Saudis target 'triple-digit' oil price for the first time
Source: Financial Times
Saudi Arabia said on Monday it wanted to keep crude oil prices at around $100 (U.S.) a barrel, the first time the kingdom has targeted a triple-digit price and a quarter above the previous ambition of $75 suggested by King Abdullah in November 2008.
Ali Naimi, the powerful Saudi oil minister, said the worlds largest oil producer aimed to stabilize oil prices slightly below the current level of $111 a barrel.
... Riyadh needs higher oil prices to sustain the big public rises in public spending it plans in an effort to forestall the political unrest sweeping the Middle East. King Abdullah has already announced two populist programs of handouts and boost to public spending.
The policies, at a total cost of $129-billion - equal to more than half the countrys oil revenues last year - vary from one-off bonuses for public sector workers to the promise of half a million homes at affordable prices. But the largesse failed to satisfy activists who were angry that the package of measures did not include political reforms.
Read more: http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/financial-times/saudis-target-triple-digit-oil-price-for-the-first-time/article2304075/
onehandle
(51,122 posts)Your time will come, Royalists.
Hugabear
(10,340 posts)Fearless
(18,421 posts)Wonder what that might be... spring is coming?
Strelnikov_
(7,772 posts)I saw some striking numbers this week: Look at the "break-even" costs for the world's top oil producers. That is the minimum price at which these countries need to sell oil so that they can balance their budgets.
Russia now needs oil at $110 a barrel to manage its finances. For Iraq, the number is $100. Even Saudi Arabia now needs oil to trade around $80 a barrel just to balance its budgets. The numbers are also high for Algeria, Qatar, and Oman. Only a decade ago Saudi Arabia was able to balance its budget with oil prices averaging around $25 a barrel.
So now it is in these countries' interest to keep oil prices high, which they do by curtailing supply in one way or the other. This is perhaps the most lasting impact of the year of global protest: High oil prices.
Fool Count
(1,230 posts)To calculate that "break-even" cost one must know (i) the budget deficit of the non-oil
part of the economy and (ii) exact amount of oil the country would sell to foreign buyers,
neither of which is a fixed and easily obtainable number. There are other elastic variables
there as well, i.e. tariffs/taxes imposed on exported oil, which can dramatically alter
the calculation. Countries with excess production capacity may increase their oil revenues
simply by selling more oil, without having to hike the price. Russia, where most oil is
produced by private companies, could increase the export tariff and thus extract more
revenue from those companies' profits. Another broadly oscillating variable would be
an exchange rate for a local currency to USD. Finally, the world demand for oil is not rigid
either, but depends significantly on the state of the world economy. So those "break-even"
prices are not actual numbers, but wild estimates which could vary by a factor of two or
so depending on who does the calculating and how, and therefore they have very little
analytical utility.
If Zakaria meant to say that oil producing countries like more expensive oil because it makes
them richer - Duh! - he could have made the same point without all the pseudo-economic
mambo-jambo.
Fool Count
(1,230 posts)Another consequence of nuclear Middle East - pricier oil.
ChairmanAgnostic
(28,017 posts)Make gas guzzlers obsolete, and we will create new technologies to move people around. Once our creativity becomes that far advanced, your incomes will fall. After all, you cannot undo new technology. See generally, nuclear and bio weapons, explosives, plastics, computing, medicines, material sciences, and much more.
customerserviceguy
(25,183 posts)$200 a barrel oil does more to promote alternative energy technologies than under $100 a barrel prices.
ChairmanAgnostic
(28,017 posts)that's why wars are always accompanied with an incredible slew of new technologies, material, technical, chemical, scientific, and much, much more. Because it really does become do or die.
It has been relatively rare that explosions in technology took place outside of active wars. Our invasion of the Moon was one of them, although some might suggest that the Cold War was WWIII fought without any declarations.
The computing explosion, with the semi-conducting, integrated circuit, eventually leading to the iPad, is another. Then again, some suggest that the Cold War also pressed this growth forward.
At a steady $100 or even $200 per gallon, all sorts of new technologies and answers begin to make sense, and the great inertia of mental creativity becomes directed in a new, semi-defined, direction. And from that seed, comes incredible progress.
customerserviceguy
(25,183 posts)After we conquered the moon with a few expeditions, we found no reason to go back. Here we are, some four decades after the last mission, and still there are zero plans to make another trip there for any reason whatsoever. That would have been unthinkable to about 99% of Americans who watched the first landing in 1969.
We're not going to go back to fight in Southeast Asia anytime soon, either.
As for computers, yes, the trend towards microminiaturization of electronic components was spurred by the proxy war in space. But it's clear that once these things became really, really useful, it was inevitable that a market would grow for them. I remember home computers in the late Seventies being described as "a solution in search of a problem". Glad we're beyond all that. I would say that a similar path was taken by aircraft, WWI provided a lot of impetus to work on aircraft technology, but the Roaring Twenties created a market for commercial air flight. Another boost from WWII, and the beginning of air travel for the masses was underway.
jpak
(41,741 posts)oh wait
nadinbrzezinski
(154,021 posts)More expensive oil...
Wistful Vista
(136 posts)How can they do this?