Word: bbl
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Brazil and Paraguay should be congratulated for building the largest hydroelectric dam in the world [Nov. 15]. But if the dam produces power equivalent to only a "600,000-bbl.-a-year oil well," it is not a very good investment. You obviously mean 600,000 bbl...
...inflation was 30%, and Mexico already owed some $20 billion to foreign banks. But geologists were discovering that in vast fields located in Chiapas and Tabasco states, as well as off the Yucatan peninsula, Mexico possessed proven oil and gas reserves that are now estimated to total 72 billion bbl., second only to Saudi Arabia. The fields were quickly exploited, and by 1981 Mexico was pumping 2.5 million bbl. per day, making it the world's fourth largest oil producer. Mexico earned $14 billion from its wells in 1981. No longer was there any need for the austerity...
This has become abundantly clear since last March when Saudi Arabia, the group's biggest producer at 7.5 million bbl. per day of output, forced through what amounted to a 9.6% production cut. Its purpose: to take up slack in the market and prevent petroleum prices from slipping below the cartel's official $34-per-bbl. bench-mark level. Once they had agreed to the cuts, Iran, Libya, Venezuela and several other cash-squeezed member states began pumping crude at levels above their ceilings (see chart), as well as discounting the price to their customers. As a result...
...fact, the cautious and conservative-minded Saudis are much more likely to use a carrot at Vienna than a stick. The betting is that they will favor holding the official price at $34 per bbl. As for production, the Saudis might decide to raise the spring quotas by about 10%, which would legitimize the cheating with a return to pre-March levels, while perhaps trimming their own output to keep the glut from growing worse. At the same time, the Riyadh government would stand ready to provide low-interest loans to help tide over financially squeezed cartel members until...
...Saudis, a compromise approach is much more appealing than a high-risk strategy of dramatically slashing prices in order to drive other members into line. Reason: though economists generally agree that a slow and moderate decline in prices to, perhaps, $25 to $28 per bbl. would on balance be a long-term tonic for the wavering world economy, a sudden and wrenching break in prices brought on by runaway discounting could prove perilous for oil exporters and importers alike...