Comments on: Saudis Seek Compensation for Artificial Decrease in Oil Demand

By: olivetheoil

olivetheoil — Sat, 17 Oct 2009 03:31:41 +0000

Query, so will KSA be compensating consumers for artificial INCREASES in the price of oil?

By: Solomon2

Solomon2 — Fri, 16 Oct 2009 21:30:17 +0000

Reading the email, it’s like the OPEC guys think of themselves solely as consumers of wealth, not creators of it, and thus seek to retain their share of the world’s economic pie even as it changes, rather than learn to go out and bake themselves. I suppose that makes sense from a Saudi prince who has been brought up from diapers with the idea that he is someone very special and all the little people in the world should bow to his desires.

By: Chiara

Chiara — Fri, 16 Oct 2009 01:18:07 +0000

As John explains the Saudi position, and based on straight economics, this demand for compensation for an accelerated decline in oil prices makes sense. I really don’t find it so unreasonable that a business be compensated, or demand compensation, for encroachment on its profits by a competitor. It does have an image problem given the current global economy and ecology.

And now I am off to contemplate “the prolonged oil producing nipple” or something like that.

Coolred–you really must stop making me laugh out loud in the library! LOL

By: coolred38

coolred38 — Thu, 15 Oct 2009 21:30:33 +0000

Its not like Saudi (and other oil producing countries) couldnt see this coming and act accordingly ahead of time. We have all been discussing what will oil producing Arab countries do once that oil money runs out as they have very little else to offer the world…so if we knew it was coming…why not them?

Its just an attempt to prolong the “oil producing nipple”…or something like that.

By: John Burgess

John Burgess — Thu, 15 Oct 2009 19:55:26 +0000

Agreed, for the most part.

I think more than the government’s interstates, it was the post-war economy, with exploding families, lots of ready cash for most, and an optimism about the future that drove the shift to automobiles. It’s not that they weren’t popular before the war, it was just that they were too expensive. Society changed, too, with people opting to leave the inner cities for suburbia where decent, cheap housing was available rather than the four-story, coldwater walkups that had been the norm.

Government certainly helped. But is responding to public demand merely ‘helping’?

The Saudis certainly did benefit from the auto boom. They profited even more from the fact that electricity is generated using oil. As Saudi petroleum tends to be of higher grade than many others, it substituted for sales by those with the lower grades. As they say, the oil market is global.

By: Jerry M

Jerry M — Thu, 15 Oct 2009 18:52:05 +0000

It is so hard to separate ‘pure’ market forces from non-market based influences. For example the US could have encouraged the building of modern high speed intercity rail after WWII but it ended up building highways and airports. The US interstate highway system can be seen as a subsidy to the auto and trucking industries. So, our passenger rail systems were destroyed by government action. (I realize this is simplistic.) My point is that the adoption of the car as the primary long distance form of travel was not simply based on a free market.

The Saudis were a major beneficiary of the auto boom. They may be a major looser if that internal combustion engine stops being the way cars are powered.

By: John Burgess

John Burgess — Thu, 15 Oct 2009 18:03:21 +0000

I think it was an inartful–if not boneheaded–thing to say. Yes, there’s a point to what they’re saying, but nobody really wants to hear it just now.

I think the remark was for consumption on the local market as the Saudis are very active in solar research and development. They know that petroleum is a finite resource. They also know that there’s going to be a lot of oil in the ground (good thing!) long after automobiles and power plants stop burning it. We’re going to be relying on petroleum, though to a lesser degree, for at least a century to come.

By: Jerry M

Jerry M — Thu, 15 Oct 2009 17:56:50 +0000

I think the Saudis are making an issue that can only backfire. The countries in Europe already have high taxes on gasoline and that hasn’t stopped oil use from expanding. Given the need for energy in India and China, does anyone think that Western efforts to reduce demand are going to succeed?

Instead of seeing the possible reduction in oil use as a problem they should look at it as an opportunity. Oil isn’t their greatest resource. Their greatest resource should be their people.

By: John Burgess

John Burgess — Thu, 15 Oct 2009 17:48:42 +0000

Well, that’s the point being debated: should politics or the market determine the price and accessibility of oil? The whole CO2 thing is coming under strenuous re-examination now, too, so the political urgency may not be quite as compelling as it was just a year ago.

‘Chutzpah’ is a Yiddish term that means something along the lines of ‘quite a nerve’ or ‘bold beyond belief’. It’s a sarcastic term usually, and the ur-example is of the guy who killed his parents and then asks the court’s mercy because he’s an orphan!

By: Aafke

Aafke — Thu, 15 Oct 2009 15:49:08 +0000

I’m just speechless!
So instead of paying through the nose for oil, we should be paying through the nose for not buying oil????

And there I was, planning to build a completely passive house, with minimal energy consumption, and then I suppose I should Pay for being environmetally friendly?????
It’s not as if Saudi actually needs all those billions anyway. The majority of saudis gets nothing from it as it is. Just weed out all those spoilt waistrels of royals and the whole country would be doing fine on what’s left.
About high time to throw the whole al saud clan out I’d say!