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Politics : Foreign Affairs Discussion Group
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To: Hawkmoon who wrote (199510)8/27/2006 11:44:24 AM
From: Keith Feral  Read Replies (1) of 281500
 
Look at the political restructurings of oil contracts too. I hope that Chad's decision to revoke all Chevron licences in their country is met with the strongest level of sanctions by the US. Chad's decision to nationalize their oil industry by revoking Chevron's license for not paying taxes is a horrible precedent that demands urgent policy by the boys in Washington.

Meanwhile, Iran is going to do everything in their power to keep the risk premium in the oil market. It is almost too convenient to have the Iranian Shiites play the bad guys for the Saudi Sunni's oil pricing mechanism. It really helps to have multiple levels of Muslim identities to shift the blame back and forth in their cartel pricing games.

I am trying to look through the risk premium to see what the natural price level of oil would be outside the US. Although our reserves are in excellent shape, oil is priced on international demand. Looking at growth outside of the US, I think that demand should outpace supply for a long time to come. 98% of the available capacity of all oil rigs is currently under use. I don't see much room for too signs of a bubble in pricing given the lack of excess supply.

I read some interesting comments that oil will never see $100 a barrel with the public on board. I am pretty comfortable that oil is not going to make a big dent in economic growth, despite the higher price levels. People are going to shift their buying habits to accomodate a more fuel efficient universe that will create a better use of resources into the future. Ironically, the high price of gas may cut back on the consumption of some other bad habits that people pick up at the gas station like beer and cigarettes.
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