[OPE-L:6079] Fwd: Worth following (Part 2)

[Rakesh Bhandari <rakeshb@xxxxxxxxxxxx>]

Patrick,
thanks for forwarding the LA Times article (OPE 6071) on decreasing reliance on
Saudi and Gulf oil which has been a clear trend since the mid 70s, I believe.

While the power of Gulf and OPEC producers to determine prices and output
levels may have decreased over the last 25 years, any major interruption of
supply could still pose grave problems. Fred is surely correct here.

Of course if Saudi Arabia is to deplete its reserves to keep oil plentiful and
cheap (though not so cheap that other indebted oil exporting states become too
fragile and new exploration becomes uneconomical), the Saudis would presumably
have to be convinced that there are strongly profitable outlets for the
petrodollars that they are amassing.

(Why the Saudi state is able to collect rent from the sale of oil brings us
back to the the theory of differential and absolute rent; what Marx meant by
the latter and whether Marx's concept are relevant to oil production are not
clear to me.)

at some level, the saudis have to believe that the value of the cash from oil
sales will rise faster than the value of unlifted oil, or they may not be
willing to provision the market today with cheap and plentiful oil.

but if as a price for its provision of security the US govt dictates to the
Saudis that their petrodollars must be  used for the purchase of  what Lawrence
Summers once called in a different context "sterile assets"-- overpriced US
treasuries, US arms, useless infrastructure--the saudis may reason that they
have more to gain in economic terms from keeping more oil in the ground for
sale tomorrow in a more favorable market than selling it cheap today  for
petrodollars which are then pulverized anyway through conversion into basically
sterile assets.

at any rate, there could be a reason why many in the Saudi elite may be
supporting Osama bin Laden's attacks on the US.

Rakesh