[OPE-L:6221] Re: Re: economics of oil

From: Rakesh Bhandari (rakeshb@stanford.edu)
Date: Mon Nov 26 2001 - 15:45:21 EST

Dear Rakesh,

Thanks for the words, indicating the receipt of the package.  As for Sa'udi
deal, it is possible to sell oil below market prices.  However, this is an
ad hoc gesture that has nothing to do with the mechanism of price formation
in the global oil sector.  Tomorrow, for instance, the Emir of Kuwait may
decide to sell his daughter to the lowest bidder for the sake of protection.
Clearly, this decision has nothing to do with the formation of global oil
prices.  The Sa'udi deal is of the same genre.  Remember: those who are
still insisting on the existence of the 'cheap' Middle Eastern oil, have yet
to be awakened by the fundamental global transformation of the post- 1970s
world.  These individuals (journalists, orthodox and even heterodox
economists, 'assorted would-be experts', government 'officials', etc., etc.)
are not only ignorant and illiterate in a universal sense of the term, but
also each may have their own ideological and material reasons vis-a-vis the
Middle Eastern politics.

Best wishes,


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