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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (14790)	11/11/2002 5:56:19 PM
From: cnyndwllr	Respond to of 206093

Tomas, it's probably true that there isn't much extra productive capacity but just a little more supply than demand drops the price dramatically. It's this inelasticity that makes the price so dependent upon OPEC manipulation of supply. With future prices falling, then if the anticipated future price is X, current rational producers will sell all they can at a price of X, (or a little less than X because of the time value of money). In reality the price shouldn't drop nearly as far as it would if the full capacity of the Iraqi fields were to come into production. I say this because it's not in the best interests of the oil industry, our country or the environment that we have oil too cheaply. The supply would still be controlled only the U.S., (probably through its profit making oil industry,) would have a lot more control over the supply. In the same way that we "won" the cold war by outproducing all competing unfriendly economies, we would win the peace by retaining some control over the natural resource that makes the wheels of the world turn. It's a policy that's consistent with our past where we installed and supported corrupt regimes in middle eastern oil countries over the last decades. The less popular support those regimes had and, therefor, the more dependent on us they were, the more control we had over them and their oil. I think this administration wants to take one more step and exert direct control over that low hanging fruit that's just begging to be picked in Iraq. As far as the long range effects of that exercise of power and what it does to the trust and security the rest of the world clearly felt in the U.S. at one time, that's another question and one that I doubt Bush/Cheney is very adept at considering. Philosophical discussions aside, we certainly have the power to take the Iraqi oil and if we've learned anything about this administration, it's that if the ends justify the means then it's usually a go. Ed