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Gold/Mining/Energy : Oil & Gas Price Economics
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To: rajaggs who wrote (289)10/9/2000 3:23:53 PM
From: Ed Ajootian  Read Replies (2) of 350
 
Jaggs,

I agree, now that the dust has settled on the SPR release it seems to be a non-event in the overall scheme of things. Also, with the 800,000 bopd of extra OPEC oil flowing for 9 days so far it seems to be having only a modest impact in keeping oil prices down. I realize that part of what's keeping prices up right now is the political tensions, but still, I bet that is worth only a buck or two on the price.

I believe oil prices are now in a nearly perfect range, which is high enough to allow for the creation of a huge amount of cash flow for the US oil producers, yet not so high as to choke off the economy.

BTW, I've been meaning to ask a question here. I remember reading that OPEC has been complaining that the consuming nations have been artificially distorting the supply/demand parameters for oil and this has contributed to the high current price for oil. One of these distortive things mentioned was the incidence of high consumption taxes on oil. I don't understand how high taxes on the consumption of a commodity could artificially keep its price too high. I would think it would do the opposite, since it would lead to less use (i.e., demand) of it than would otherwise occur. Can someone less "economics-challenged" than me help me out here?
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