<The war in Iraq has also sharply reduced oil output due to sabotage. Expect to see oil prices decline for that reason alone when the Bush War ends>
Since oil prices depend on limited supplies, one of the best ways of keeping profits up is to keep competing products off the market. Putting a bullet through the Middle East is an excellent way to keep competing products off the market. Which is exactly what has happened for 15 years.
The profits for BP, North Sea, Russia, Exxon, French nuclear power and other competing producers, not to mention USA producers, have been immense over those 15 years and are now phenomenal.
I'm not sure that it would be in King George II's oil buddies' interests to have Iraqi oil come flooding onto the market any time soon.
I even wonder if Saddam was induced to invade Kuwait for precisely the purpose of getting his oil off the market.
In the late 1980s, my BP colleague and I were discussing oil, profits and prices and we figured that the best way to improve profits was to, and we used the precise expression, "Put a bullet through the middle east". Maybe I'm too cynical, but I am getting long in the tooth and over several decades I have found that cynicism, skepticism and doubt have served me well.
I will not be surprised to see Iraqi oil stay off the market for quite some time. Or, if Iraq suddenly goes harmonious, politically stable and gung ho for oil export and development, I would not be surprised to see Osama's Saudi Arabian cash flow foundations get a bit of a problem and demands on democratic processes in the kingdom. Or perhaps Iran's nuclear bomb ambitions would be targeted to keep their oil off the market and kill two or three birds with one stone.
Mqurice |
