How should we interpret yesterday’s announcement from OPEC?
Bloomberg described yesterday’s developments this way:
The new [OPEC-10] production target set today effectively erases most of a prior agreement made late last year for those 10 nations to cut production by 1.7 million barrels a day, to 25.8 million barrels a day. The new target of 27.2 million barrels a day is for those same 10 members, which excludes Iraq and Angola.
Here’s how OPEC’s website characterized the previously applicable production quotas:
For example, the table states that Venezuela had agreed to a production ceiling around 3.1 mb/d at the beginning of 2005, which was raised to 3.2 mb/d for the second half of the year. And here’s how those ceilings compare with what Venezuela actually produced (crude oil production excluding lease condensate) according to
Table T12 from the Energy Information Administration:
It’s hard to see a close connection between Venezuela’s ceiling and its actual production. The same is true for the other OPEC members. Some produce significantly more and others significantly less than their alleged quotas. The previous agreements reached in October and December of last year acknowledged this state of confusion, with OPEC at those meetings evidently agreeing to “cuts” in the production quotas (indicated in the last two yellow columns of the tables above) without formalizing what levels these cuts were supposed to be defined relative to.
So where does this 25.8 mb/d figure for the previous aggregate OPEC-10 production ceiling come from? The only reference to this number that I could find on OPEC’s website was the following statement in the April 2007 Bulletin:
OPEC’s two recent Meetings– in Doha, Qatar, in
October last year and then in Abuja, Nigeria, two months later– committed 10 of OPEC’s 12 Members (Angola and Iraq are exempt) to withdraw a total of 1.7 million barrels per day of crude oil from the international market. The first accord, which came into effect on November 1, reduced the production ceiling by 1.2m b/d to 26.3m b/d, while the second agreement entailed a further cut of 500,000 b/d and came into force on February 1.The Conference, which convened at the Organization’s Secretariat in the Austrian capital, decided that the current output ceiling for the OPEC-10 should remain at 25.8m b/d for the summer months.
So evidently there had been an understanding of the totals for the new levels across the OPEC-10, if not a public declaration of what the values for individual countries had been. This I can only interpret as an even looser bound on individual countries than had been in place for 2005 and 2006. In any case, whatever the 25.8 mb/d was supposed to signify, it didn’t correspond to what the OPEC-10 were actually producing, which EIA Table 12 gives as 26.3 mb/d for May and
Rigzone reported as 26.6 mb/d.
The rather uninformative OPEC press release itself summarized yesterday’s change this way:
the Conference decided to increase the volume of crude supplied to the market by OPEC Member Countries (excluding Angola and Iraq) by 500,000 b/d, effective 1 November 2007.
Well, can we trust that this will be the amount by which production actually changes, even if the agreed-upon starting and ending production ceilings remain a bit murky? I hardly think so. The following table is reproduced from my post two months ago:
| Country | Oct announced | Dec announced | Total announced | Actual decline |
|---|---|---|---|---|
| Algeria | 59 | 25 | 84 | 30 |
| Indonesia | 39 | 16 | 55 | 10 |
| Iran | 176 | 73 | 249 | 50 |
| Kuwait | 100 | 42 | 142 | 130 |
| Libya | 72 | 30 | 102 | 20 |
| Nigeria | 100 | 42 | 142 | 130 |
| Qatar | 35 | 15 | 50 | 60 |
| Saudi | 380 | 158 | 538 | 200 |
| U.A.E. | 101 | 42 | 143 | 100 |
| Venezuela | 138 | 57 | 195 | 50 |
| Total | 1200 | 500 | 1700 | 780 |
Even with what would appear to be substantially more sharply defined agreements than emerged from yesterday’s meeting, the production decisions announced by OPEC last year were at best a very crude predictor (ok, bad pun) of what each country actually ended up doing.
These are the kinds of facts that have led me to view OPEC not as a functioning cartel, but instead as a group of countries loosely announcing what individually they’d each pretty much want to do on their own anyway. I see the primary role of OPEC today as one of orchestrating political theater. For countries like Iran and Venezuela, it plays well for domestic politics to pretend that they are championing the cause of higher oil prices. For countries like Saudi Arabia and Kuwait, it lets them pose for an international audience as if their production decisions were somehow forced on them by the other OPEC members.
The one country for which I read some news into the latest OPEC announcement is Saudi Arabia. If the OPEC-10 are about to increase production, a significant chunk (more than half, I’d guess) must be expected to come from the Saudis. I doubt very much that OPEC would have made an announcement such as the one yesterday unless the kingdom intended to boost production by several hundred thousand barrels a day beginning in November. The interpretation that I have been favoring for why Saudi production fell by a million barrels per day over the last two years is that production from northern Ghawar, their most important oil field, has peaked. Furthermore, the recognition that higher oil prices have not led to as big a reduction in demand as we might have expected historically leads them to want to extract the remaining reserves more slowly. The Saudis have made big investments in developing other sources such as southern Ghawar and Qatif. I take the OPEC announcement as confirmation that these other sources are producing enough that the Saudis feel they can comfortably increase production by a few hundred thousand barrels per day. I don’t have any particular confidence that we’ll actually see a 500,000 b/d increase from OPEC as a group, but a few hundred thousand seems pretty reasonable to expect. This is of course better than the most dire assessment of the Saudi situation, but a long way from implying that the kingdom will be back up to its previous peak of 9.6 mb/d any time soon.
And that, in my opinion, is why the announcement that OPEC has increased its production quota from 25.8 to 27.2 mb/d was greeted by oil prices flirting with an all-time nominal high.
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Professor,
Thanks for this. I was interested in your take on the Saudi oil production increase considering your position on Ghawar.
One reason that higher oil prices have not slowed consumption as in the past is because inflation is higher. Consider $70/bbl oil with gold at $35 v $70/bbl oil with gold at $700.
In the 1970s the share of US consumer spending going to energy rose from just over 6% to some 9%.
So far this cycle it has gone from 4% to 6% and is still less than it was at the early 1970s bottom.
Moreover, in real terms the price of oil is still less than it was at the early 1980s peak — roughly $100 in current dollars.
In the 1970s we had physical shortage as much of the problem was a supply interruption.
Now the high price of oil is largely a demand pull
process.
basically, all these points lead me to the conclusion that the price of oil has yet to rise high enough to generate a 1970s type drop in demand.
Oil is settled (for the most part) in USD.
With the USA in the process of debasing its currency do not expect to see crude prices falling much (or at all) anytime soon.
This so-called production rise is theater … doing “something” to help the poor struggling consumers (addicts).
The producers (pushers) continue to smile and the princes continue to party (attend an OPEC meeting and learn precisely what this means).
Great post, professor.
For at least a decade, I’ve believe that you know that an OPEC minister is lying when you see his lips moving . . . . . . if “watch what they do, not what they say” is a touchstone for day-to-day living and any sort of analysis, it applies in quadruplicate to OPEC members. To my mind, the idea that oil prices move up or down based on anything that’s said at an OPEC meeting is just so much statistical noise.
Mathematically, for quite some time the Saudi’s have been the only country in OPEC that is supposed to have enough excess production capacity to matter (as your analysis points out, “more than half” of this OPEC-10 increase has to come from the Saudi’s). Now we potentially have a decent test of the question of whether Ghawar has entered its eventual (and fast!) decline, or has it not? IF Ghawar has begun to decline, I can’t imagine that the price of oil wouldn’t spike sharply over $80 in the very near future.
As this is written, crude has popped up into the low $79s a couple of times today, but gotten no further. Place your bets . . . . . .
Slightly off-topic, but just wanted to point out that you can buy next summer 08 gasoline at summer 07 prices, even though oil prices are significantly higher over the past few months. The US refinery shortage seems to have gone away without anyone building any new ones.
I don’t claim to know why oil prices are so high right now, but I’m skeptical that it has much to do with concern about the Saudi Ghawar oil field possibly reaching its production peak. I imagine it has more to do with short term supply and demand concerns, including the continual risk of hurricanes, political problems, sabotage and the general uncertainty which has affected the oil market in recent years.
The Ghawar analysis is IMO too abstract and speculative to really move the markets. Plus if that were the reason we would probably see more of a contango pricing relationship, with future prices higher than today. Instead, today’s prices are the highest on the futures market and they drop pretty steadily as you go out into future delivery months and years.
Hal, my main point was focused not so much on Ghawar as the fact that the OPEC announcement should not be viewed as signaling a significant production increase and is not going to undo the previous Saudi production cuts.
I’d suggest the market doesn’t DIRECTLY care a whit about Ghawar one way or the other.
What the oil market cares about is that over the past 12 months Saudi daily production has declined from 9.5-9.6 mbl per day to 8.6 mbl per day — and it’s worth noting that the decline in Saudi production happened BEFORE the Saudi quotas were cut, though over the past 6 months the quota has tracked production rather closely.
As the good professor points out, IF OPEC is to raise production meaningfully from here, the Saudi’s have to increase production, and there’s a legitimate question about whether or not they can IFF Ghawar is in rapid decline. Stay tuned
Hal:
I think it’s quite reasonable to think there could be some moderation in demand for oil over the next year given recent turmoil in financial markets and poor employment numbers suggesting a recession on the horizon, which could explain the structure of futures prices. However, NYMEX shows oil futures gradually declining to a low of about $70 in 2015, so markets certainly aren’t anticipating things getting much less tight at any point in the future. This is bad news for the Fed, since it suggests it cannot count on much relief from lower energy prices to mitigate inflation fears.
Kevin Drum notes this paragraph from the New York Times story on the OPEC announcement: “Consuming nations, including the United States, have been urging OPEC producers to put more oil on the market, warning that the winter months would see a big jump in consumption that non-OPEC producers would not be able to meet.”
Is this an official concession that non-OPEC producers have already reached peak oil? So OPEC and Saudi Arabia in particular is the only excess capacity left? It’s getting harder and harder to deny that peak oil is upon us.
However, NYMEX shows oil futures gradually declining to a low of about $70 in 2015, so markets certainly aren’t anticipating things getting much less tight at any point in the future.
In all seriousness, has there been any time recently when the futures market didn’t show either (a) a gradual, steady increase in price over the next several years or (b) a gradual, steady decrease in price over the next several years? The futures market seems to be one of the few places where forecasts of sharp changes actually get priced out very quickly.
Yes, it would seem likely that the Saudis are looking at a production increase of some sort after their massive investments, in the face of the downward pressure that I agree with you is probably going on in all-crucial al Ghawar.
Another source of production increase that has been unmentioned in most sources has been noted in links found in the new blog by Ben Lando http://www.iraqioilreport.com. On Aug. 6 the Kurds passed their own oil law and are negotiating contracts. Not only that they have already made contracts, dating as far back as May, 2006 with the Norwegian wildcatter, DNO, with reports of “gushers” coming in from the fields that DNO is operating in, with the Kurds hoping to be up to 200,000 more bpd by the end of the year, with 2 mbpd more in five years. This may be wishful thinking for many reasons, but it is going on (see also my post on econospeak on this, especially for more details on the oil law issue).
I note that if production does increase from several sources and a global recession does rather suddenly appear, as we know they sometimes do (those hard-to-predict turning points, eh, JDH?), a possible crash of oil prices might not be out of the question. What impact would that have on global financial markets?
The futures market seems to be one of the few places where forecasts of sharp changes actually get priced out very quickly.
This applies to all storable commodities. What you see in the futures strip is a result of spreads calling the commodity to the marketplace – or paying the producer to keep it off the market: the price for the futures contract tracks the current spot price modulo the interest rate and storage costs/convenience yields.
If the market really thought oil would rise sharply in the future, it would not keep selling for the same price on the spot market, because sellers would just hold it off the market and even out the fluctuation in prices.
Here are some oil price graphs of the “futures strip”, prices as a function of delivery date in the future, which I have made from time to time. I don’t have access to historical data so I just made these on the dates in question by copying from free online web pages:
Today, pure backwardation:
http://alumni.caltech.edu/~hal/oil20070912.png
From June, the more common shape which I call the dipsy-doodle:
http://alumni.caltech.edu/~hal/oil20070607.png
From March, a flatter dipsy, pretty close to pure contango:
http://alumnus.caltech.edu/~hal/oil20070316.png
(Note that the vertical and sometimes horizontal axes differ on all these.)
A couple from last year. Contango-ish:
http://alumnus.caltech.edu/~hal/oil20061020.png
Backward-ish:
http://alumnus.caltech.edu/~hal/oil20060426.png
Flectophiles (curve lovers) will notice that these mostly have very similar shapes: the price goes up and then it goes down. Sometimes it goes up and hardly goes down; and sometimes it hardly goes up at all and just goes down (today it only goes down – “oil price sets new record”).
I’ve never seen an explanation of why the oil future strip has had this shape for at least the last couple of years. Why should it (almost) always go up and then down? I haven’t found any other commodity that does that. It seems to be a very persistent pattern at least in current market conditions. I hope someone can explain it.
The cuts were in relation to the level of 27.5 mbpd. As opposed to the “official” quota level of 28.0 at the time. 27.5 happened to be the quota level of the period previous to the one in question as well as the approximate actual production in the third quarter of 2006.
The debate within OPEC regarding those Dec and Feb cuts revolved around whether or not to cut from actual production levels. Hence this outcome.
Here is a chart comparing actual production and the quotas from the OPEC pdf. I believe it shows a correlation that is more pronounced than one might expect.
OPEC quota and production
One word: fluidized bed coker process
http://www.patentstorm.us/patents/5658455-description.html
It’s all about getting more gasoline from a barrel of heavy crude these days. Refiners have money, and this is what they’re spending it on.
It is not only consumers who change their behavior in the face of rising gas prices. Getting more out of a barrel of crude is equivalent to finding more of the stuff in the ground.
Of course, with every refiner and thier brother upgrading to be able to process heavy crude, consumption of natural gas is going to go through the roof. You need hydrogen to hydrotreat the heavy crude and get the sulfur out, especially now that we have ultra low sulfur diesel. You make hydrogen for the most part with natural gas.
GC, how do you claim that 27.5 mb/d was allocated across individual countries? If you have such numbers or conjectures, please give your source.
Am I reading the graph you link to correctly as already showing quotas and production through the end of November 2007?
3 points:
1. Seems like they are already pumping more than the new quota. The NYTimes article K Drum pointed at contains this:
Because of high demand, OPEC members had already been pumping more oil than their previous quotas allowed.
The 10 countries that have been allocated a production quota, all except for Angola and Iraq, pumped an average 26.7 million barrels of crude a day last month, according an estimate by Bloomberg, or some 900,000 barrels a day more than their collective target.
The new production level raises the target to 27.2 million barrels a day.
2. Please notice that the mix from Saudi Arabia has shifted. More of the so called oil is actually NGLs – Natural Gas Liquids aka ethane, propane, butane and pentane. Stuff they mostly burned off in the past – or (in countries like Norway) pumped back in to keep pressure up.
Please also note how huge a portion NGLs now have of total global oil production.
3. Finally if you want the link to the DOE EIA data that shows the 2005 Peak of conventional crude oil production send me an email.
Hey, of course I realize that it is probably pretty off to be speculating about the possibility of a crash in the price of oil in the not-too distant future right when we just hit $80 per barrel for the first time… :-).
I don’t see a crash unless you think something dramatic is going to happen to demand. Then again, I also never saw a ‘US refinery shortage’ just because the marginal gallon of gasoline came by tanker instead of pipeline and capacity via expansion rather than greenfield.
Platts
Global Insight
Bloomberg
Correct. The graph shows levels through 2007 simply as a 4 month projection. The quota is raised by 0.5 mbpd in November and December. Production is projected as the July level for August, September, and October and raised by 0.5 mbpd in November and December. Actual August level will be available from the IEA in 10 days. I doubt actual September and October values will differ much. It is arguable whether or not the 500,000 bpd increase will happen at the end of the year.
I’m hoping that OPEC will update that pdf that you are using for the current individual country levels. Since OPEC seems to do everything in set ratios derived from individual countries? reserve levels, my opinion is that the 0.5 mbpd increase would simply be a reversal of the February cut on an individual basis. Saudi Arabia’s quota always seems to be about 32.5% of the total quota. This translates to 158,000 bpd.
Obviously when one zooms in on individual production levels following each quota change, or even the overall level you can make the argument that these countries don’t act cohesively and don’t do what they say. A longer term analysis shown by this graph suggests it is more complicated.
For 10 months in 2006, OPEC was UNDERproducing. Previous to this, from 2001-2005 OPEC overproduced by an average of 1.1 mbpd. In 2006 the underproduced by an average of 427,000 bpd. Since November they have been overproducing by 560,000 bpd if you use the Sep 2006 level of 27.25 as a base. If you use the official quota of 28.0, you get a very interesting figure- they have only been overproducing by 6(six) barrels per day!
Again, you can argue that OPEC is tailoring its quota for political theater, and I think that is definitely part of the story. However, the numbers clearly show a more recent tighter compliance/gap between production and quota. Will this continue? I don’t know if OPEC has control over the market, but it seems to believe it has more control than it did before the appearance of peak-oil.
I tried to post this as an html table, but it didn’t quite work. What I did was express the individual quota levels from the OPEC pdf as percentages of the total level for two periods.
August 2004 and the cut of November 2006. There are differences but you can see that they are small.
expressed in thousands of barrels per day
————–Aug 2004—-Nov 2006
Saudi——8450 32.50%– 380 31.67%
Iran——–3817 14.68%– 176 14.67%
Emirates—-2269 8.73%— 101 8.42%
Kuwait——2087 8.03%— 100 8.33%
Venezuela–2992 11.51%– 138 11.50%
Nigeria—-2142 8.24%— 100 8.33%
Libya——1392 5.35%—- 72 6.00%
Algeria—–830 3.19%—- 59 4.92%
Indonesia–1347 5.18%—- 39 3.25%
Qatar——-674 2.59%—- 35 2.92%
level/cut —–26000 ——– 1200
I haven’t looked at the other recent periods, but I’m guessing the ratios are the same. You can see the levels of the top 6 producers where the bulk of the quota comes from are virtually identical across different quota changes.
I would assume these same levels for any individual allocation increase making up 500,000 bpd.
..it is probably pretty off to be speculating about the possibility of a crash in the price of oil
Probably not. About half of the current price of oil is due to speculation. Speculators are herbivores, and any strange noise may trigger a stampede. “Recession” sounds quite frightening.
wcw,
The demand side part would come if there is a global recession soon. The probability of that has become much higher by most measures recently, thanks to the ongoing, and still not fully resolved in the view of many observers, problems in the financial markets coming out of the ongoing decline of housing prices interacting with the spreading around of debt instruments with badly packaged and increasingly sour sub-prime mortgages in them. Given the importance of US imports to the rest of the world economy, a recession in the US could easily spread elsewhere, and if the trigger were further financial sector problems, well, we have already seen that those can spread even more rapidly to other countries.
Certainly the probability of an oil price crash remains low. But, given the non-trivial probability of a recession, plus the apparent increase in output going on out there, with some of it not fully reported, such as in Iraqi Kurdistan, and some of the current price surges due to refinery problems that can go away once hurrican season ends, I would suggest at a minimum that the probability of an oil price crash is undervalued in the market. Oil prices have historically been volatile and subject to sudden large changes in both directions.
There could be a bunch of people out there on the wrong wing of rather dark swan.
I might also remind that the last time we saw a sudden (and unexpected) crash of oil prices back in 1986, it was the immediate trigger of the Savings and Loan crisis, which largely came out of the subsequent crash of a lot of real estate in Texas in particular. While that did not cause a recession, it did cost US taxpayers over $100 billion to bail out the S&L depositers, and a crash in real estate anywhere during a recession largely caused by crashing real estate could be especially unpleasant.
Again, of course, I suspect that $100 per barrel is more likely than $30 per barrel over the next 12 months…
With all due respect, Barkley, I don’t think anybody on this site discussing oil needs to be reminded of anything. This is a tough crowd.
Of course $100 is more likely than $30 – it is closer by $30. That’s a huge amount. If you wanted to bet, I would suggest $60 versus $100 (12 months).
If you wanted to get some attention, I would try $70 versus $90. These are the type of bets T.Boone Pickens makes. He is right half the time. But it doesn’t matter. He only does it for the attention.
Matthew Simmons has a $10,000 Dollar bet with a columnist at the New York Times that oil with average $200 in 2010. I can source that if you like.
What do you think?
cg,
I am not into doing these kinds of bets. Just warning that the markets have probably underforecast and undervalued the probability of a sharp decline in oil prices, although a drop to $60 or $50 would be more in the cards (heck, we were at 50 not that long ago, no big whoop). Variations between 70 and 90 are barely worth talking about. Sudden moves to either one will not crash financial markets more broadly. A sudden drop to 50 or 40 could.
Regarding Simmons’ forecast, I think that would be more likely the case if we had a much steeper decline of the US dollar, not out of the question.
And if demand slackens….
http://www.opec.org/opecna/Speeches/2007/OPECSpareCapacity.htm
To complete the picture, I will now turn to non-OPEC supply. The impact of Engineering & Procurement capital expenditure increases on non-OPEC growth since 2002 has been positive. In fact on average, production has increased at record rates. Increased investment has also resulted in the stabilization of production in many mature fields by slowing the decline rate of many, enabled the development of marginal fields, allowed for more exploration and the application of more technology, and kicked off an expansion of projects under development and fields in production.
The one significant blip was 2005, when the Gulf of Mexico witnessed its most intense storms in 100 years.
Other events, such as the sinking of the world’s largest floating production platform in Brazil in 2001 and the collapse of Russia’s largest oil company in 2004 had very little impact on non-OPEC supply. In the six year period from 2000 non-OPEC oil production growth averaged 800,000 b/d per year, nearly five times higher than the period 1990-99, and one of the highest growth rates in 20 years.
However, the fact that non-OPEC production growth fell behind that of world demand growth for the years 2003-06 reversing earlier trends of exceeding or matching demand growth combined with the frequency of accidents and of downward forecast revisions, led the analytical community to under appreciate non-OPEC’s recent performance and to essentially write off its potential.
“I am not into doing these kinds of bets.”
No, No, I didn’t mean it that way. Not the actual bets, at least. But you clearly think about this stuff enough to comment and maybe invest in certain ways in the oil business.
The Good Professor for instance is fairly well know and respected. He writes in the Atlantic and on his own blog he writes semi-frequently about oil. He favors the view of Stuart Staniford and the Oil Drum.
The Oil Drum contains many views. Most extremely bullish on oil. Stuart rarely writes. He is neither an economist nor an oil expert. JDH is both. Both guys are extremely conservative in how they talk about price and predictions. But the info is clearly there.
Guys like Simmons and T. Boone are about publicity and attention.
But we are all here ultimately for the same reason(s). And I appreciate your input as much as anybody’s.
(Personally, I am against gambling)
I realize nobody is reading this thread anymore, but I’m curious to see if I get a response from Prof. Hamilton.
There is a story in Platts about the new quotas. My guess was wrong.
I’ve thought some about this eventuality and it is not good news for the Oil Drummers.
http://saudioilproduction.blogspot.com/2007/09/new-opec-quotas.html
CG, you’ll note my prediction in the original post was “a significant chunk (more than half, I’d guess) must be expected to come from the Saudis”. Your link claims the share is 63%.
How I read it(but didn’t pay attention).
“If the OPEC-10 are about to increase production, a significant chunk (more than half, I’d guess) must be expected to come from the Saudis.”
These two statements check. The one quoted and the the one you made are exactly 100% identical.
You gain serious “cred” for that.
But there are still questions to be asked.
Why are you always so skeptical of my analysis if we ultimately always agree?
With Saudi production headed towards 9 mbpd, where is Stuart Staniford?
My “link” is from Platts. As ASPO-USA doesn’t respond or react to any comments – especially ones to Dave Cohen’s piece on OPEC quotas, what can one do but look stuff up yourself.
I only saw this because Dave was begging people to read his piece on ASPO’s site, stating specifically it should be required reading.
Aren’t you ASPO, too? What’s with you guys? Always at each others’ throats. I love economists, why do you guys have such a low opinion of each other?
Last questions, Professor.
What will Saudi production be in November?
What will UAE production be?
What will the price of oil be(WTI)?
What will the TD3 tanker rate be?
Honestly, nobody’s watching. But you smoked me with that last one. I’ll be more careful next time. Cheers.
CG, I don’t consider myself aligned with ASPO or any advocacy group. I call it as I see it. And the way I see it, the challenges in continually increasing global oil production are more daunting and the likelihood that those increases will not continue is higher than many other analysts seem to believe. If that’s what ASPO is saying too, then so be it, if not, then so be it.
As for your invitations for specific future predictions, I do not know the answer.
My mistake. I thought I saw you listed as an ASPO member somehere.
I’d be interested to know if you’ve read – “Traders, Guns, and Money.”
I haven’t. I’m still trying to locate the book. Jon Markman on Microsoft Money has recommended the book and written a piece recently on the economy based on the book.
Amazon lists it as #138 on their bestseller list. No bookstores carry it near me. It lists as $29.95, yet it is in softcover. Strange?
I like your thoughts about not making predictions. I’d like to see more about your influences. Who were your inspirations in life? Sorry. Who ARE your inspirations?
Economists get a bad rep. Show us you are interesting. You obviously are. You are one of the very few economists who understand peak oil. Or even oil.
Greenspan gave it a shot. Another (very) recent book – Naomi Klein – “Shock (something)” – I forget. I like Klein. I read about 20 pages. I discovered it looking for Das’ book.
Klein wrote a piece on the Canadian oil sands recently for the Nation. So I guess she knows a little.
Ahh. Until next time…
Funny, if I click on the OPEC document above, they have replaced it with an old one up to 2001, as Dow Jones is reporting Venezuela’s quota has been dropped to 2.4 million and the Venezuelan Government is complaining.
I believe it’s still there, Miguel. Scroll down to page 2.
I have a question that perhaps could be a topic for a blog post. I’ll post it here in the hope that it will be seen but not be too obtrusive.
Representative John D. Dingell of Michigan has recently proposed a carbon tax along with other tax changes in order to help deal with global warming. Leaving aside the convoluted politics, I am curious about one aspect of carbon taxes. Dingell proposes a carbon tax of $50 per ton of carbon ($50/tC). This works out to about 13 cents per gallon of gasoline since gas has about 5.3 pounds of carbon per gallon. Now, this is a very small amount in the larger scheme of things. A 13 cents gas tax will not make much difference in energy usage. With the volatility of the past few years, gas often fluctuates that much in just a month or two. So it seems questionable what such a carbon tax would do to gasoline usage.
OTOH such a tax would have a major effect on coal prices. It would be close to $50/ton of coal which would almost double coal prices. This would undoubtedly drive electricity production away from coal and spur construction of alternative fuel power plants.
So my question is, why is it that the same tax level would have almost no impact on transportation uses, but a big impact on electricity generation? What does that tell us about the relative importance of these two sources of CO2 pollution, and where society should be devoting its efforts in order to maximize return? Does it mean that transportation is not where we should be putting our efforts in terms of reducing carbon output? In general, what is this economic relation trying to tell us?