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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (345)	4/21/2003 12:00:19 AM
From: Wyätt Gwyön	Respond to of 4912

so back to your original point that the saudis, due their financial needs, would begin jacking up oil price if your question is what they "need" oil to be at for budgetary reasons, supposedly that is in the high teens. as to the issue of from where they would jack up prices once they have the world over a barrel, so to speak, i don't know. again, i think it's more a question of from what level of market share they would feel like exercising control. they probably have accountants figuring that one out. and their market share's slated to rise over the coming decades... would begin jacking up oil prices leads to the obvious question..."from what price point"....will the saudis decreaseproduction(the only way, imo, that there is pricing power) a rise in prices could be achieved without decreasing production, if production decreases elsewhere. that is in fact what is happening in non-OPEC areas like the US lower-48 which are past their Hubbert peaks. a big problem for the US, and perhaps an impetus for its recent geopolitical assertiveness, is that "friendly" sources of oil are declining in production while the middle east has many more years left. couple this with the possibility of regime change in Saudi Arabia. possibly a new regime less willing to satisfy the demands of the US, and able to get by on less money since they wouldn't have a payroll of 30,000 princes. if they need less money, they don't need to sell as much oil. it wouldn't take long to wreak economic havoc across the world with $150 oil. "wanting to keep a certain market share" actually , imo, implies a need to maintain market share in the face of decreasing demand (or at the very minimum, growth of demand) which seems to coincide with a bearish viewpoint of contracting demand worldwide demand is increasing and will continue to increase, although maybe SARS could dampen the growth for a few years. Faber had some interesting stats a few issues back, showing how the per capita consumption of oil had skyrocketed in Korea since the 60s. his point was that we can expect the same on a much larger scale from China going forward, w/r/t oil and other commodities.