Dog Gone:

Thanks for the last info from your saudi contact ; about 10 days ago wasn't it??

Have you heard any more regarding the ports, pipelines,etc. I'm truly wondering if their "surprising" cohesion(sp) regarding production limits are actually the result of the inability to produce more.

-- jeanne (jeanne@hurry.now), January 30, 2000

Answers

P.S. to Andy, PA Engineer, Downstreamer(if you are still here)::

Have you heard anything from your contacts? Do you still know people in-country?

-- jeanne (jeanne@hurry.now), January 30, 2000.

Dog Gone, Andy, PA Engineer, Downstreamer have all left. They are too afraid of the rath of CPR.....

-- CPR Can Save Lives. (IfHeWould@Just.goAway), January 30, 2000.

Downstreamer has SIX posts today alone; you guys know where he is:

http://pub3.ezboard.com/fdownstreamventurespetroleummarkets

HERE IS Downstreamer's post on the Saudi's posted just after noon today:

http://pub3.ezboard.com/fdownstreamventurespetroleummarkets.showMessag e?topicID=375.topic

NY Times: The Saudi's Global Gamesmanship ---------------------------------------------------------------------- ---------- Saudi Gamesmanship: Why Expensive Oil May Endure

---------------------------------------------------------------------- ----------

WHO you gonna believe? Me or your lying eyes?

When it comes to oil prices, that classic Richard Pryor query ought to be the refrain of the experts, who have been in agreement for months that oil prices will not -- no, cannot -- long remain anywhere close to their current level. But prices keep rising anyway.

The experts probably are right, in the long run. But it may be months or even years before they are vindicated -- and that vindication is likely to come only after people begin to wonder whether the experts might be wrong.

In the meantime, oil supplies are tight and becoming tighter. Because refiners were sure that prices had to fall, they tried to avoid being caught with excess inventories. Now with the weather cold, prices have soared, particularly for home heating oil. Consumers will soon be screaming.

What we have here is a great example of global gamesmanship. As Frederick P. Leuffer, Bear, Stearns's oil watcher, notes, Saudi Arabia has two goals. The first is to make money from its oil. The second is to retain its position as the dominant global supplier. High oil prices bring in money, but run the risk of stimulating exploration for more oil, which would damage the second goal.

So it is in the Saudis' interest to keep the world guessing. The major oil companies, which were caught off guard when prices plunged in 1998, still have not raised their exploration budgets back to 1997 levels. "If people think the price will stay above $25 a barrel, they will significantly increase their investment in exploration and production and in another two or three years, we will be facing another crisis," said Thierry Demarest, chairman of TotalFina, as he insisted this week that his company would only make investments that promise profits with oil at $13.

So long as the industry thinks like that, it is quite possible that Saudi Arabia will be willing to exercise the restraint needed to keep oil prices firm. While the crude quote slipped 52 cents, to $27.32 a barrel, yesterday after the Saudi and Norwegian oil ministers agreed that the world oil market had reached "equilibrium," whatever that means, it remains far above the 1998 low of $10.35.

That low price reminded members of the Organization of Petroleum Exporting Countries that the Saudis could flood the market to punish others for cheating on OPEC quotas. One reason that everyone has forecast lower prices was the assumption that such cheating would soon resume. It hasn't, and it may not while the memory remains fresh.

If so, the world is back where it thought it was in 1980, at the mercy of the Saudis. The Saudis don't want to bring on world recession or reduce the sales of gas-guzzling sport utility vehicles, but they did run up a lot of debts when oil was cheap, and they could use the money.

About 40 percent of the energy used in this country comes from oil. As we spend more for gasoline, home heating and plane tickets, less will be left to pay for discretionary expenses, and the economy will be slowed.

In the long run, the availability of excess OPEC production capacity probably will lower oil prices. There is a good chance that OPEC production quotas will rise in March. But it is doubtful that the current market forecast, which says that oil for delivery a year from now will cost 23 percent less than oil does now, will prove accurate.

Two decades ago, the world's experts were terrorized by the prospect of ever-rising oil prices. Now they see nothing to fear from that source, and are sure oil prices will soon fall. Could they be as wrong now as they were then?

-- Hokie (Hokie_@hotmail.com), January 30, 2000.

Good number crunching , Hookie . I'm sure your right , because the ' majority ' are generally wrong ! Greed will triumph and prices will stay up , this time . Eagle

-- Hal Walker (e999eagle@FREEWWWEB.COM), January 30, 2000.

Somebody said "So it is in the Saudis' interest to keep the world guessing." For several years, they've been loudly, publically, overtly trying to get out of the economic bind they were in.

Price depends on the intersection of the (usually positive) price/supply curve and the (usually negative) price/demand curve. The Saudis were caught by an international oversupply of oil in the middle of high-cost development projects and long-term budgeted expenditures. Until they could build up their cash reserves AND cut their non-discretionary expenditures, they had to _increase_ their oil sales when prices dropped.

They have, apparently, fixed that. We can, unless some other major supplier gets caught in the same web, finally look forward to the long-term increases in oil prices we could have confidently but incorrectly predicted years ago.

No tricks, no secrets, and no relation to Y2K.

-- Markin Golding (fogobum@home.com), January 30, 2000.