Why Oil Is Not A Strategic Good

J Cullen jcullen at austin.rr.com
Mon Mar 31 14:14:23 PST 2003



>Paul_A wrote:
>
>>I basically agree with your line of thinking Doug, but doesn't it
>>become complicated? If things go their way, those Texas companies
>>will soon own a lot more oil in Kirkuk and Ramaillah than in
>>Midland and Odessa.
>
>Do the majors own Texas fields, or independents?
>
>> The Iraqi fields produce very low cost crude and may only be
>>paying taxes to the Military govt and its successor. Won't this
>>change these companies mind a bit - move them towards lower
>>prices/higher quantity?
>
>Why would they want lower prices? When do oligopolists ever want
>lower prices, except in the short term to drive competitors out of
>business? The higher the oil price the more money they make, unless
>it's high enough to cause a recession.
>
>I've got to find some folks who understand this stuff.
>
>Doug

I couldn't find figures on the percentage of oil production attributable to independent producers as opposed to major oil companies, but independent producers probably do account for a majority of production in Texas. An official with the Texas Independent Producers and Royalty Owners (TIPRO) testified at a legislative committee in 2002: "In 1999 the average Texas oil well produced 6.9 barrels per day and the average gas well produced 216 thousand cubic feet of gas per day. While these may sound like big numbers, they are not. At current prices, 6.9 barrels of oil generates $141.45 per day of revenue and 216 thousand cubic feet of gas generates $496.85 per day of revenue. No self-respecting hamburger stand would be satisfied with this level of revenue."

From the big oil company point of view, it is easier to deal with one big contractor running Iraqi oil production than it is to deal with thousands of "stripper" wells run by independent operators in Texas and Oklahoma. -------------- next part -------------- An HTML attachment was scrubbed... URL: <../attachments/20030331/54dc9a7d/attachment.htm>



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