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

To: Hawkmoon who wrote (199510)	8/26/2006 2:26:51 PM
From: Ichy Smith	Read Replies (1) \| Respond to of 281500

But right now, there would seem to be at least a $10-20 political risk premium in the current price of a barrel of oil, and I think that is detrimental and is a bubble that needs to be deflated. Unfortunately, the current political crisis over Iran and their nuclear programs, as well as Ahmadinejad's rantings and ravings about "ushering in the advent of the Mahdi" make this unlikely anytime soon. I, on the other hand would like to see a higher oil price. A reduction will just let people think they can get another SUV. A longer period of really high oil prices would force the Governments of democracies to push for innovation and to help the process along. There really is no reason for countries like Germany and Sweden to be further along than Canada and the US in alternate energy progress.

To: Hawkmoon who wrote (199510)	8/27/2006 11:44:24 AM
From: Keith Feral	Read Replies (1) \| Respond to 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.