A devil's choice
Given the fact that the world's oil production is running full tilt , and demand is now LIMITED by that supply, we have a fun situation.
If ONE producer has problems, we have short term shortages and price spikes. until demand retreats or supply recovers.
This what I might call a "paycheck-to-paycheck" mentality. There's nothing left over for emergencies.
Well imagine this scenerio. Let's create a new coalition called OPEC2. Countries on OPEC2 are all oil exporters of course, and generally have quite a bit of oil left still, but they don't NEED regular oil income.
So OPEC2 countries all agree to reduce their production in half of current levels, transitioned over say the next 12 months, longer if they're a big coalition.
Then OPEC2 countries all say "We will be the 'spare capacity' countries. Whenever prices rise above $180/bbl, we'll increase our production back up to as high as our original 100%, if need demands."
Of course it's not a particularly good price according to current standards, but it's an insurance policy for the world.
REALLY, this is a sweet deal, because they'll promise to sell this oil at EXACTLY $180/bbl even if world prices are higher. Sure, someday they might raise this, but they promise to give a 12 month warning on all price increases.
The OPEC2 countries at worse have half their income, but really not since their declining production will raise prices.
Higher prices will slow growth as we want, so we'll have more time for improving efficiency and finding competitive alternatives.
The world would have a nice "cap price" to compare alternative energy and surely SOMETHING must be competitive at such prices, hopefully something not more polluting, but one disaster at a time.
When will OPEC2 come and save us?
If we can't get a oil exporting nation who is NOT dependent upon oil income, we do have a problem I admit, but that's a problem they need to work on themselves - better sooner or later.
If OPEC2 is "too hard", then I'll settle for a little terrorism (Oops! I mean "Freedom fighters") who sabatoge oil production against repressive governments who keep their control by their oil wealth. (These are "nice" fighters - they don't kill civilians - just "infrastructure" that helps maintain the power of the state - you know, somewhat like our bombing and cruise missiles are SUPPOSED to do.)
We shall see!
If ONE producer has problems, we have short term shortages and price spikes. until demand retreats or supply recovers.
This what I might call a "paycheck-to-paycheck" mentality. There's nothing left over for emergencies.
Well imagine this scenerio. Let's create a new coalition called OPEC2. Countries on OPEC2 are all oil exporters of course, and generally have quite a bit of oil left still, but they don't NEED regular oil income.
So OPEC2 countries all agree to reduce their production in half of current levels, transitioned over say the next 12 months, longer if they're a big coalition.
Then OPEC2 countries all say "We will be the 'spare capacity' countries. Whenever prices rise above $180/bbl, we'll increase our production back up to as high as our original 100%, if need demands."
Of course it's not a particularly good price according to current standards, but it's an insurance policy for the world.
REALLY, this is a sweet deal, because they'll promise to sell this oil at EXACTLY $180/bbl even if world prices are higher. Sure, someday they might raise this, but they promise to give a 12 month warning on all price increases.
The OPEC2 countries at worse have half their income, but really not since their declining production will raise prices.
Higher prices will slow growth as we want, so we'll have more time for improving efficiency and finding competitive alternatives.
The world would have a nice "cap price" to compare alternative energy and surely SOMETHING must be competitive at such prices, hopefully something not more polluting, but one disaster at a time.
When will OPEC2 come and save us?
If we can't get a oil exporting nation who is NOT dependent upon oil income, we do have a problem I admit, but that's a problem they need to work on themselves - better sooner or later.
If OPEC2 is "too hard", then I'll settle for a little terrorism (Oops! I mean "Freedom fighters") who sabatoge oil production against repressive governments who keep their control by their oil wealth. (These are "nice" fighters - they don't kill civilians - just "infrastructure" that helps maintain the power of the state - you know, somewhat like our bombing and cruise missiles are SUPPOSED to do.)
We shall see!
posted by Ares Olympus at 4:29 PM
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