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:: MAX BLACK ::
"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience."--C.S. Lewis
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:: Monday, August 16, 2004 ::
Oil Futures "Tumbling"?
Crooked Timber on the Venezuelan referendum:
Of course there is now a fairly substantial Catch-22 situation. Part of the reason why Chavez was able to win was that in recent months he's been throwing around money like water on social programs. He was able to do this because oil was up above $40 a barrel, generating vast profits for the state oil company. A lot of the reason why oil prices were so high was that there was significant uncertainty about supply from Venezuela because of the impending referendum. Now that some of the uncertainty has been resolved, oil futures have already started tumbling, meaning that it's going to be that little bit more dfficult to deliver on these promises; if I were a Venezuelan, I wouldn't be assuming that we were out of the woods yet.
Prediction: Long term political uncertainty in the middle east and South America combined with increasing energy demands from China will continue to constrain world oil production and distribution. Save for temporary dips from speculators shorting the market on passing issues such as Chavez' re-election, oil prices will hover at or near $40.00/+bbl for the forseeable future. Look for prices to spike sharply if Global Guerrillas successfully target oil production infrastructure.
Daniel Drezner has more [>]
:: Max 2:57 PM [+] ::
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