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

To: Ish who wrote (155417)	1/6/2005 5:03:10 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 281500

Ish, I guess it's tough to work out, but supply and demand move around, and if a big chunk of supply is permanently removed from the equation, the baseline is raised. It's obvious really. That's why people are ranting about Hubbert's Peak. It's all about supply and demand with price as the arbiter. Less supply = higher prices. More supply with lower costs [such as Iraq's oil instead of hard to find oil in small reservoirs] = lower prices. Get it? Lots of oil, the stuff is cheap. Not much of it and everyone wants it, the stuff is expensive. That's also why Saudi Arabia increases and reduces their supply - they are trying to maintain prices at what they think optimize their long-run profits. If Iraq was at full production, the price of oil and oil company profits would be much lower than now. Mqurice