>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?
I understood both. For example Shell and Amoco have a pooling arrangements for their Texas fields. But I was really thinking of the Texas companies rather then the Texas fields.
>> 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.
Hasn't the petroleum industry been very very careful not to let prices stay too high on a sustained basis or substitutes and conservation will develop? Its the old question of trading off price per unit vs. quantity. Whether a company will lean more towards higher price/lower quantity or the opposite depends on lots and lots of factors and shifts ((so I am not saying prices will fall as a result of the war; just that we shouldn't assume that "Texas" will take the same view after the war that it did before)). Of course one big difference has been time preferences. Countries facing big financial and political pressures have wanted to maximize short term revenue return while others (Saudis) have wanted to maximize unit return over a long haul. Companies under a financial squeeze are another example. Nervous new owners of Iraqi fields might want to pump fast for the first few years.
But don't you think that the big question will not be the price? Rather it will be the strategic control and the shifting of power (and profit) away from the 3rd world governments and back to the companies.
>I've got to find some folks who understand this stuff.
Yea. I shouldn't have put my foot in my mouth, since this isn't my field at all (and now I am only making it worse). Maybe Michael Tanzer could steer you to someone who does applied work and has a taste for speculating.
Paul