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:[EMAIL PROTECTED]
Sent: Mon 3/8/2004 7:49 PM
To: [EMAIL PROTECTED]
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" <[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
>
>
>
>
