[OPE-L:6079] Fwd: Worth following (Part 2)

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Wed Oct 17 2001 - 04:12:35 EDT

thanks for forwarding the LA Times article (OPE 6071) on decreasing reliance on 
Saudi and Gulf oil which has been a clear trend since the mid 70s, I believe. 

While the power of Gulf and OPEC producers to determine prices and output 
levels may have decreased over the last 25 years, any major interruption of 
supply could still pose grave problems. Fred is surely correct here.  

Of course if Saudi Arabia is to deplete its reserves to keep oil plentiful and 
cheap (though not so cheap that other indebted oil exporting states become too 
fragile and new exploration becomes uneconomical), the Saudis would presumably 
have to be convinced that there are strongly profitable outlets for the 
petrodollars that they are amassing.

(Why the Saudi state is able to collect rent from the sale of oil brings us 
back to the the theory of differential and absolute rent; what Marx meant by 
the latter and whether Marx's concept are relevant to oil production are not 
clear to me.) 

at some level, the saudis have to believe that the value of the cash from oil 
sales will rise faster than the value of unlifted oil, or they may not be 
willing to provision the market today with cheap and plentiful oil. 

but if as a price for its provision of security the US govt dictates to the 
Saudis that their petrodollars must be  used for the purchase of  what Lawrence 
Summers once called in a different context "sterile assets"-- overpriced US 
treasuries, US arms, useless infrastructure--the saudis may reason that they 
have more to gain in economic terms from keeping more oil in the ground for 
sale tomorrow in a more favorable market than selling it cheap today  for 
petrodollars which are then pulverized anyway through conversion into basically 
sterile assets. 

at any rate, there could be a reason why many in the Saudi elite may be 
supporting Osama bin Laden's attacks on the US. 


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