yet more Bina

[Christian A. Gregory]

>
> First, Saudi Arabia belongs to OPEC, which is a rent-collecting agency.
The
> price of oil is determined globally via the spot and futures markets.  So,
> OIL PRICE DETERMINATION, not attempt to determine prices, belongs to
larger
> forces that are beyond a rent-colleting entity.  The US engagement of the
> early 1990s with Iraq stems from the US reaction against its loss of
global
> hegemony via the Pax Americana's implosion.  If even the entire Saudi
Arabia
> were taken over by Saddam Hossein, the long-run price of oil would not
have
> changed significantly.  So, both the popular left and the conservative
right
> are wrong on that note.

So, OPEC can't ever act on the production side to influence price again
because it's too internally divided? Is this because its huge producers
(like Saudi Arabia) gain more relatively from higher production than its
smaller producers (like Kuwait), who would gain relatively from keeping it
in the ground in anticipation of higher future prices? Was not Iraq's
interest in Kuwait an interest in pushing prices down?

You suggest that the price is determined on the spot and futures markets,
but the price has got to be above the price for a good offered in a
perfectly competitive market with homogenous goods--simply because there are
no substitutes and there is still huge excess capacity. If OPEC still
controls around 30% of world output, in those conditions, how could it not
exert some pricing power?

I'm not suggesting the US-over-a-barrel scenario. But I also wonder what
globalization has meant in terms of oil production and pricing. At one
point--1973 and 1979--OPEC pretty much did what it would. That was an
anomaly--but what in particular has changed since then?

Christian