Sunday, December 12, 2004

OPEC and the narrative

From Forbes:
OPEC May Consider Further Production Cuts

So what is behind this? Sure, summer driving season is over; OPEC is a cartel, gotta keep the money maximized.

But in reality, pumping at 30 million barrels a day will remind people (and worse, investors) how close to the production threshold we are every time a pipeline pops in Iraq or a freighter gets stuck in the Panama canal.

Gotta have wiggle room. That tar Saudi was pumping last season to meet their promised "raise in production" impressed nobody and made quite a few people jittery. Maybe structural problems in the world economy can be soft pedaled for one more year, weak dollar not withstanding.

Also, if OPEC is incapable of pumping 30 million next year, a plausible lie is locked into place.


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