Well, Bina said it's not a case of perfect competition or pure competition, because he thinks that's a chimera. Perfect competition hasn't been suggested as the current state of the oil market by any one, or if so, I've missed it. Bina is not a neoclassical economist, and is not arguing from a neoclassical perspective.
On a side note, I've held off on this sense there is a gargantuan can of worms that Bina thwacks at, about what exactly are the assumptions about economics of Leftists/radicals in the US. This goes well beyond oil, specifically hitting beliefs about monopolies and competition. An important subject, to be sure, but I definitely can't write on it with any depth.
But to the topic at hand, I'd like to get into what can be said with some certainty about the global oil market. What I'm most concerned about is that the anti-war movement explanations of an oil motive verges on denial of the very existence of a global spot and futures markets for oil. Without a coherent framework to understand it, anything goes, like Bina said on theories of value. Hence the visions of pipelines behind every cruise missile launched.
The original question of mine was how is leverage exerted (if at all) in the global oil market? This overlaps with Michael's question of how to "exercise a corner" in the oil market. Production cuts/increases are a part of this. I certainly would not say such changes are irrelevant, but it's the extent of their impact that's murky to me.
Is this what 'blood for oil' would mean if true: With relatively low cost and high production, the Saudis are the major swing producer. With Iraq in the it's pocket, the US could both control the levels of Iraqi production (a major OPEC member) and have a client government that would serve as a credible threat to the Saudis, thus making them more compliant to Washington. ???
I have been reading, and still digesting, several pieces on OPEC. So, Michael, if you have a copy of the Foreign Affairs article you cited, could you e-mail it me?
Passing thought: perhaps the emphasis on Venezuela in the citation is less an exaggeration of Venezuela's significance than an underscoring of internal divisions within OPEC.
-- Shane
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