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That's not their marginal cost though. They may need $90/bbl to balance their budget, but they don't need $90 to pump the next barrel.
by ascorbic 11y ago
That's not their marginal cost though. They may need $90/bbl to balance their budget, but they don't need $90 to pump the next barrel.
- hughw 11y agoAgree, that was my point. It's not relevant to talk about their marginal cost as if you could ignore their need to balance their budget eventually.
- late2part 11y agoTrue. But let's play this out. If they can't balance their budgets, their government collapses (like Bankruptcy) and is replaced by a new Government that doesn't offer the same panem et circenses. New Government outsources oil production (like House Saud did some 70 years ago) and then the true marginal becomes the needed cost.
- venomsnake 11y agoThen we have civil war and big chunk of Saudi oil is off the market and prices rise again.