Re: Saudis Waging an Oil War on Iran?
On Jan 24, 2007, at 2:52 PM, Yoshie Furuhashi wrote:
On 1/24/07, Doug Henwood dhenwood@panix.com wrote:
Maybe, who knows? But I’ve been following this stuff for over 20 years, and I’m impressed by how someone always has a political explanation for movements in oil prices (and how you can always find a trader or two to tell the story you want to hear).
If there were no political explanation for oil prices, wouldn’t oil prices behave like those of other commodities? While the Saudi design is just one piece of the picture, it is certainly a not insignificant piece.
What’s the proof that oil doesn’t behave like other commodities? Were
Chile suddenly to become politically unstable, the price of copper
would undoubtedly rise. But sometimes prices move on their own accord
and people make up the reasons afterwards.
Saudi Arabia’s not insignificant in the oil market, but does that
mean several twitches of a Saudi oil minister’s eyebrow can move the
price by $2 or $20?
Doug
January 26th, 2007 at 10:37 pm
I am shocked! The story is full of mistakes that might disqualify a journalist from his job!
First, the name of the Saudi oil minister is Ali Al-Naimi, not Ibrahim Al-Naimi as Robert Windrem stated in his NBC story.
Second, Saudi oil production have been decreasing in recent months! (By the way, if the meeting between VP Cheney and King Abdullah was secret, how did Windrem know what went on in that meeting?)
Third, Mr. Windrem will not find a single expert who will claim that the cost of oil production in Iran is between $15-18 as he claimed in the story.
Fourth, Mr. Windrem and his “secret” trader do not know the difference between ‘reserves” and “production”. He states that Iran’s oil reserves are declining. What he meant was production. Iran’s oil reserves have increased substantially in recent years.
Fifth, he was unable to distinguish between the huge amount of investment needed to develop a filed and the cost of producing oil from the same filed. It seems that he understood that if investment needed to develop Asadgan filed if very high, the cost of producing oil should high! This is a 26 billion barrel field and the cost of extracting oil might be less than $2/b.
Finally, the regime has survived economic sanctions, a long destructive war with Iraq, and two oil prices collapses (where prices dropped below $10/b), why a decline in oil prices from $70 to $50 will cause a regime change?