Folks are still having fun with Glenn Reynolds’ “Let’s invade Saudi Arabia and Iran and steal their oil” post. Sean Carroll reckons that the wrongness might be enough to form a singularity. But that can’t be right, because the wrongness has escaped to form this post by Lubos Motl:
Prices would plummet
Sean thinks that they won’t plummet because the oil fields are essentially running at full capacity. Sean has a naive idea about the driving forces behind these prices. In 2002, the oil price was $18 instead of $70. Does it mean that the oil fields were running at a much-higher-than-full capacity?
The oil price is a very volatile quantity that sensitively responds to many different factors. The consumers are ready to pay higher prices because they feel that oil is something valuable that can cease to be available tomorrow. OPEC’s statements have a dramatic impact on the price. If there were real competition, the prices could drop. Of course, the conflicts started by September 2001 did not really move the oil industry in this right direction.
Study this graph of the oil productions and prices. (Stolen from this thread at The Oil Drum.)
All right, suppose you wanted to get the oil producers to produce as much oil as possible. One method, known to work much more effectively than invading and stealing it, is to offer lots of money for it. That’s what’s been happening, as the graph shows. As the price has gone up, more and more oil has been produced. Except that production has leveled off recently, which indicates that everyone is pumping oil at full capacity to take advantage of those sweet $70 a barrel prices.
The reason why oil was $18 in 2002 was that there was less demand so there was real competition and the oil producers were prepared to cut each others throats to sell their oil. Consumers are not stocking up on oil because they think it won’t be available tomorrow. Production may well have peaked, but that doesn’t mean that it will run out tomorrow — it just means that there will be long gradual decline in production. OPEC’s statements don’t make much difference to the price. OPEC’s actions might, but they are pumping as much oil as they can.
What’s interesting is that one wrong statement on Reynolds’ blog has expanded into much more wrongness at Motl’s. I think some sort of wrongness inflation theory is needed.
Motl continues with more of the same, culminating in this:
I think it is obvious that even if a fuller control by U.S. capitalism led to a smaller influence of dictators, lower prices, and stronger growth of the economies, especially the poor ones, the U.S. would be blamed as an imperialist oppressor. Even Sean Carroll agrees that it is the case. But he disagrees that it would be inappropriate to blame the U.S. for such changes. Well, if the governments and political systems impose things such as affirmative action, stifling political correctness, nationalization of corporations, huge redistribution plans, far left-wing blogs offer their support. If someone thinks about government plans that would actually make things better, not worse, and cheaper, not more expensive, far left-wing bloggers complain about imperialist oppression.
Stealing the Saudis’ oil would seem to be a pretty darned huge redistribution plan and it would make things worse. You’d think that right-wing bloggers would be in favour of free markets and buying it from the Saudis. Unless they really are imperialists.
(And is it me or is Motl’s blog design the ugliest you have seen in a long time?)