Re: oil crises.

["Devine, James" <jdevine@xxxxxxx>]

I think the idea is that if there's overproduction and prices collapse so that scarcity rents go toward zero, it creates an incentive to get together to fix prices upward. (Inside a country, the price collapse would drive many out of business, so that a small number of companies take over.) 
JD

	-----Original Message----- 
	From: joanna bujes [mailto:jbujes@xxxxxxxxx] 
	Sent: Mon 3/8/2004 7:49 PM 
	To: PEN-L@xxxxxxxxxxxxxxxx 
	Cc: 
	Subject: Re: [PEN-L] oil crises.
	
	

	I'm sorry, but I don't understand the argument that higher prices are
	the result of overaccumulation. What happens to supply/demand idea? This
	is not a rhetorical "I don't understand." Please explain,
	
	Thanks,
	
	Joanna
	
	dmschanoes wrote:
	
	>----- Original Message -----
	>From: "Devine, James" <jdevine@xxxxxxx>
	>To: <PEN-L@xxxxxxxxxxxxxxxx>
	>Sent: Monday, March 08, 2004 8:14 PM
	>Subject: Re: [PEN-L] oil crises.
	>
	>
	>(a civil conversation)
	>
	>
	>
	>>DMS:  But Iraq is not a high cost producer of oil, having a
	>>cost of production approximately
	>>equal to Saudi Arabia, the low-cost producer.
	>>
	>>
	>
	>JD: I have heard otherwise from other sources.
	>____________________________________________
	>>From the US Energy Information Agency
	>
	>http://www.eia.doe.gov/emeu/cabs/iraq.html
	>
	>Iraq's oil development and production costs are amongst the lowest in the
	>world (perhaps $3-$5 billion for each million barrels per day), making it a
	>highly attractive oil prospect. However, only 17 of 80 discovered fields
	>have been developed, while few deep wells have been drilled compared to
	>Iraq's neighbors. Overall, only about 2,300 wells reportedly have been
	>drilled in Iraq (of which about 1,600 are actually producing oil), compared
	>to around 1 million wells in Texas for instance. In addition, Iraq generally
	>has not had access to the latest, state-of-the-art oil industry technology
	>(i.e., 3D seismic, directional or deep drilling, gas injection), sufficient
	>spare parts, and investment in general throughout most of the 1990s.
	>Instead, Iraq reportedly utilized sub-standard engineering techniques (i.e.,
	>overpumping, water injection/"flooding"), obsolete technology, and systems
	>in various states of decay (i.e., corroded well casings) in order to sustain
	>production. In the long run, reversal of all these practices and utilization
	>of the most modern techniques, combined with development of both discovered
	>fields as well as new ones, could result in Iraq's oil output increasing by
	>several million barrels per day
	>
	>
	>
	>