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3 Aspects to Pricing Oil

earfearferf


On Jun 30 05:32 AM maximax wrote:

> nah smokey, most posters here have an agenda, but no clue. Eichler's
> first two points are spot on, and actually nothing new if you had
> been reading industry journals like Argus/OMI etc instead of just
> dwelling on this site. I am ambiguous on the third point, the relationship
> between the spot and the futures market is very complicated, and
> academics are not in unison on what is happening here. Is the additional
> liquidity by speculators required for this market? Anyway, they risk
> their own money, all those gov't interventions called for risk taxpayer's
> money. And to all those supply-demand/Hubbert comments above - Eichler
> is not even contradicting them! In fact his points are based on S/D,
> and he calls them "aspects" not the whole picture! Indeed, economics
> is no more just about S vs D, they are now about truly understanding
> the microfoundations of a market, as well as the agent's incentives
> etc... not just foolishly applying two-dimensional textbook-like
> S-D curves like some of the above posters seem to try.
>
> So smokey... (1) reserve estimates of the US offshore fields are
> old and vague, but do not expect to find another Ghahar/Cantarell
> etc that can keep up current US consumption ad infinitum. It will
> buy you time, but will not affect the price much (the US cannot use
> domestic fields to isolate itself from world markets), but it won't
> buy you very much time. (2) is much more important - solve the demand
> side, get yourself off the stuff. The main obstacle to progress here
> has been the present US gov't, which has happily invaded Iraq on
> behalf of its oil majors, but has been blocking climate and other
> progressive treaties. Political will is paramount, as energy efficiency
> is riddled with market failures. But many interest groups and voters
> are against it due to the negative short term implications...