Iranian discontent

[68valu]

Apparently, now that we have financed and built up the middle east from our purchasing of oil and development of the oil fields, which the rest of the world is now benefiting from, our money is no good any longer!

It's time we tap our strategic reserves and let the middle east revert back to life without our help or money.

see how long it takes for them to start crying.

http://biz.yahoo.com/ap/080406/iran_opec.html

[ramzey]

gee, what a news.................
do you think what about was this war in Iraq?

[Bronk]

gee, what a news.................
do you think what about was this war in Iraq?

[FrodeMk3]

Apparently, now that we have financed and built up the middle east from our purchasing of oil and development of the oil fields, which the rest of the world is now benefiting from, our money is no good any longer!

It's time we tap our strategic reserves and let the middle east revert back to life without our help or money.

see how long it takes for them to start crying.

http://biz.yahoo.com/ap/080406/iran_opec.html

Someone on here posted something that said that OPEC and other oil nations' were gonna start selling on the Euro.

[68valu]

gee, what a news.................
do you think what about was this war in Iraq?

Thats exactly why we need to tap our own oil reserves. If only long enough to break the oil cartel.(OPEC)
right now the oil market is a monopoly. the only way to break a monopoly is to bring other suppliers into the market. once we have the ability to purchase from other sources, OPEC will have to compete with that source. Right now they have no competition.

[Maverick]

If you think our dropping out of the oil market in the ME would do that you really need to do more global marketing study. There is something called China that would happily buy up our share at reduiced prices without our competition. There are other countries also happy to do so as well.

[68valu]

If you think our dropping out of the oil market in the ME would do that you really need to do more global marketing study. There is something called China that would happily buy up our share at reduiced prices without our competition. There are other countries also happy to do so as well.

You offer a weak rebuttal with no substance and no alternative solution. That implies you feel that no changes should be made to the current system and we should continue along the path we are on.
If you know so much about macro economics then what should we do, if not continue along the current path?

The only point you made was "happily buy up our share at reduiced prices" which has no basis but does indicate my  point of forcing the price down.

I don't care what China and these other countries you claim do. I care about our future. China has the manpower and economic resources to purchase oil at the current prices but is now only beginning to reach an equal plane with us on an industrial level. That is part of the problem with the world economy. what we used to have almost exclusive use of, we are now having to compete on a more global scale now because of the modernization of formerly 3rd world contries.
Tapping our oil reserves is unavoidable, short of reducing our use of fossil fuels. We need to do it before we bankrupt ourselves, while at the same time building up our enemies coffers.
If you have a better solution, lets hear it. I'm willing to listen. Or do you think the "Status Quo" is OK. Lets keep bankrolling our enemy while bankrupting ourselves.
Or should we just hope it all just goes away!!
Maybe we should all just pray!!

[john9001]

just buy less gas, gas consumption in the US has been dropping for the last 10 weeks.

[Charon]

You're talking about nationalizing our oil industry. Which would be great if it really worked (historic inefficiency and lack of competitiveness) or if it were even workable in the first place in the US.

Well, lets see. We're the No.1 consumer of oil -- with a bullet -- so to speak. About four times more than anyone else (Millions of barrels per day):

United States: 19.993 (actually 21 now)
Japan: 5.423
China: 4.854
Germany: 2.814
Russia: 2.531

But we are ranked 16th from the standpoint of reserves.

1  World 1,025,000,000,000
2  Saudi Arabia 261,700,000,000
3  Canada 178,900,000,000
4  Iran 130,800,000,000
5  Iraq 112,500,000,000
6  United Arab Emirates 97,800,000,000
7  Kuwait 96,500,000,000
8  Venezuela 78,000,000,000
9  Russia 69,000,000,000
10  Libya 38,000,000,000
11  Nigeria 34,000,000,000
12  European Union 28,210,000,000
13  Kazakhstan 26,000,000,000
14  United Kingdom 25,410,000,000
15  Angola 22,880,000,000
16  United States 22,450,000,000

Now, I don't believe this takes into account tar sands and deep gulf and the difficult fields under the great plains that are viable at $40+ per bbl oil. But, since it costs the Saudi's about $5 per bbl to produce their crude you had better really hope we don't enter another oil glut at any point in the near future if you are an investor, or if you are a taxpayer and we have nationalized the industry. ANWR, is literally a drop in the bucket whether it is included in the above figure or not.

We are currently producing oil at a rate second only to the Saudi's (millions of barrels per day):

Saudi Arabia: 8.528
United States: 8.091
Russia: 7.014
Iran: 3.775
Mexico: 3.560
Norway: 3.408
China: 3.297
Venezuela: 3.137

And yet we can only meet about 45 percent of our demand. If we more than doubled our production (probably take 10-20 years) our reserves which are scheduled to last 12 years will only last 3-4, but it wouldn't matter since we couldn't increase that production by the time they will run out at current rates. Saudi will have cheap oil for 81 years by comparison.

Now, this is based on economic (cheap) oil. We can easily produce oil at 8 times the cost to produce it in the areas with the greatest reserves. So, we can easily have more expensive oil than the rest of the world by a huge margin from many decades. Remember, current $100 bbl oil is based on a subtle shift in supply and demand, market speculation and some 30 percent the devaluation of the US dollar. It is not only possible, but highly likely that we will shortly see oil well below current prices unless OPEC really hauls down production.

But, if they did so they would be endangering their position by encouraging additional supply that will ultimately chip away at their dominance. Perhaps just slightly but it doesn't take much -- only a few percent relative to supply and demand not even counting "uneconomic" oil. And of course, there are other players beyond OPEC who will undersell (increase production) them at some point, and usually things collaspe like a house of cards at that point. We can produce $40 or $50 or $60 per bbl oil if we have to all day long. But, they can just as easily maintain $20-$30 a bbl oil with healthy profits and make our investment in tar sands etc,. non viable. It's all a balancing act.

There is a reason why things are the way they are.

Charon

[WWhiskey]

 i was pretty sure we had 118.15 years of resources according too my calc. but yes, they will not want us to produce anymore than we do now, so as to keep there income and power! what we must do is show them we are willing to produce, so that they will make it harder for us to do so ,I.E. cut the price of there oil to keep us from wanting to pump more of our own!
also if we keep trying to find new ways to transport goods, and each other, in 118 years we may not be very dependant on oil whatsoever!

[C(Sea)Bass]

just buy less gas, gas consumption in the US has been dropping for the last 10 weeks.

$4.20 per gallon gas might have something to do with that

[68valu]

i was pretty sure we had 118.15 years of resources according too my calc. but yes, they will not want us to produce anymore than we do now, so as to keep there income and power! what we must do is show them we are willing to produce, so that they will make it harder for us to do so ,I.E. cut the price of there oil to keep us from wanting to pump more of our own!
also if we keep trying to find new ways to transport goods, and each other, in 118 years we may not be very dependant on oil whatsoever!

Well said.
That was my point. Force opec to lower prices through increased domestic production, even if it means nationalizing our domestic resources. Nationalizing would work if it was structured and managed properly, much like our railroad system. If the price drops down to a nonfeasible extraction level, then we have accomplished what we set out to do. If the price remains high, then at least our dollars are staying in the USA instead of in our enemies bank accounts. We also increase jobs in OUR country.
It is not just OPEC, but our greedy US oil companies contributing to this problem. We cannot allow private oil companies (record profits every year) to dictate our oil prices, as this is a matter of national security, not capitalism.

What if this has ANY credence:
http://www.canada.com/saskatoonstarphoenix/news/local/story.html?id=5f07f6b9-815f-4058-9e25-17fb0c61cd61


And most importantly we need to reduce our fossil fuel dependence.

[Charon]

I think we have plenty of oil in the world to last us a hundred years or more. However, much of the oil we (the US, The West, etc.) have access to comes in at a much higher price point fom a production standpoint than the Middle East.

Much of our current price hinges on a few percentage points shift in production and market reactions. China and India are driving that and their demand will increase, but so will production (though it has lagged natrurally and perhaps now artificially). And, as noted the devalued dollar is about 30 percent of the current cost.

But,

The cost to produce a barrel of Saudi crude is $5.
I've seen an "average" figure for world crude in general at $10.

So, any solution from a reserves standpoint has to come in at, say, under $20 in cost to be attractive and the closer to $10 the better.

Take the oil glut of the 1990s. While we were paying $1 and change for gasoline we could have easily been paying $2 and change per gallon if we had a nationalized oil industry using our full resources which come in at over $40 per bbl to produce.

That makes altrernative energy an interesting investment now. A lot of excitement, a lot of interest... Like riding the dot com bubble. Just know when to jump off.

I used to be of a mind that we would see at least $50 per bble oil for some time but that opinion has changed.

I interviewed an analyst, Peter Beutel, who said some convincing things that lead me to believe we will see a 1990s style glut hit within 4-8 years. Of course, a number of years later we will likely seee another shock. If you look at the numbers -- reserves, cost and demand it makes sense too. I can't imagine, though it still might be the case, that the Middle East will not have/or soon will catch up to Chinese and Indian demand. Then we are back to the OPEC games, and as recently as 2000 OPEC was happy to try and set a price basket of, as I remember, $22-$24 per bbl.

Will they work to set that figure in the future? I don't know. They have had a hard time staying honest as a group at such efforts. And, on the other side, they have new data on the price impact on demand that may push for a higher basket goal. But, one imagines they will work to keep prices below $40 once demand drops relative to supply.

FWIW Beutel though OPEC might have severly screwed themselves with this run up, long term.

The one thing that hasn't changed really is that since 1970 we have suffered from an increasingly diminished level of control over our energy destiny and that is not going to go away until the cheap oil gets used up.


Charon

[Bodhi]

$4.20 per gallon gas might have something to do with that

I paid 3.06 this morning for 85 octane.  They only sell 85, 87, and 91 around here.

[Charon]

Well said.
That was my point. Force opec to lower prices through increased domestic production, even if it means nationalizing our domestic resources. Nationalizing would work if it was structured and managed properly, much like our railroad system. If the price drops down to a nonfeasible extraction level, then we have accomplished what we set out to do. If the price remains high, then at least our dollars are staying in the USA instead of in our enemies bank accounts. We also increase jobs in OUR country.
It is not just OPEC, but our greedy US oil companies contributing to this problem. We cannot allow private oil companies (record profits every year) to dictate our oil prices, as this is a matter of national security, not capitalism.

Your point doesn't make economic sense when our resources cost $40+ to produce. As for the railroads, those are private with the one exception -- Amtrack -- being hardly a success story. Let's face it. Communism is a failure.

As for the Greedy Oil<tm> companies -- just why weren't they greedy during the 1990s? Why did they push the price of crude down to $10 bbl? Under your model US drivers would have paid twice as much for
gasoline, if not more, during the 1990s.

Charon