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Unread 15 Sep 2005, 23:45   #1
acropolis
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About Countries Selling Their Natural Resources

Or giving them away, as the case may be.

I don't know how the system works, I'll say that now. But we in America have a nice sized oil field under a pristine arctic wilderness in the middle of nowhere, and of late there has been pressure to lease it for drilling to relieve high oil prices.

But here's my thinking. Oil is selling for X dollars a barrel right now. If we lease those fields, I sincerely doubt any company would pay more than X dollars/barrel for the oil they pumped out. Which to me is bullshit.

Cause we know for a 'fact' that the price of oil is going to go up. To me it's like having a winning lotto ticket and then selling it for face value (less than face value actually). Okay, so maybe we don't know for a fact that oil prices will keep going up; it's possible some magic new energy source will pop up, and oil will immediately be worthless like tech stock circa august 2001. But in that scenario, we're fine. You're fine. Everybody's fine. I don't feel an urgent need to put it all on the line to prepare for that fearsome best-case scenario.

So, were I in charge I would hire some two-bit economists to predict the high-value for oil, and I wouldn't sell reserves for less than maybe 90% of that value.

This is where other people point out
A) Why I'm wrong
B) How governments should make use of their natural resources
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Unread 15 Sep 2005, 23:49   #2
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Re: About Countries Selling Their Natural Resources

The government has some interest in stabalising / reducing oil prices though. Speculating in such a fashion would only increase the problem of high prices surely?

But I think the main problem with the plan is it relies on economists knowing anything at all, let alone the peak price of oil.

edit : Obviously it's unlikely to occur in the US, but the best model under the current system would simply be for the government to create a "company" which then drills for and sells the oil. Any upsurge in price would therefore benefit the tax-payer.
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Unread 15 Sep 2005, 23:52   #3
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Re: About Countries Selling Their Natural Resources

Isn't part of the problem though that OPEC regulates how many barrels a day can be pumped which therefore keeps the price of oil above a certain level?
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Unread 15 Sep 2005, 23:54   #4
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Re: About Countries Selling Their Natural Resources

I don't think oil is expensive, if you compare it to other goods.
Take a half-litre of Coca-Cola bought in a store. Costs around 1£. One litre of oil costs roughly the same (norwegian prices).

Coca-Cola is made of sugar and water. Oil is a limited resource on earth.
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Unread 15 Sep 2005, 23:55   #5
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by All Systems Go
Isn't part of the problem though that OPEC regulates how many barrels a day can be pumped which therefore keeps the price of oil above a certain level?
OPEC only regulates their own production. America isn't a member of OPEC afaik.
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Unread 15 Sep 2005, 23:56   #6
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Re: About Countries Selling Their Natural Resources

Opec only controls a certain part of the world production.
Large oil producers like Norway, Russia, USA, isnt a member.

Besides, Opec is bascily producing what they can atm.
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Unread 16 Sep 2005, 00:06   #7
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Re: About Countries Selling Their Natural Resources

They almost certainly would lease the fields under forcast conditions, its probably also worth remembering that those companies would have to pay tax on all their incomes so the rise in oil revenue would be benefitial to the 'home' economy.

btw my lefty conspiracy theory inclined comrade aquaintance down the pub said he thought the limiting of refining capability and general uhmmming and ahhing about what to do from the big four producers was a concerted attempt to get the price of oil high and keep the proletariat down.
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Unread 16 Sep 2005, 00:07   #8
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Re: About Countries Selling Their Natural Resources

What precisely does it mean to say that a 'country' owns something?
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Unread 16 Sep 2005, 00:13   #9
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by All Systems Go
Isn't part of the problem though that OPEC regulates how many barrels a day can be pumped which therefore keeps the price of oil above a certain level?
as far as i know their target price used to be somewhere between 20 and 30$, we are slightly above that right now.

on the topic: there is a difference between money today and money in x years. you dont know what happens to the prices, although with a few billion asians who all want their own cars its a fair guess that they will rise.
but consider this: the OPEC stops its oil production. from one moment to the other some 30% of the oil supply are gone. thats an oil crisis, economies collapse, people lose their jobs, etc. in short, suddenly their entire market is gone and they have noone to sell their oil to and prices fall instead of rising. other than that it puts pressure on governments / companies / whoever to either find alternatives to oil or at least use the oil more efficently.
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Unread 16 Sep 2005, 00:14   #10
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Re: About Countries Selling Their Natural Resources

It means we can tax the companies 78% (and then some more) for taking up the oil, Nodrog.

From the history "How Norway got rich".
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Unread 16 Sep 2005, 00:16   #11
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by Nodrog
What precisely does it mean to say that a 'country' owns something?
The same thing as a corporation owning something pretty much. Except instead of shareholders you have citizens (and they can't really sell their shares). And instead of a board of directors you have your government. And so on.

In real-terms, like most property law, very little except that people recognise some people have some rights, and if you don't like it well the US Army have some guns so whatcha gonna do?
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Unread 16 Sep 2005, 00:22   #12
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Re: About Countries Selling Their Natural Resources

Acroplis wihtout having access to any linked articles and just going by what i remember off the top of my head:

Oil prices aren't really that high (in historical terms) atm.

The peak that hit last week was due to a natural event (i dont wanna say disaster) and as such the prices are stabilising and by the time any lease arrangement was worked out they prices will be back to $56/barrel or so (i suspect) which is about mean oil price etc.


ASG:

OPEC pumping capacity 20 years or so ago was about 75 million barrels a day (or something) when they only needed to pump 50 odd (i might be slightly off with that number).

OPEC pumping capacity now is 82 million barrels a day (or something) and they normally need to pump 78 or so (again numbers might be *slightly* off).

As such everything is normally fine.

However with Katrina taking out a large chunk of US production even if they wanted to OPEC cant increase production too much (or sommit).


Personal opinion wise i think if America actually got their priorities straight and made it so SUV's dont "exist" (ie they are no longer classified as "trucks") and people were made to switch off their TV's instead of putting them on standby and such like things would be better without having to blame it on the sand jockeys.
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Unread 16 Sep 2005, 00:22   #13
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Re: About Countries Selling Their Natural Resources

Oil prices aren't going to go down much even when everything is back on stream again. The developing nations in Asia (China and India and the others) are going to be increasing demand and ofc the more thats sucked out of the ground, the lower the reserves get.
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Unread 16 Sep 2005, 00:26   #14
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by Dante Hicks
The same thing as a corporation owning something pretty much. Except instead of shareholders you have citizens (and they can't really sell their shares). And instead of a board of directors you have your government. And so on.

In real-terms, like most property law, very little except that people recognise some people have some rights, and if you don't like it well the US Army have some guns so whatcha gonna do?
Corporate ownership can normally be justified in the same way as personal ownership (so 'not at all' to you) - a transformation of resources by a group of individuals grounds the property claim, and it is eventually 'sold' to shareholders when the company goes public. But there is no obvious way that government control of natural resources can be justified in this manner - the analogy doesnt stretch that far. Its meaningless to say that the country owns the resources, and just wrong to say that the citizens collectively own it (otherwise I could take my share and sell it). So youre left with the choice of it either being unowned, or the government owning it via some claim that seems ultimately groundless.
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Unread 16 Sep 2005, 00:32   #15
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by Nodrog
Corporate ownership can normally be justified in the same way as personal ownership (so 'not at all' to you) - a transformation of resources by a group of individuals grounds the property claim, and it is eventually 'sold' to shareholders when the company goes public. But there is no obvious way that government control of natural resources can be justified in this manner - the analogy doesnt stretch that far. Its meaningless to say that the country owns the resources, and just wrong to say that the citizens collectively own it (otherwise I could take my share and sell it). So youre left with the choice of it either being unowned, or the government owning it via some claim that seems ultimately groundless.


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Unread 16 Sep 2005, 00:34   #16
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by Nodrog
Corporate ownership can normally be justified in the same way as personal ownership
I can't for the life of me understand why government ownership can't be justified in the same manner.

perhaps you need to address what you mean by a government
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Unread 16 Sep 2005, 00:40   #17
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Re: About Countries Selling Their Natural Resources

Someone (hi Nod) should stop reading Rand and come to grips with reality.
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Unread 16 Sep 2005, 00:45   #18
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by Nodrog
Its meaningless to say that the country owns the resources, and just wrong to say that the citizens collectively own it (otherwise I could take my share and sell it).
Not every organisation can be dissolved in such a fashion. Charities for examples, cannot be "sold" by their shareholders (if they have them, usually they have trustees, but it's the same sort of principle) and neither can Industrial & Provident Societies afaik. But charities can still "own" things (like office buildings and other assets).
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Unread 16 Sep 2005, 00:53   #19
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by acropolis
This is where other people point out
A) Why I'm wrong
Firstly, everyone already stockpiles massive amounts of oil. Oil might go up faster than interest rates; if you think it's likely then maybe you should stockpile some yourself.

Also, as a country we need to sell some of our current reserves to buy guns. Say Mad Max was reality. After the nuclear apocalypse, your undefended bunkers of oil will look a bit silly when you've been miserly with your guns.

Quote:
B) How governments should make use of their natural resources
Hopefully, the same as any landowner except they should try and think a bit more in the long-term to set a good example.
If it really is the case that governments are massively subsidising oil by drilling land imprudently then they should really just stop. It might make all those roads they built look a bit silly though.
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Unread 16 Sep 2005, 05:59   #20
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Exclamation Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by acropolis
But here's my thinking. Oil is selling for X dollars a barrel right now. If we lease those fields, I sincerely doubt any company would pay more than X dollars/barrel for the oil they pumped out. Which to me is bullshit.
If I recall correctly, the US government leases drilling rights on federal land to the highest bidder. Of course, winning bidders have to pay all exploration, drilling, pumping, and transportation costs--plus the costs of meeting all state and federal environmental regulations; and I'm guessing there's no refunds if the quantity or quality of the reserves don't meet predictions. However, if you think leases are going too cheaply then you are free to submit your own bid(s). The one 'gotcha' is that you have start substantial extraction of the oil/gas within 10 years or you can't renew the lease (meaning you can't lease it and then sit on it for 50 years waiting for it to appreciate--only the government is allowed to do that).

More germane is the fact that the oil and gas will be 'generously' taxed as it's pumped out, so the (state and federal) government will get far more money than simply the cost of the lease.

Purely from the standpoint of maximizing government revenues, it's probably better to have all leases sold and to tax production than to try to increase the lease price beyond what the market will bear (which will only scare off some potential bidders due to the numerous risks associated with oil and gas exploration and may result in some leases not being sold at all).
Quote:
Cause we know for a 'fact' that the price of oil is going to go up. To me it's like having a winning lotto ticket and then selling it for face value (less than face value actually). Okay, so maybe we don't know for a fact that oil prices will keep going up; it's possible some magic new energy source will pop up, and oil will immediately be worthless like tech stock circa august 2001. But in that scenario, we're fine. You're fine. Everybody's fine. I don't feel an urgent need to put it all on the line to prepare for that fearsome best-case scenario.
The idea of the government leaving the oil and gas in the ground and letting it (hopefullly) appreciate in value has to be weighed against the cost(s) of not pumping it out now; namely, lower government revenues and more of the country's wealth being spent in foreign countries to buy oil/gas that could have been spent domestically, as well as the risk that the oil/gas will be worth less, as mentioned. I don't believe that this kind of commodity speculation is either a necessary or prudent function of government.
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Unread 16 Sep 2005, 09:59   #21
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Re: About Countries Selling Their Natural Resources

Sell the oil, use the money to build wind turbines, lower the value of oil, buy it back for less, blow up the wind turbines, PROFIT!!!


It's a fool-proof plan.
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Unread 16 Sep 2005, 14:49   #22
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by Dace
Acroplis wihtout having access to any linked articles and just going by what i remember off the top of my head:

Oil prices aren't really that high (in historical terms) atm.

The peak that hit last week was due to a natural event (i dont wanna say disaster) and as such the prices are stabilising and by the time any lease arrangement was worked out they prices will be back to $56/barrel or so (i suspect) which is about mean oil price etc.

OPEC pumping capacity 20 years or so ago was about 75 million barrels a day (or something) when they only needed to pump 50 odd (i might be slightly off with that number).

OPEC pumping capacity now is 82 million barrels a day (or something) and they normally need to pump 78 or so (again numbers might be *slightly* off).
Despite the factthat you are probably partly pulling numbers out of your arse, I will be committing these to memory and using them from now on.

I do have a response to this, but it appears it will be spread down among the next couple responses.
Quote:
Originally Posted by wu_trax
but consider this: the OPEC stops its oil production. from one moment to the other some 30% of the oil supply are gone. thats an oil crisis, economies collapse, people lose their jobs, etc. in short, suddenly their entire market is gone and they have noone to sell their oil to and prices fall instead of rising. other than that it puts pressure on governments / companies / whoever to either find alternatives to oil or at least use the oil more efficently.
And so, in such a situation, we would be better off if we had already sold all of our oil?
Quote:
Originally Posted by wu_trax
on the topic: there is a difference between money today and money in x years. you dont know what happens to the prices, although with a few billion asians who all want their own cars its a fair guess that they will rise.
In the short run we have no idea what prices will do. At present, prices are dependent on the amount of oil that can be produced vs. demand. And with new discoveries of oil fields or new technology that makes pumping easier, oil prices could easily drop over the next few years or even next few decades. However, in the long run we do know what prices will do. There is a finite amount of oil on the planet, and eventually the supply side will transform from "supply that can be produced (Dace's 82 million a day)" to "Supply left." And where the first one can go up and down, the second can only go down.

It's possible that the demand side could drop in a big way, either from a new energy source (in which case all of our worries are allayed) or from aliens landing on earth and eating all of our faces. In neither case do I see a big "gee, if only we'd sold our oil..." scenario.
Quote:
Originally Posted by Nodrog
and just wrong to say that the citizens collectively own it (otherwise I could take my share and sell it). So youre left with the choice of it either being unowned, or the government owning it via some claim that seems ultimately groundless.
This needs more explaining. To me, the USA is a nation, and comprised of a set of land, resources, people, and capital (much of it military). I would consider the citizens of the USA the 'owners' in a way, but in a different way than, say, I own my pants. Does the US government not own any tanks either? Or does it own the tanks, but there is some way in which I can sell my shares of US tank?
Quote:
Originally Posted by queball
Firstly, everyone already stockpiles massive amounts of oil. Oil might go up faster than interest rates; if you think it's likely then maybe you should stockpile some yourself.
If I had money, which I don't, oil futures would certainly be intriguing.

But not a certainty. As I said, in the short run, oil prices could go anywhere. And by short run I mean as much as 50 or even 100 years. As a human, that's a little too long for me. But as a government, that should be considered almost short-term.
Quote:
Originally Posted by queball
Also, as a country we need to sell some of our current reserves to buy guns. Say Mad Max was reality. After the nuclear apocalypse, your undefended bunkers of oil will look a bit silly when you've been miserly with your guns..
If we had no guns, and we had no money or no credit with which to buy them, I would certainly endorse the sale to buy them, else someone might take our fields anyway (even without the Mad Max scenario).

I would definitely always choose the sale of oil as necessary to maintain a subsistence existence.
Quote:
Originally Posted by queball
If it really is the case that governments are massively subsidising oil by drilling land imprudently then they should really just stop. It might make all those roads they built look a bit silly though.
The trick here is that the majority of Earth's oil supply is in the hands of governments in which
A) the leaders put the sale money in their personal bank accounts
B) the leaders might be overthrown at any time
for people in that situation, the obvious direction is to make as much money as possible on a daily basis, not to get as much money out of the fields as possible in the long run.

So clearly they have no reason to stop. We do.
Quote:
Originally Posted by Tactitus
If I recall correctly, the US government leases drilling rights on federal land to the highest bidder. Of course, winning bidders have to pay all exploration, drilling, pumping, and transportation costs--plus the costs of meeting all state and federal environmental regulations; and I'm guessing there's no refunds if the quantity or quality of the reserves don't meet predictions. However, if you think leases are going too cheaply then you are free to submit your own bid(s). The one 'gotcha' is that you have start substantial extraction of the oil/gas within 10 years or you can't renew the lease (meaning you can't lease it and then sit on it for 50 years waiting for it to appreciate--only the government is allowed to do that).

More germane is the fact that the oil and gas will be 'generously' taxed as it's pumped out, so the (state and federal) government will get far more money than simply the cost of the lease.

Purely from the standpoint of maximizing government revenues, it's probably better to have all leases sold and to tax production than to try to increase the lease price beyond what the market will bear (which will only scare off some potential bidders due to the numerous risks associated with oil and gas exploration and may result in some leases not being sold at all).

The idea of the government leaving the oil and gas in the ground and letting it (hopefullly) appreciate in value has to be weighed against the cost(s) of not pumping it out now; namely, lower government revenues and more of the country's wealth being spent in foreign countries to buy oil/gas that could have been spent domestically, as well as the risk that the oil/gas will be worth less, as mentioned. I don't believe that this kind of commodity speculation is either a necessary or prudent function of government.
A necessary and prudent function of government is making and executing plans for the long term welfare of its people. Neither do individuals, mortal as they are, nor corporations, owned by sets of individuals, have any serious push to make such long term plans.

At present, energy prices for the reasons described above are artificially low. Government acting to make them artificially lower while removing our future options doesn't appear to be beneficial to me.
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Unread 16 Sep 2005, 16:29   #23
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by acropolis
And so, in such a situation, we would be better off if we had already sold all of our oil?
depends on the country we are talking about. the US probably would be better off, the Saudis for example dont have much of an economy, so if they dont have anyone to sell their oil to, they would be in some serious trouble.
Quote:
In the short run we have no idea what prices will do. At present, prices are dependent on the amount of oil that can be produced vs. demand. And with new discoveries of oil fields or new technology that makes pumping easier, oil prices could easily drop over the next few years or even next few decades. However, in the long run we do know what prices will do. There is a finite amount of oil on the planet, and eventually the supply side will transform from "supply that can be produced (Dace's 82 million a day)" to "Supply left." And where the first one can go up and down, the second can only go down.

It's possible that the demand side could drop in a big way, either from a new energy source (in which case all of our worries are allayed) or from aliens landing on earth and eating all of our faces. In neither case do I see a big "gee, if only we'd sold our oil..." scenario.
there are four types of countries:
a) countries that live on oil, like saudi arabia. They want a constant flow of money, so they cant just stop production to safe their oil for later. they also want relativly, but not too high prices.
b) developed countries with their own oil, like the US, UK or Norway. These are the only countries that might have an interest in preserving their reserves, but on the other hand, since they are developed countries they also have an interest in a stable global economy. an oil crisis isnt fun, even if you are not that dependend on others. Besides, by your logic, you could never use that oil in alaska, because prices would rise forever (or until there is an alternative)
c) developed countries without natural resources, like Germany or Japan. They dont have much of a choice, they have to buy at whatever price the suppliers demand. But, if the prices are too high, they might put more resources into developing alternatives to oilor at least minimize its usage, so that they are not that depended on others (in europe governments didnt put such a lot of taxes on fuel for the fun of it, but to make people buy smaller, more efficent cars). this is why countries of type A or B dont want the prices to rise too far.

( d) developing countries without a serious economy and without natural resources. They dont have the money to buy oil, so we can ignore them for now. if they should ever become developed countries (China), demand for oil will rise even further)
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Unread 16 Sep 2005, 17:14   #24
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by wu_trax
depends on the country we are talking about. the US probably would be better off, the Saudis for example dont have much of an economy, so if they dont have anyone to sell their oil to, they would be in some serious trouble.

there are four types of countries:
a) countries that live on oil, like saudi arabia. They want a constant flow of money, so they cant just stop production to safe their oil for later. they also want relativly, but not too high prices.
b) developed countries with their own oil, like the US, UK or Norway. These are the only countries that might have an interest in preserving their reserves, but on the other hand, since they are developed countries they also have an interest in a stable global economy. an oil crisis isnt fun, even if you are not that dependend on others. Besides, by your logic, you could never use that oil in alaska, because prices would rise forever (or until there is an alternative)
c) developed countries without natural resources, like Germany or Japan. They dont have much of a choice, they have to buy at whatever price the suppliers demand. But, if the prices are too high, they might put more resources into developing alternatives to oilor at least minimize its usage, so that they are not that depended on others (in europe governments didnt put such a lot of taxes on fuel for the fun of it, but to make people buy smaller, more efficent cars). this is why countries of type A or B dont want the prices to rise too far.

( d) developing countries without a serious economy and without natural resources. They dont have the money to buy oil, so we can ignore them for now. if they should ever become developed countries (China), demand for oil will rise even further)
i like that perspective. obviously, if selling ANWR prevents the world from collapsing, it is worth selling, even if the price goes up. "By my logic" the price of oil does not go up forever. If you look at it purely in terms of energy (once you add in plastics etc. the situation gets more complicated), oil is worth just slightly less then it would cost to produce the same energy via an alternate means (oil is cheaper because its use causes pollution which has a cost, whether the person using it pays it or not). comparing to solar panel costs shouldn't be that hard, though it's likely such panels will get cheaper with time.

in your "four cases" I would argue with you on (c). On paper there isn't a real economic difference between Germany and Japan buying large amounts of oil for storage and the USA and Norway simply not selling what they have. They each have the same cost at present in terms of dollars per barrel. In practice, Germany and Japan have a practical problem with storing the vast quantities (the USA has that taken care of for free), and both have in practice political problems as well (for the US, fighting enviros to get the oil out, fighting oil interests to keep the oil in; for Germany and Japan there would be a lot of people getting angry at them for buying up oil and driving up the price). But they would be buying dollars for dimes.
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Unread 16 Sep 2005, 18:37   #25
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by acropolis
i like that perspective. obviously, if selling ANWR prevents the world from collapsing, it is worth selling, even if the price goes up. "By my logic" the price of oil does not go up forever. If you look at it purely in terms of energy (once you add in plastics etc. the situation gets more complicated), oil is worth just slightly less then it would cost to produce the same energy via an alternate means (oil is cheaper because its use causes pollution which has a cost, whether the person using it pays it or not). comparing to solar panel costs shouldn't be that hard, though it's likely such panels will get cheaper with time.
it takes some time to make everyone buy a car that runs with solar energy and during that time you can ask whatever price you want for oil, because the demand is more or less static.
Quote:
in your "four cases" I would argue with you on (c). On paper there isn't a real economic difference between Germany and Japan buying large amounts of oil for storage and the USA and Norway simply not selling what they have. They each have the same cost at present in terms of dollars per barrel. In practice, Germany and Japan have a practical problem with storing the vast quantities (the USA has that taken care of for free), and both have in practice political problems as well (for the US, fighting enviros to get the oil out, fighting oil interests to keep the oil in; for Germany and Japan there would be a lot of people getting angry at them for buying up oil and driving up the price). But they would be buying dollars for dimes.
that would be true on a perfect market. in reality you have options, we have none. if the oil prices rise to, lets say, 120$ per barrel, your enviromentalists will either shut up or your governement would be safly able to ignore them. we have no such options, we'd just have to pay the 120$.
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Unread 16 Sep 2005, 20:34   #26
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by wu_trax
that would be true on a perfect market. in reality you have options, we have none. if the oil prices rise to, lets say, 120$ per barrel, your enviromentalists will either shut up or your governement would be safly able to ignore them. we have no such options, we'd just have to pay the 120$.
In a global capitalist market, the people of the United States would also pay $120 per barrel if that was the going rate.

If the price went down because of the United States drilling in ANWR, then the price would also go down for Germany.
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Unread 16 Sep 2005, 20:35   #27
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by acropolis
However, in the long run we do know what prices will do. There is a finite amount of oil on the planet, and eventually the supply side will transform from "supply that can be produced (Dace's 82 million a day)" to "Supply left." And where the first one can go up and down, the second can only go down.
I think it's possible to have a finite amount of a non-durable good go up in price at a constant 6% a year even with no technological progress. Say there are x = 1 - exp(-p) units of oil that can be extracted for under p dollars per litre. Set p = exp(1.06t) where t is the time in years. If demand at p and t happens to be equal to dx/dt then everything's hunky dory.

Quote:
Originally Posted by Tactitus
If I recall correctly, the US government leases drilling rights on federal land to the highest bidder.. Of course, winning bidders have to pay all exploration, drilling, pumping, and transportation costs--plus the costs of meeting all state and federal environmental regulations; and I'm guessing there's no refunds if the quantity or quality of the reserves don't meet predictions. However, if you think leases are going too cheaply then you are free to submit your own bid(s). The one 'gotcha' is that you have start substantial extraction of the oil/gas within 10 years or you can't renew the lease (meaning you can't lease it and then sit on it for 50 years waiting for it to appreciate--only the government is allowed to do that).
What is the justification for demanding the oil be drilled immediately?
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Unread 16 Sep 2005, 21:20   #28
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by queball
I think it's possible to have a finite amount of a non-durable good go up in price at a constant 6% a year even with no technological progress. Say there are x = 1 - exp(-p) units of oil that can be extracted for under p dollars per litre. Set p = exp(1.06t) where t is the time in years. If demand at p and t happens to be equal to dx/dt then everything's hunky dory.
if i understand what you are saying, it is possible for oil price to ramp up forever with constant sales of oil and finite oil reserves. which is neat. i reserve the right to assume that you don't actually mean for the price of oil to be at $145 per liter in 5 years (e^(1.06t) ).

however, i do believe i set a credible upper bound on oil prices in one of those last posts.
Quote:
Originally Posted by Texan
If the price went down because of the United States drilling in ANWR, then the price would also go down for Germany.
to an extent, this puts the USA and Germany in the same car, but with the USA in the driver's seat (given that the US has control over the reserves).

However, in theory there's no reason why Germany can't sell oil they don't have in the same manner as Wall Streeters sell short, putting the USA and Germany in one of those multiple-steering wheel drivers ed cars.

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Unread 16 Sep 2005, 21:50   #29
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by JonnyBGood
Sell the oil, use the money to build wind turbines, lower the value of oil, buy it back for less, blow up the wind turbines, PROFIT!!!


It's a fool-proof plan.
Rinse and repeat
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Unread 16 Sep 2005, 22:00   #30
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Re: About Countries Selling Their Natural Resources

There's something inherently insane about a discussion between queball and acropolis.
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Unread 17 Sep 2005, 02:14   #31
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Re: About Countries Selling Their Natural Resources

on further consideration.

assuming that you, like 99.99% of the population would consider those oil fields an asset to the country that has them, then clearly any country whose oil is being pumped out should be counting the depleting oil into their receipts. and it's reasonably clear as well that in doing this accounting, you should count according to the equivalent energy value (EEV).

in the case of ANWR, saying that there are 20 billion barrels there, and every barrel has 50 gallons of gas (lot of simplification here), and that gas tops off at $10 per gallon, then we really have an asset sitting there worth 10 trillion.

Now, assuming that between leasing and taxing we could get $1 per gallon now (whereas we could probably eventually get ~$5), then for each barrel that gets drilled now we are incurring a deficit of $200.

However, on paper as the US does business now, we count the income from the taxes on oil, but not the loss of the asset. If I were a major player in a ruling party in a country that had a serious deficit problem, then obviously under such an accounting I would be selling everything that wasn't nailed down for pennies on the dollar. But that doesn't make it a 'good idea' to me.
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Unread 17 Sep 2005, 02:42   #32
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Re: About Countries Selling Their Natural Resources

Quote:
Originally Posted by JonnyBGood
There's something inherently insane about a discussion between queball and acropolis.
what is it??

qft?
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