<Our World Is Finite: The Implications of Resource LimitationsThe Oil DrumDrumBeat: October 25, 2007>

174 comments on This Week in Petroleum 10-24-07

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alistairC on October 25, 2007 - 8:04am Permalink | Subthread | Parent | Comments top

Sort of looks suspiciously like Ace's predicted Q407 price shock, as predicted many moons ago...

Will the Saudis boost production substantially to bring prices down? That depends on two things :

* the Saudis deciding that $100 oil is not in their long-term interest
* their capacity to do so.

It seems they are determined to remain inscrutable. If they do not substantially increase exports, and announce that they are comfortable with $100 oil, we're no further forward with knowing their true capacities. But the circumstantial evidence that they are past peak would be stronger...

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olepossom on October 25, 2007 - 8:32am Permalink | Subthread | Parent | Comments top

I still believe that the price declines right into November of both 2004 and 2006 had more to do with the interests of the House of Saud in keeping the GOP in power in DC than in market fundamentals. In line with that theory, I would expect Saudi production to being to ramp up again in march 2008, just like in March 2004 and march 2006, to bring down the price in WTI by November 2008.
There is nothing to demonstrate the truth of this theory, beyond the Saudi production statistics and the asynchronous movement of oil prices in the Spring and Fall shoulder seasons.

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alistairC on October 25, 2007 - 9:18am Permalink | Subthread | Parent | Comments top

You really think the Saudis are Republicans? Do you think they have been well-served by the GWB administrations?

I rather think the umbilical cord between Riyad and Washington has been cut, and the house of Saud is looking after number one, from now on.
If they are interested in maximising exports to the USA (in the hypothesis that they have spare capacity), then they might back the candidate who is most hostile to America's energy independence, probably the Republican. On the other hand, if the continuing solvency of the USA as a client is their main concern, they may take the opposite course and favour a Democrat.

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olepossom on October 25, 2007 - 9:47am Permalink | Subthread | Parent | Comments top

I would direct your first question to Bandar Bush. Perhaps it might be asked the other way round. I think at this point the Saudis have no choice but to be Republicans. Any American pullout from Iraq would leave the Shi'a in charge, which would mean Iran ascendant, which would trouble the preodminately Shi'a eastern provinces of KSA, which would threaten Ghawar, Abqaiq, et al., which would ... I think you get the idea by now.

For a short experiment, compare and contrast the conduct of the Bush administration with what a Gore administration would have done, not just in energy and environmental policy, but in digging into the backgrounds of 15 of the 19 highjackers on 9/11.

No, the umbilical cord between DC and KSA is tighter than ever.

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ChrisN on October 30, 2007 - 10:45pm Permalink | Subthread | Parent | Comments top

Not even hardly. KSA remains the top customer of US defense weaponry, and just three weeks ago they announced a new $631 million purchase of US weapons. Sounds like the same old deadly embrace to me.

--C

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