Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Ilaine who wrote (55330)	11/2/2004 4:21:01 AM
From: Maurice Winn	Read Replies (1) of 74559

<If you think the price of oil is high now, imagine the price of oil with Islamic fundamentalists in control of oil producing countries> CB, I think that would lower the price of oil. That's because when irrational people control things, other people have to make arrangements elsewhere. The irrational have to sell their products and services at lower prices because they are likely to do something silly, such as turn off supply at odd times. The price of oil is a function of supply, demand and the cost of exploration and production. Who owns it doesn't matter. Islamic fundamentalists can't put the price of oil up and more than a Wall Street oil broker can. Buyers bid for available supplies. That determines the price. What the suppliers want is irrelevant. If suppliers don't like current prices, they can keep their oil in the ground. That's what the Saudis do when prices are lower than what they think they should be. Right now, with high oil prices, competitors to the Saudis will be boosting production and reducing Saudi market share. Noocular reactors will be built and they won't be turned off when oil prices drop to $10 a barrel to try to recover market share. When photovoltaics are produced because of high oil prices, they aren't disconnected if prices of oil subsequently fall. Islamic fundamentalism is irrelevant to the price of energy, but they could lower the value of their own oil by doing stupid things. If they cut off the oil supplies, yes, that would create huge price increases until alternative sources of energy or conservation efforts reduce demand. But that would be temporary. Then, the value of their oil would be reduced and who would want to buy from such irrational suppliers? Mqurice

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