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" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> 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
