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Unformatted text preview: rel. This low price may, however, guarantee the maintenance of reasonable
revenue to Saudi Arabia, whose production costs are very low (according to some unofficial estimates perhaps as low as $1.5 per
barrel at present). Such an aggressive approach - although regarded by a few panellists as being somewhat technically difficult - would
result in driving other ‘high-cost’ oil-producers (including many OPEC members) from the market, as well as demolishing much of
the global interest and research into alternative energy means (including renewables ). 65
Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Market Position 66 Oil DDW 2012 1 Oil producers will use markets to keep prices low, disincentivizng alternative
Moran, Professor of National Security Affairs at the Naval Postgraduate School in Monterey, California. and Russell , 08
Daniel Moran, Professor of National Security Affairs at the Naval Postgraduate School in Monterey, California. and James A. Russell,
Associate Professor in the Department of National Security Affairs at the Naval Postgraduate School, 3-7-08, [“The Militarization of
Energy Security,” Saudi-US Relations Information Service, http://www.susris.com/articles/2008/ioi/080307-russell-energy.html] E.
Yet it is important to recognize that the complexity of the problems the market is being trusted to solve is destined to increase . Until
now energy markets have been expected to do no more than ensure that supply kept up with demand, and that prices remained within a
range that buyers and sellers could tolerate. If it is true that oil may eventually become too expensive to use for energy on the current
scale, whether because too scarce or too toxic, then the market must gradually learn to do more. It must drive the price of oil up at a
rate that provides adequate incentives for the development of alternative fuels -- a development that the producers of oil can be
expected to use their market position to resist. It must also do this at a rate that is sufficiently smooth as not to dislocate too severely
established patterns of consumption in the developed world, nor thwart too severely the aspirations of those who hope to join that
world someday. It must also proceed sufficiently rapid as to forestall the advent of “virtual” peak oil. 67
Last printed 9/4/2009 7:00:00 PM Oil DDW 2012 1 Spare Capacity 68 Oil DDW 2012 1 Saudi Arabia has the capacity to massively increase supply to deter alternative
Moorse, Managing Director of Louis Capital Markets, 09
Edward L. Moorse, Managing Director of Louis Capital Markets. He was Deputy Assistant Secretary of State for International Energy
Policy in 1979-81 ,09 , [“Low and Behold Making the Most of Cheap Oil,” 88 Foreign Aff. 36 2009, http://heinonline.org/HOL/Page?
handle=hein.journals/fora88&div=72&g_sent=1&collection=journals] E. Liu
By 2003-4, Saudi Arabia was concerned. It responded by raising production: from 7.5 million barrels per day in 2002 to 9.2 million
barrels per day in 2003. After a dip in 2004, it produced close...
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This note was uploaded on 01/30/2013 for the course ECON 101 taught by Professor Burke during the Spring '13 term at Southern Arkansas University.
- Spring '13
- The American, Saudi Arabia, Peak oil, Nuclear weapon, Oil prices