Monday, December 24, 2007

OPEC Strategy

If OPEC is restricting supply all the peak oil hysteria may be unfounded.

What if their strategy is to keep production restricted encouraging alternatives and then open the valve wide to cause the alternatives to fail economically?

I wouldn't put it past them.

Prompted by the discussion at Top Ten Oil Stories Of 2007.

1 comment:

LarryD said...

I doubt that OPEC is capable of that coherent a strategy, too many different perspectives and goals. And the oil shock of the '70s doesn't offer a good precedent, oil demand dropped and was a long time recovering.

Most changes to adjust to high oil prices are capital intensive, that's why adjustment isn't swift. By the same token, once they are in place they'll not be removed quickly.

For example; Shell Oil's oil shale extraction process is profitable down to $30 a barrel, once they get past the political barriers to implement, OPEC will not easily eliminate them.

China isn't likely to give up on their energy diversification strategy either.