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Interesting to consider the politics of this. On the one hand Saudi Arabia and others want to give the illusion of the wealth lasting for ever. On the other h
by benj111 8y ago
Interesting to consider the politics of this.
On the one hand Saudi Arabia and others want to give the illusion of the wealth lasting for ever.
On the other hand, lower reserves would lead to higher prices, which is something they'd want to maximise.
- Someone 8y agoNo, they want to maximize the amount of money they get out of their oil, with money they get now being worth more than money they will get next year, with that being worth more than money they get a decade from now, etc. Also, the house of Saud isn’t playing only that game. They also want to stay in power. They’re not universally popular in the region, so that means listening to their faraway supporters, who want to keep oil prices low.
- benj111 8y agoI don't get what you're disagreeing with me about?
- Someone 8y ago”higher prices, which is something they'd want to maximise.”
- benj111 8y agoYes... You maximise money, by maximising prices (for some value of maximise). I'm not saying they should be aiming for $1 million / barrel. But clearly $60 is better than $50, assuming that doesn't lower volume. We seem to agree on that?
- ppf 8y agoNot really - they are relying on keeping output high to depress prices. Otherwise, other sources of oil (eg, US shale, South American oil sands) that are more expensive to extract become worthwhile, sending oil revenues to those other countries.
- ppf 8y agoYou are right that the politics of this is very interesting, though.
- benj111 8y agoYes obviously there are many factors that come into play. But this is one of the few factors they can make up. You can't fudge production numbers, you can fudge what's still in the ground. But which way to fudge it?