Re: Russia may restrict oil production and exports

[BUFDRVR]

>Yeah right! Russia's only significant export product. Just like the Peter
>the Great, Russian officials are always running around shooting off their
>mouthes but nothing but BS comes out.

I don't know, it brings up an interesting economic point, one I'm unqualified
to answer...but I'll give it a shot. OPEC usually reduces production to freeze
falling oil prices, or increase oil prices. I'm not exactly sure how much you
restrict in order to raise prices enough not to lose money on a reduced export,
but it obviously works for OPEC. In Russias case, it may be even more
benificial as their production and transportation costs are much higher than
any OPEC nation; thus controlling oil exports in order to control prices may be
in Russias best interest.


BUFDRVR

"Stay on the bomb run boys, I'm gonna get those bomb doors open if it harelips
everyone on Bear Creek"

[Cub Driver]

On 24 Mar 2004 23:12:09 GMT, (BUFDRVR) wrote:

>I don't know, it brings up an interesting economic point, one I'm unqualified
>to answer...but I'll give it a shot. OPEC usually reduces production to freeze
>falling oil prices, or increase oil prices. I'm not exactly sure how much you
>restrict in order to raise prices enough not to lose money on a reduced export,
>but it obviously works for OPEC. In Russias case, it may be even more
>benificial as their production and transportation costs are much higher than
>any OPEC nation; thus controlling oil exports in order to control prices may be
>in Russias best interest.

WSJ recently had an article to the effect that OPEC can't pump any
more "sweet" crude than it is presently doing. And while you can
indeed get gasoline from less-sweet oil, it takes a lot of doing, and
most refineries aren't set up for it.

The problem here is China. We can look forward to an era in which
things China produces will get cheaper, while things while China
consumes (principally oil) will get dearer.

In this climate, Russia's cutting oil production/exports is really bad
news, if true.


all the best -- Dan Ford
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