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The populist Clinton promises to take on OPEC
Posted by: McQ on Tuesday, May 06, 2008

Great populist rhetoric, but I'd love to know how she plans to "go right at OPEC".
"We’re going to go right at OPEC," she said. "They can no longer be a cartel, a monopoly that get together once every couple of months in some conference room in some plush place in the world, they decide how much oil they’re going to produce and what price they’re going to put it at," she told a crowd at a firehouse in Merrillville, IN.

"That’s not a market. That’s a monopoly," she said, saying she'd use anti-trust law and the World Trade Organization to take on OPEC.
She claims she'd use our "anti-trust law", but I don't see that as having any effect on a cartel who would not find any difficulty selling its product elsewhere if we decide to make it difficult to sell it here. And, frankly, it shows a pretty significant ignorance (or she assumes a level of ignorance by voters) of how world markets work - cartel or no cartel.

Secondly, I'm not sure what the WTO can do to a cartel which essentially has functioned under its "watchful eye" for decades. Again, the cartel has all the cards and the WTO, when it gets down to brass tacks, has no real power.

But it certainly is fun stuff to spout when you really don't have any idea of how to have actually have an effect on gasoline prices (well except the obvious - drill, drill, drill, exploit, expolit, exploit) and your sole "plan" is to sell the vapor-ware of 'alternative fuels' and "windfall profits taxes" which will drive the price of gas even higher.
 
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Imperialism of the rankest sort (heh).



She’s been inhaling.
 
Written By: looker
URL: http://
I can only guess that the US will out produce OPEC ... LOL
 
Written By: Neo
URL: http://
From the link:
UPDATE: The Obama campaign points out that Clinton has not signed on to cosponsor a bill that aspires "to make oil-producing and exporting cartels illegal."

UPDATE: Clinton’s campaign says she voted a version of the bill in 2007 and has long favored filing a WTO complaint against OPEC.
More popcorn fodder.

I find this comparable to the Obama NAFTA talk, just talk.

OTOH, I have concerns when ANWAR and the Gulf ’o’ Mexico are held up as ’thee’ solution to gas prices. Because OPEC & friends could just absorb production and keep overall supply essentially the same and oil prices high.

Without breaking OPEC, which is unlikely, some kind of domestic nationalization of the marketting of US produced oil would be needed to see any benefit at the pump.

There are other benefits to pumping our own oil, but I just do see it at the pump as long as we are dealing with an international cartel.
 
Written By: jpm100
URL: http://
I recall Jimmah "The Rabbit Slayer" Carter saying the same thing.
Anyone remember how well that went?

 
Written By: Bithead
URL: http://bitsblog.florack.us
I’ll buy drilling anywhere in the US (including, if need be, my backyard....)

But I want a guarantee before they set up the rig that oil will stay IN the US.

Because,
I see nothing to convince me that any oil drilled on US soil or in US holdings is going to be reserved for US consumption.

It’s not "our" oil, it belongs to the guys who drill it. Correct me if I’m wrong, but isn’t it all, more or less, going into a big tank somewhere and being shipped off to the guy who bought it at $(x) per barrel even if that guy happens to be Hu Jintao in Bejing?

Sure increasing the supply should lower the price, is all that miracle price changing (which for months now has struck me as nothing but profit taking by real middlemen and oil companies disguised as middlemen) going to happen before, say, August of this year? Nah....

Even if we start drilling today (ocean platforms, take how long? Land based platforms I know, I see em going up all the time here) off Florida or in Anwar how long before that oil they haven’t pumped yet enters the market?



But Hillary’s answer is...well...it’s not even in the realm of reality. To paraphrase another post on another subject, it’s nothing but whining and expecting the world will alter itself to accommodate the whining.

 
Written By: looker
URL: http://
Because OPEC & friends could just absorb production and keep overall supply essentially the same and oil prices high.
Yeah, but more of the revenue stays out of OPEC hands, something that the constituent countries will not stomach too well regardless of what the perfumed princes in the palatial hotel lobby have to say (read: quota cheating).
 
Written By: CR
URL: http://
Historically, one of the reasons that we have maintained close relations with Saudi Arabia was their willingness to adjust their output in such a way as to maintain stability in the oil market, because stability is valuable economically.

So now President Hillary is going to get up on her bully pulpit and bash them for doing just that?
 
Written By: Aldo
URL: http://
At Drudge’s page he’s got this big headline about oil going to $200 a barrel, with the prediction coming from Goldman-Sachs.

But if I were guessing (and I am) it sounds like a siren song for suckers to come buy the speculators out before the price starts to head south.

I remember that book by Jim Glassman predicting (and titled) that the Dow would go to $35,000 toward the end of the dot-com bubble. Har-dee har har har.

The Fed has already signaled the end of loosening. Jobless claims were something like a quarter of what was being predicted. The mortgage/liquidity crisis is stabilizing.

And I think that the Euro is overvalued, the dollar undervalued, and commodity prices set to dive with more positive news on growth in the U.S.

Suckers beware of commodities.

Plus, on oil prices, the bet is that supply cannot catch up with Chinese and Indian demand. Well, I’m curious to watch to see how their demand catches up with these prices.

And, oh, Hillary: watch cattle futures!
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
But if I were guessing (and I am) it sounds like a siren song for suckers to come buy the speculators out before the price starts to head south.
Heh. Seems to me that’s happened before, too.

And Martin, dare I say this, you’re right on track with my original prediction of midsummer, here.

 
Written By: Bithead
URL: http://bitsblog.florack.us
"We’re going to go right at OPEC," she said. "They can no longer be a cartel, a monopoly that get together once every couple of months in some conference room in some plush place in the world, they decide how much oil they’re going to produce and what price they’re going to put it at," she told a crowd at a firehouse in Merrillville, IN. "We’re going to drill in ANWAR, we’re going to drill in the Gulf, we’re going to do all we can to recover oil from the Bakken formation, and we’re going to fast-track the development of new nuclear power plants"
Unless she added the bolded part, she’s just empty rhetoric.
 
Written By: shark
URL: http://
Hillary could always go to war for oil . . .
OTOH, I have concerns when ANWAR and the Gulf ’o’ Mexico are held up as ’thee’ solution to gas prices. Because OPEC & friends could just absorb production and keep overall supply essentially the same and oil prices high.
jpm100, why would they do that? They will move to maximize profits, not price.
I’ll buy drilling anywhere in the US (including, if need be, my backyard....)

But I want a guarantee before they set up the rig that oil will stay IN the US.

Because,
I see nothing to convince me that any oil drilled on US soil or in US holdings is going to be reserved for US consumption.
looker, shouldn’t the market decide how resources are allocated? Isn’t oil essentially fungable, and wouldn’t it work to drive down prices?

Granted, .gov regs (like those that make it difficult to make new domestic refineries) alter the marketplace in unsavery ways, and so we need to do more than drill for oil—we need to attack stupid .gov regulation accross the board.
 
Written By: Don
URL: http://
jpm100, why would they do that? They will move to maximize profits, not price.
Here’s a hypothetical,

Which makes more revenue?
900 barrels of oil sold for $120
-or-
1000 barrels of oil sold for $60

The same severe inelasticity of consumption that has allowed oil to reach $120 works in the other direction. It wouldn’t take much to tumble the price. But by the same token, it wouldn’t take much reduction in output to absorb it.

I’m sure they’d begrudge the lost revenue, but their response would not likely to drop revenue further by allowing supply to increase.
 
Written By: jpm100
URL: http://
When we’re talking $120 a barrel, we’re not talking the cost at the terminal from the ’well’ as it were...are we?
I don’t think we are.

As far as supply lowering cost, yeah I expect so. But let’s not get all caught up like it’s got our names on it. It will go where the market sends it.
If the premise is that ’our’ oil should be cheaper for us that’s not going to happen, it may drive the overall price down, but that’s not because it’s ours, that’s just because it increases the supply and alters the demand vs supply equation.

 
Written By: looker
URL: http://
by allowing supply to increase
Supply should be increasing, at the current prices, without anyone allowing it to increase. It’s a simple fact that oil with high extraction costs becomes profitable at these prices. The Saudis pay something like $4 a barrel in extraction costs; the extraction costs for the vast Canadian tar sands are up around $15-$20 a barrel.

So, I’m not a petroleum afficianado, but it strikes me that supplies should be bursting at the seams.

Once prices begin to fall, and the Saudis have already become as addicted to those profits as we supposedly are to their oil, they ramp up production to try to maintain the revenue stream, which causes the prices to fall further (or so goes my theory). If supply is increasing concurrently from, say, Canadian tar sands, then suddenly the Saudis want prices to continue downward to make those high extraction costs less competitive and to try to punish the capital investors. And then you get the historical price oscillation of oil.

Certainly, demand in the 1970s, early 80s, when the last huge price spike occurred was much less than the demand in the 1990s, when the bottom fell out of oil prices.

When oil prices get up way high like this people always start to believe that they will never come down, but they always do. And the argument is always that demand has increased so much that the prices can’t come down this time, but they always have.

And we were desperately running out of oil in the 1970s and prices fell during the 80s and into the 90s, when they were about as low as they ever have been, I believe, adjusted for inflation.
 
Written By: Martin McPhillips
URL: http://mcphillips.blogspot.com/
The same severe inelasticity of consumption that has allowed oil to reach $120 works in the other direction. It wouldn’t take much to tumble the price. But by the same token, it wouldn’t take much reduction in output to absorb it.
How much elasticity is there in the supply? I know it isn’t always a simple matter to ramp up production, and I suspect it can also be difficult to ramp it down.

Of course, you could pump it and store it, but that has costs too.
I’m sure they’d begrudge the lost revenue, but their response would not likely to drop revenue further by allowing supply to increase.
I presume they are in competition, and they want to sell their product, not watch their competition sell product.

Even in a cartel like OPEC, what you really have is a loose confederation. They are really in competition with each other, in a sense—if they agree to shut down oil production, each one’s interest is served by cheating and actually producing, for example.

 
Written By: Don
URL: http://

 
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