)
Date: Sat Apr 19 2003 - 21:28:32 MDT
--- "Robert J. Bradbury" <bradbury@aeiveos.com> wrote:
>
> On Fri, 18 Apr 2003 Dehede011@aol.com wrote:
>
> > They let slip that they predict that if the sanctions are
> > lifted it will cost middle eastern countries one trillion dollars
> in oil
> > revenues over the next few years.
>
> Ron, I'm not sure I buy this. Is this an assertion of what will
> actually happen, what the papers are "selling" to people, or
> conclusions that people have reached independently?
It is the conclusion of OPEC that, agreeing with my own predictions,
oil prices will plummet in the face of a freely producing and exporting
Iraqi oil industry, costing the muslim world's oil industries one
trillion dollars in gross revinues.
This might be more than just the revinues of the raw oil itself, but
revinues from refined products, shipping services, as well as ancillary
economic activity that depends on well paid, well employed oil industry
workers.
>
> >From an economic standpoint, it may make a certain amount of sense
> for countries to cut back on oil production because when production
> declines the price will increase and they can sell the reserves
> that have been conserved at that much higher price. So it becomes
> a question of "Do you want less money now or more money later?"
> situation. (Assuming inflation adjustments on the value of money
> of course.)
It doesn't quite work that way. If you look at the price history prior
to the first gulf war, you'd see that there was a significant amount of
oil overproduction and quota cheating by all oil producing nations. The
OPEC syndicate was on the verge of having absolutely no meaning. Even
Saudi Arabias effort at grossly cutting back on production could only
go so far, given that it had its own economy to support. At one point,
it switched gears and started overproducing themselves to drive the
price down so low that few nations were earning any profit on their oil
production (that oil sold at spot market prices, mind you).
This essentially idled most all of the US oil industry in the late
1980's. At one point, oil prices had reached $14/bbl, and this was when
the USSR wasn't selling oil to anybody, they were only selling some
natural gas to europe.
Since then, US economic activity has gotten even more energy efficient,
and our tax system is structured to boost economic activity and tax
revinues when oil prices are low. The last thing that the enemies and
rivals of the US want is low oil prices, because their systems are
almost all structured to benefit most with high oil prices.
=====
Mike Lorrey
"Live Free or Die, Death is not the Worst of Evils."
- Gen. John Stark
"Pacifists are Objectively Pro-Fascist." - George Orwell
"Treason doth never Prosper. What is the Reason?
For if it Prosper, none Dare call it Treason..." - Ovid
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