The Band --Can it work? Is it Good For OSX?
Gary, I'm inclined to agree with you, except that I think Stable oil prices are more important than high oil prices, and may be perceived to be so by the market sooner than expected.
I'm sure we all agree that it's difficult to criticize the price control mechanism when its details, or even a rough outline of its construction, are not available.
Still, I think the general idea is a good one, and it seems to me it would be quite possible to achieve a control of price with such a mechanism. A 'Band' would not be inherently extremely difficult to implement, imho. What it needs to succeed is the same thing the current system needs --- A commitment among producers to work together for the common good. They have shown a new spirit of co-operation these last months, and I believe they recognize that continuing in this co-operation is the best policy for them as individuals. Of course there are potential problems, but imho they probably will be worked out.
Those who are saying such a control system is impossible must rely for this conclusion on a lack of co-operation among producers; on the old 'Cheating is Coming Soon' hypothosis. (If anyone has other reasons for their doubts of producer-agreed mechanized supply/price controls, would you please explain them? Thanks!) But the producers have been showing us and themselves for some months that co-operation is not only possible but profitable. I think they will continue to hang together for at least the forseeable future. Not a Sure Thing, but Probable, imho.
I also think that a stable $18-20brent price will be very good for the sector as a whole. Spending on e+p etc is bound to be positively influenced by a stable price in such a range--- which is a range where good profits can be made by most sector companies. Even much higher prices would not do as much to encourage e+p spending when the strong possibility existed that the price would collapse before the increased spending could bear fruit. A Stable Price in the $18-20brent range is good for darned near everybody, imho.
regards,
diana |
