leverage (was Re: Bina on Iraq)

[Christian Gregory]

Doug wrote:
> I'm not an economist, but I think Bina is right about the oil market - it's a mostly competitive market, not one with administered prices. I think he exaggerates U.S. economic decline, but that's my  particular bete noir. And he doesn't have much to say about the political angle - U.S. desire to have a chokehold over world oil supplies, to exert control over Europe, Japan, and increasingly, China.

But Doug, don't you think it's strange to use this opposition--ie competitive, not administered? Even in neoclassical theory, monopolists can't set any price they want. And same goes for "perfect competition," in which equilibrium price is mostly "hovered around" rather than specifiable. And even if prices are determined on the spot and futures markets, aren't those prices affected by OPECs stated intentions for production?

Christian