Comments on: Links 4/21/08 http://www.nakedcapitalism.com/2008/04/links-42108.html Sun, 22 Nov 2009 16:56:52 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Lune http://www.nakedcapitalism.com/2008/04/links-42108.html#comment-7170 Lune Mon, 21 Apr 2008 17:58:00 +0000 http://www.nakedcapitalism.com/2008/04/links-42108/#comment-7170 The Saudi's <i>won't</i> or <i>can't</i> raise oil supplies? I'd wager good money it's the latter.<br/><br/>Contrary to popular opinion, sustained high oil prices cause major worries for OPEC as much as they do for oil consumers, because if high prices last, people eventually change their habits to consume less oil. While a temporary price spike brings in lots of extra cash for the Saudis, it's damaging in the long run to the demand for their primary export.<br/><br/>Thus, I suspect that Saudi Arabia would increase production if it could. The definition of "proven reserves" is malleable enough to allow lots of wiggle room. And nationalized companies like Aramco often have political and social reasons for obscuring their true capacities. So I'd take all their assurances with a grain of salt. The Saudi’s won’t or can’t raise oil supplies? I’d wager good money it’s the latter.

Contrary to popular opinion, sustained high oil prices cause major worries for OPEC as much as they do for oil consumers, because if high prices last, people eventually change their habits to consume less oil. While a temporary price spike brings in lots of extra cash for the Saudis, it’s damaging in the long run to the demand for their primary export.

Thus, I suspect that Saudi Arabia would increase production if it could. The definition of “proven reserves” is malleable enough to allow lots of wiggle room. And nationalized companies like Aramco often have political and social reasons for obscuring their true capacities. So I’d take all their assurances with a grain of salt.

]]>