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Monday, June 23, 2008

Saudi Arabia to Pump More: I Told You So

Now I can't really know what motivates the players on the world oil market, but this is rather interesting. About a month ago the Saudis put the smack down on George Bush when he asked them to produce more. Now all of a sudden, the Saudis are promising to ramp up both current and future output from previously projected levels.

What changed? Well, it's entirely plausible that the sudden shift in US sentiment for OCS and ANWR drilling made OPEC's new profit-maximizing output level in the near-future a lot higher than it had previously been. This is exactly the mechanism I've been arguing about over at the Environmental Economics blog.

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