Chris b,
When we talk about oil prices, we are talking on the prices and trading on
the spot market, which are relatively small volumes. Most large supplies
are contracted and not bought on the spot market, but the contractual
prices are regulated by the spot market, This means that the prices are
dependent on demand and supply, at the ultimate levels and margins. Before
the war, the total Iraq production was near the swing (extra) production
capacity, which is what was needed to maintain a low oil price. There are
only two price regulating factors, the swing production and the US
purchases to its strategic inventory reserves. The latter was introduced
after the first oil crises, 35 years ago, to give US a pricing tool for
managing any new crises.
By taking out the swing capacity, the oil price get truly dependent on
demand, since there are no more cushions, other than US purchases to its
strategic inventory reserves. If the demand rises more than expected, as
the "non foreseeable" demands from China and India, the market get very
sensitive and without extra production capacity, the price will be the only
regulating factor. It does not help that US continued to fill up their
reserves at higher price, which are larger volumes than the rises from
China and India together. Bush did in fact completely control the price
with the purchases to the inventory reserve and by that guaranteed a high
price and large profits for his buddies. Despite this, he has the nerve to
blame China and India for the high prices. It seems to be no limits on how
you can fool the American public with a little propaganda.
I do not in any way want to claim that the American public is stupid, I
know better than making that kind of generalizations. That many are a bit
naive and still belive in the tooth fairy, is an other issue. It seems
however that the American public already are in the process of changing the
attitude to the Iraq war, if one should belive the recent polls. Bush is
aware of it and has "admitted" that he has to do more "explaining" in
public "appearances", so the American people will "understand" him. -:)
Hakan
At 01:55 AM 7/8/2005, you wrote:
hi hakan.
i don't know the figures, but the oil production in iraq since desert
storm has been a very small piece of the pie, much diminished from what it
had been. i can't argue, though, with the impact of both increased demand
from emerging economies and the decline in the value of the $u.s.
but in my view, this only underscores my point. because adding a major
military conflict (it doesn't matter how brief or easy they thought it
would be: an invasion of a country by a force in excess of 150000
personnel is a major conflict, no matter how you care to dissect it) smack
in the midst of the world's primary oil production area, to this already
volatile economic situation should only have had a much greater impact on
oil prices than a single storm. a storm which *might* afffect one of the
lesser oil-producing areas by disrupting some of its production.
the point i'm trying to make is that they--those who control the
oil/energy industry--will stubbornly refuse to view the iraq situation as
putting a large part of world supply at risk. if you were to apply this
rationale, the price of oil would spike in a manner that would provoke
public outrage and a dramatic change of the american public's attitude
regarding the iraq war.
chris b.
-----Original Message-----
From: Hakan Falk <[EMAIL PROTECTED]>
To: Biofuel@sustainablelists.org
Sent: Wed, 06 Jul 2005 06:43:31 +0200
Subject: Re: [Biofuel] ASPO on the Economic near-Future
Chris b,
The fact is that the oil price has gone up very much thanks to the Iraq
venture. The oil production in Iraq, before the occupation, was almost as
large as what they call the "swing production", or with other words the
cushion that evened out production and demand. The biggest problem and
reason, has also been the US filling up their strategic storage, which was
going down due to the war. Bush has been filling up, independent of the
price of the day.
With the "swing production" gone and higher demand from China and India,
the price have moved up in a steady way and will continue to do so. It is
also interesting to note that the high oil price is mainly a US problem
and countries that pegged their currencies to the greenback. In many other
currencies, the oil price has not gone up that much. This because the
dollar lost significantly in value! , 0.89 dollar for one Euro, before the
war, has changed to 1.25 to 1.35. This mean that EU is less effected by
the higher oil price in dollar.
One reason for the low response at the time of the war, was the general
opinion that US would gain and be able to stabilize the oil supplies
rapidly. This has not happened and in combination with that, it was
discovered that a large part of the "general oil reserves" was paperwork.
It is much worse times to come and maybe a serious US lead depression will
be necessary to establish lower oil demand levels. On the other hand, it
might nor help, since the growth in China and India, will outstrip the
effects of a depression. A depression will probably hit US, but it has
more to do with adjustments to a new world economic balance.
The forgiveness of the African debts, is necessary and sound adjustments
of the books, not our leaders sudden rebirth and alter egoistic mood.
Hakan !
At 03:29 AM 7/6/2005, you wrote:
>i've never heard this term of 'the bilderbergers' before, but i don't
find >teh notion too farfetched. more likely to me that their idea
of >safeguarding supply is simply to make it more expensive, regardless
of >whether it provokes economic downturn or depression. take the fact
that >oil prices spiked again simply because of this tropical storm in
the gulf >right now; the rationale being that it could disrupt supply.
>
>how do people swallow this bunk? by the same reasoning, oil should
have >surpassed $75/bbl the very day we invaded iraq.
>
>as far as your last comment is concerned, isn't it interesting that
left >wing parties and labor movements were far more widespread and
mainstream >*prior to (and during)* the great depression than *after*
(this is >especially true of the situation in the u.s.a.).?
>
>-chris b.
>
>-----Original Message-----
>From:! Ken Provost <<mailto:provo%40apple.com>[EMAIL PROTECTED]>
>To: <mailto:Biofuel%40sustainablelists.org>Biofuel@sustainablelists.org
>Sent: Mon, 04 Jul 2005 17:52:06 -0700
>Subject: [Biofuel] ASPO on the Economic near-Future
>
>
> >From the latest ASPO Newsletter:
>
><<http://www.peakoil.net/>http://www.peakoil.net/>http://www.peakoil.net/
>http://www.peakoil.net/
>
>
> > Expect a severe downturn in the world's economy over
> > the next two years as Bilderbergers try to safeguard
> > the remaining oil supply by taking money out of people's
> > hands. In a recession or, at worst, a depression, the
> > population will be forced to dramatically cut down their
> > spending habits, thus ensuring a longer suppl! y of oil to
> > the world's rich as they try to figure out what to do.
>
>
>
>I know, your eyes glaze over when you hear anything about
>the Bilderbergers :-) Interesting idea, tho. My Dad was
>poor enough in the Great Depression that hey traded with
>their Polish neighbors for sauerkraut and potatoes. OTOH,
>my Mom was sort of aristocracy, and the same event hardly
>even broke their stride! Funny how economic downturn may
>even be in the best interest of the world's richest....
>
>-K
>
>
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