Posted on 05/02/2013 8:31:48 AM PDT by 2ndDivisionVet
In a clunky op-ed in the Sunday New York Times called “The Dark Side of Energy Independence,” Benjamin Alter and Edward Fishman, staffers at Foreign Affairs, see all sorts of negative geopolitical effects resulting from an American oil industry that has become so good at extracting fossil fuels that we’re set to enjoy energy independence from the the rest of the world.
In their eyes, America won’t get to enjoy this energy independence at all. Rather we will suffer the consequences of it. “That’s because America’s oil and gas bonanza will drive down global energy prices, undercutting the foundations of petrostates everywhere,” they write.
Alter and Fishman cite the head of commodities research at Merrill Lynch who has suggested that oil could fall to $50 a barrel within two years. This price is so low, they write, that it would destabilize already unstable autocracies like Bahrain and Saudi Arabia and even Russia, all of which rely on petrodollars to pay off restive elements and pacify the masses.....
(Excerpt) Read more at forbes.com ...
Do you believe the Saudi oil price is fixed at a certain dollar amount? Contract delivery prices vary by the hour.
Doyou belive that the Saudi’s do not fix the price of oil by their published production quota? They openly state when the price is getting too low that they will reduce production to jack the price back up, and the market obliges. If the US could supply the same production they could say that they will produce zero and the market would not oblige.
The price of oil is set by its availability now, because of monopoly. A healthy market price is set by demand. Seems the same but it actually is quite different. If it was set by demand, the price of oil would hover just over the price of production. It does not.
But the issue is that they are going to fall one way or another. Oil rich nations tend to be distorted in that oil becomes the main, or only, pillar of their economy. That weakens the state in the long term. Like a company town when the factory closes, the oil country dies. They don't have any other source of income to transition to.
For the US, long term, this can be a good thing. If we have someone who actually does long term strategy (which I doubt), it would place us in a stronger position.
They have been exporting their hotheads to us now, and they are already getting desperate on their declining oil supply. As they get more desperate, they will fund more terrorism to keep the heat off themselves.
Again, this doesn't have to be a bad thing. We just need to be prepared to counter the destabilizing effect.
They did not make sense. They spouted some correct facts, but connected dots that do not connect, took a vacuous view of cause and effect, and filtered everything through moral equivalency.
In other words, liberal bullshit.
The price of oil is not fixed, it constantly moves. The OPEC production ceilings quit being issued in 2007. They still talk about a target, but do not hold/penalize countries to a set amount.
They openly state when the price is getting too low that they will reduce production to jack the price back up, and the market obliges.
I would say the market responds to change in supply and demand, basic econ 101.
If the US could supply the same production they could say that they will produce zero and the market would not oblige.
The US has constantly supplied all it could and the market reflects that. While we don't shut down production from established wells, when the price is high we drill more, and when it is low we drill. Wells constantly decline in production so there is a lot of moving targets.
The price of oil is set by its availability now, because of monopoly.
The price of oil is not set, it constantly responds to constantly changing market conditions. What price would you base your -10¢? The moment you offer oil for sale at below market prices, you change the market price.
A healthy market price is set by demand.
All commodity markets have their price set by supply and demand. A monopoly in that market is part of the supply, regardless if you like it or not.
Go for it, believe what you want, what I have to say means nothing to you anyway.
You have a good day.
Cheers
“At a time of desperate steel shortage, we cannot afford to permit the expansion of a steel company which produces too much, because it might throw out of business the companies which produce too little, thus creating an unbalanced economy which...”
Insert oil for steel and it’s right off the pages of Atlas Shrugged. Who wants to bet money the government will latch onto this news story as a justification to put even more limits on oil drilling?
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