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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Dwight E. Karlsen who wrote (12479)	2/22/1998 11:22:00 PM
From: Jess Beltz	Read Replies (1) \| Respond to of 95453

Dwight, it is undoubtedly true that a lot of supply/demand considerations from around the world determine today's price of oil. It is also true that there are a lot more oil fields in production and development than was the case in 1974. However, I think the following things are relevant here. (1) I can remember during the OPEC induced oil embargo in 1974 a lot of people saying things like "how can those piss-assed little countries do this to someone as powerful as the United States. We should just go and take the oil." Well, we now have a huge military presence there, and we determine the safety of those oil fields. (2) The Saudis cannot very well do anything to really jack up the price of crude when that would adversely affect the very people that protect and defend them. Any US administration would find it almost indefensibile to be providing protection for people who were gouging us through the price of oil. We would take our planes, tanks and ships and go home, and the Saudi's would be left there with Saddam. What percentage of the world's oil reserves are still in the gulf region? (and remember that much of those reserves are available now, not needing to be found or developed.) (3) As far as destroying the republican guards is concerned, I doubt seriously that there would have been any more protest about that, had it occurred than there was already. One thing is for sure, however, and that is the fact that those were the people with the guns that kept that idiot in power. Destroying them would have destroyed much of Saddam's internal powerbase, making some kind of internal attempt to remove him much more likely. The simple fact is that someone stopped the allied (American) forces in the Gulf from annhilating these people as they were trying to extricate themselves from the pocket around Bassra, with the result that they all escaped back to big daddy in Baghdad. I guarantee that for the forseeable future, any altercation in the Gulf predominantly led by US forces will result in (a) a large contingent of US military personnel in the region, and (b) Saddam still in power. For those of you tempted to draw comparisons between Saddam and Hitler, there are no comparisons beyond the obvious egomania of both. There simply is no way that, given the world power structure at the moment, Saddam can be anything more than a pimple on the world's ass. He is a threat to no one EXCEPT his neighbors in the Gulf and his political enemies in Iraq. From a humanitarian standpoint, yes, a lot of people suffer from the SOB. From an international political/military standpoint, except for his influence on Persian Gulf oil exports, he is a complete nonentity. Let me say in conclusion, that the price of oil is a nontrivial concern to the US government. The Fed is myopically fixated with the direction of inflation (price stability in the words of Paul Volker), and perhaps no other input to the Producer Price Index or Consumer Price Index is as important as the price of energy. This wonderful era of new productivity with NEXT-TO-ZERO inflation is being driven in large part by the fact that energy prices (read oil) have been steady or falling (or steadily falling) for some time. If you were to see a large jump in oil prices, it might help to throw this economy that is chugging along just fine off track. It would prove disastrous in the near term for the economic recovery we would like to see in the far east. Just some rambling thoughts. Criticize at your leisure. jess.