Politics and high crude prices

JohnDenver · Light Sweet Crude Joined: Aug 29, 2004 Posts: 1866

The recent run-up in crude prices really can't be blamed on resource depletion. Virtually all the reasons are political.

Consider Iraq. The country is capable of pumping 3 or 4mbd more than it is now, but it's not because of politics. Everybody keeps saying: OPEC is pumping flat out, they can't increase anymore, but in fact they can. They can increase, at the very least, by the 3 or 4mbd that Iraq is not pumping.

The Caspian? Potential oil production there is apparently 5 or 6mbd, so what's standing in the way? Pipeline politics, and nationalized oil interfering with investment.

Further development in Saudi Arabia? Poor investment returns due to nationalized oil.

Mexico? Still some good potential in the deepwater Gulf, but the Mexican policies on oil nationalisation make it a bad investment for the companies which have the technology to do it.

Politics is in play everywhere. After Yukos, Russia looks like a dicey spot to invest a lot of money. Iran? Can't invest there; it's illegal. Nigeria? Political unrest. Venezuela? Messy politics. Polar? Messy jurisdictional/political issues. ANWR or the protected US coast? Messy politics.

It's a wonder the oil companies can produce any oil at all.

One thing's for sure: Right now, we could be pumping a lot more oil than we actually are. So the recent high prices (driven as they are by political impediments) are actually a sign of the peak being delayed, not coming on early. The politics is keeping the oil in the ground, and ensuring we have a long plateau.

Specop_007 · Expert Joined: Aug 12, 2004 Posts: 6235

Falconoffury · Expert Joined: May 25, 2004 Posts: 1431

Iraq is not an OPEC country, and it probably never will be. The US wanted Iraq to combat high price fixing by OPEC, so we aren't going to let it become an OPEC country. All of the true OPEC countries are likely running flat out.

Caspian has more problems than just political. It is all very sour with vanadium and sulfur in it. It's in an unstable region with no oil development whatsoever, and a lack of population centers nearby. Not to mention it's underwater.

The lack of drilling in ANWR is probably the only truly political setback in the world. It could produce 2 million barrels per day at full production for a number of years and it's already not far from other oil drilling operations and pipelines. Technically, it would be much easier to develop than the Caspian Sea.

If we could make friends with the Iraq people, use Keane seperation technology in Canada on a much larger scale, and started full development of ANWR, then we could certainly buy time.
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Kingcoal · Posted: Mon Nov 01, 2004 11:42 am Post subject:

From what I've heard, the world market is awash with sour. Evidentally, most refineries aren't set up to refine sour. The price hikes came from a shortage of sweetl. It's too early to tell, but I'm betting that sweet has already peaked.

nero · Posted: Mon Nov 01, 2004 12:02 pm Post subject:

Politics, of course, plays a part in peak oil just as peak oil plays a part in politics . After all, one of the prime rationalizations for nationalization in the first place was the recognition that the oil is a nonrenewable resource.

JohnDenver · Light Sweet Crude Joined: Aug 29, 2004 Posts: 1866

JohnDenver · Light Sweet Crude Joined: Aug 29, 2004 Posts: 1866