Posted by
Boris Tiraspolsky on Sunday, May 25, 2008 1:20:58 AM
"It is interesting how little we know regarding the future price of oil, the future development of alternative energy sources, and the ultimate economic and political impact of both. Oil production may be approaching an irreversible decline. On the other hand, Russia and OPEC may have mustered the necessary discipline to limit the supply. How can we determine the operative cause in this instance? One has only to consider human nature and the history of OPEC to sniff out the truth."
The Oil Problem
by J. R. Nyquist
The price of oil has risen to over $130 per barrel. What is the cause of this rise? In the latest forecasting survey of the Wall Street Journal, we read that a majority of economists attribute rising food and oil prices to “fundamental market conditions.” It’s not an investment bubble. It would seem that demand is rising faster than the supply. Question: Is the Organization of Petroleum Exporting countries (OPEC) effectively limiting production? If this is true, then anger over U.S. policy in Iraq has far ranging consequences. When President Bush recently visited Saudi Arabia the Saudis refused to expand their oil production. Were they unhappy with the American president? Were they attempting to persuade him, or dissuade him, on a particular issue?
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