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Strategies & Market Trends : World Outlook -- Ignore unavailable to you. Want to Upgrade?

To: Richnorth who wrote (557)	12/20/1998 11:29:00 AM
From: David S.	Read Replies (1) \| Respond to of 49342

With OPEC, each nation has a motivation to overstate oil reserves. Allowed annual production is higher if you have more reserves, so why not tell the world you have a zillion barrells? That doesn't mean you HAVE to pump as much as possible, but gives you the flexibility to do so if you want. So, lots of nations have been doing that AND pumping a hell of a lot to maximize current revenue. An individual nation will maximize current revenue if other nations do not overstate reserves & consequently pump beyond their optimal means. But many nations have been overstating, which creates low current prices, but which also paints a future with less stable oil supplies than many would like to believe. Current technology allows wells and entire oil fields to be drained more quickly than ever before - that maximizes current production and creates an illusion of a big supply of energy...until the well runs dry.