more Bina

[Christian A. Gregory]

>These excess profits belong to the distinct category of oil rent; as
>such, they can be appropriated by the lessor, the owner of oil-in-
>place. The size of the oil rents, therefore, is simply dependent
>upon the magnitude of differential productivity (by implication,
>differential profitability) of all competing oil regions globally.
>Hence, differential profits turn into differential oil rents; and
>all differential oil rents are price-determined. This universal rule
>applies equally to both OPEC and non-OPEC countries. This explains,
>for instance, why OPEC posted prices no longer remain insulated from
>the determining (and at times, undermining) impact of spot prices in
>the global oil market.

I'd like some clarification on this. There are two arguments about rents
compacted here: one, that they depend on geographical region cost; and two,
that they pertain to scale (the magnitude of differential productivity). The
latter, it would seem are less important than the former for Bina's
argument, since it's the existence of oil rents--"excess" profits gained by
the lessor--that has allowed for _price_ competition to displace OPEC's
pricing power. But he says that the differential rents are _determined_ by
price, instead of that they determine price and price competition
themselves. Or is that what he means by "price-determined"?

Christian