dms dmschanoes at earthlink.net
Sun Aug 10 22:33:34 MDT 2003

Perhaps this is an opportune time to change the subject back to something a
little less inflammatory-- hydrocarbons.

Let's recall that prior to the OPEC initiated price increases, the spot
price of oil had plummeted to $10 barrel,  that the price of oil broke after
1986, bringing down the S&L industry, causing massive layoffs and retirement
of pumping plant, the warehousing of oil in supertankers tethered off coasts
around the world all loaded up with nowhere to go, and triggering an earlier
Gulf War where the price of oil touched $40/barrel, broke, went back up and
then settled around 20-25 dollars (considered the "minimum profit" price for
oil at that time), and that costs of production per barrel oil are actually
lower now than they were in 1950

Let's also recall that the application of advanced technologies to oil
exploration and extraction reduced the finding costs continuously since
1973? 1979? I forget which, until, 1998 I believe.  Actually the US EIA
calculates finding costs over three year periods so 98 is about the time of
the upturn in finding costs.    And what was driving the finding costs?
Deep water offshore exploration where the technology cheap as it is (the
price I think of seismic 3D computer assisted mapping declined some 60
percent since its original development) was still negatively impacted by the
costs of working deep water.  Lifting costs for deep water are even higher,

SO for the 3rd time, OPEC charges to the rescue of the less than 7 sisters,
the big oil companies, that is to say for the most part, the US oil
companies.  And jacks the price so that now deepwater can or might or soon
will be profitable.

And guess what?  US offshore deepwater production has exceed US offshore
shallow water production for the first time.

And guess again. All that attention now being paid to Africa?  Oil in the
offshore of Sao Tome, Principe, the Gulf of Benin?  Yeah, you're right, it's
deepwater offshore.

So there you go, the price of oil deviates from its value as the mechanism
for raising oil's rate of profit and staving off the results of

Item 2 Security in the oil fields?  The Navy, which by the way is the single
largest consumer of petroleum products in the world,  has several battle
groups on station, there's 150,000 ground forces in the country, the US Air
Force hanging around a lot, and you know what?  None of the oil companies at
this time want to  bring Iraqi production on line.  Just that simple.

Item 3.  No choice, but to let the oil companies use an oil swap to avoid
royalties?  Not hardly, any number of windfall regulations could be applied
to the reserve purchase to insure the payments to the US govt.    But
moreover, I believe you are presupposing that the US govt had adopted the
Hubbertist line and knows that prices are headed higher because oil is
getting scarcer. But if that's the case, the US oil companies would be
tripping over themselves to get into Iraq, security or no security, and get
that oil so they could cash in on the cow.  So I think you have a
contradiction to resolve in your analysis as it undermines your position.


More information about the Marxism mailing list