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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Michael Watkins who wrote (148213)	10/19/2004 9:04:49 PM
From: Keith Feral	Read Replies (1) \| Respond to of 281500

Yes, exactly why OPEC nations have made utterly no attempt to keep up with global demand for oil. They are using the pent up demand to shift the curve demand for tight oil supplies. The upward shift in the demand curve has given natural rise to the price of oil. This is the essence of the free market definition of supply and demand. I know this is self evident to you, but is being overlooked as a practical means of strategy in the political agendas of OPEC nations as political turmoil is swirling. Meanwhile, energy companies are gearing up every conceivable oil rig at attractive day rates for E & P companies to increase new sources of supply. Transocean energy is picking up contracts from every conceivable energy company. Amazing to see the new day rates they are fetching. Iraqi oil was banned except from the food for oil program. 40% of Iraqi output was still ending up in the US. The buyers and the sellers cannot differentiate one another in a competitive market. I cannot really argue the ideological point that you are trying to make, namely, that US energy consumption is too high. However, what if the rest of the world energy consumption is too low? What if they continue bidding up the price of energy to satisfy their growing demand for oil? Globalism may not stop with just the US and the West at the top of the food chain. Global demand for modernization is going to keep going in a generally forward direction. The only question is how far it will get stretched before there is another bubble. Since things are so deflated today, we could chug ahead for a long time before there were any dire situations. In a society where people pay $5 for a cup of Starbucks coffee, I am not that scared of $2 a gallon for gas. I can only say one thing. US government policy with respect to energy is limited to the protection of free trade. In this direction, the Bush administration has bit the bullet and made some difficult decisions in Iraq. I think it it good that the US is adamant about free trade for energy. Most nations that criticize our leadership are probably quite thankful at the same time. It is not illogical to presume that they protest our intervention since the press and the terrorists can isolate US policy. At the same time that they save face, they can also enjoy the benefits of free market access to energy as we contain the disruption to the energy markets. However, it is the free energy market that must establish the price of goods based upon supply and demand. The market has done a terrible job with respect to new technology relating to energy. Ironically, I think all of the conservatives laugh when the tree huggers block efforts to develop new oil supplies in the US. They get to revert to the tough game of containment and military spending to protect the limited supplies of OPEC energy. It all just keeps going in circles. The only silver lining that I imagine is that the new supply of non OPEC reserves begins to dilute the price of OPEC oil. Once their influence is contained, the world will be a more stable place.