EDITORIAL: OPEC killing the golden goose

[OKIsItJustMe]

http://www.metimes.com/Editorial/2008/03/14/editorial_opec_killing_the_golden_goose/6424/

EDITORIAL: OPEC killing the golden goose

MIDDLE EAST TIMES
Published: March 14, 2008

As the oil price clambered above the once-unthinkable level of $110 a barrel, the oil-rich countries of the Middle East are now confronted with two familiar questions and one even more familiar dilemma. They are all familiar because the rules of the market never fundamentally change. And as legendary Saudi Oil Minister Sheikh Yamani used to say: "The Stone Age did not end because the world ran out of stones. It ended because it became cheaper and simpler to develop metals and bricks and cements."

So the Oil Age will not end because we run out of oil, but when the price of oil goes so high that it becomes cheaper and simpler to move to alternative fuels. At $110 a barrel, that moment comes very close indeed. And in the tar sands of Canada, oil can now be produced for less than $50 a barrel and the sludge-like heavy oils of the Orinoco basin can probably be developed for similar sums.

Increasingly squeezed out of the Middle East, the private corporations are finding oil in deeper and deeper seas and in ever less hospitable climates, and with oil at $110 a barrel these new prospects look ever more viable.

The U.S. government is now pumping billions of dollars onto clean coal research, the British are building a new generation of nuclear power plants and the Europeans are subsidizing wind and solar power. Hitherto the great spur has been the fear of global warming; at $110 a barrel, these investments become elementary economics.

...

[earthside]

1. The Goose is Very Much Alive

OPEC nations will be able to sell all the oil they can produce at these and higher prices.

Less developed countries that do not have the option of alternative fuel programs will be in the market for a long time to come.

If anyone is killing a golden goose, it is the United States through its wasteful ways and fiscal irresponsibility -- our consumer economy is going to crash because we could not control ourselves.

[phantom power]

2. I'm interested in this word "killing."

It implies that OPEC has a choice to lower the prices. But the only lever OPEC has over prices is to raise or lower the rate at which they make oil available. All the evidence suggests that they can't produce it any faster than they are. Since their fields are peaking.

I'm sure it is more comforting for economists to believe that OPEC is somehow being foolish and greedy, because that implies there is a way to fix what is happening.

[OKIsItJustMe]

3. What interests me more is the reaction, that high oil prices will drive business elsewhere

Naturally, the author believes that elsewhere is to other sources of fossil fuels.

However, I believe we will continue to see demand for alternative power rise. Of course, we can expect that demand to increase prices for alternative power as well. However, I believe that we will see more and more installations in more and more places.

[NickB79]

4. Oh goody, they're promoting the Alberta tar sands again

:banghead: