tag:blogger.com,1999:blog-2503392532090682825.post6610851762616592333..comments2023-06-13T05:05:28.886-04:00Comments on Economics of Information: Would a “Drain America First” strategy significantly lower gas prices?Erik Brynjolfssonhttp://www.blogger.com/profile/01117552073319813366noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2503392532090682825.post-79512759201626077762010-05-02T21:43:53.187-04:002010-05-02T21:43:53.187-04:00Thanks, Chris.
I agree that the oil grades are ...Thanks, Chris. <br /><br />I agree that the oil grades are not perfect substitutes, but in the long run, they're very good substitutes. <br /><br />Also, if Saudi oil reserves are underestimated and we may lose access to other foreign supplies, then that seems like a good argument to NOT to drain our own reserves too quickly -- let's burn the other folks' oil first and think about ways to encourage conservation and alternatives before we drain the last of our own reserves.Erik Brynjolfssonhttps://www.blogger.com/profile/01117552073319813366noreply@blogger.comtag:blogger.com,1999:blog-2503392532090682825.post-82216566344207895252010-05-02T21:09:09.522-04:002010-05-02T21:09:09.522-04:00Here are some things to think about Erik. Not all...Here are some things to think about Erik. Not all oil is created equal(fungible). West Texas and Saudi Arabia's Ghawar field produce the desirable ‘light’ crude, which is cheaper to refine (also there are limited capacities for refining various grades. Mexico and Venezuala produce heavy crude, and I’m presuming this may reflect the output of undersea drilling in the Gulf of Mexico (but they are going a lot deeper now in the Gulf, with BP’s new well at 35K feet (higher than Everest, about 7 miles). <br /><br />The Gulf of Mexico accounts for one-quarter of US consumption, but also produces about one-seventh of US natural gas consumption (the drilling gets both) and is firmly under our military control (you can’t say that for the Persian Gulf, Iraq or Russia despite claims of ‘mission accomplished.’ And received wisdom is that Saudi Arabia is not being honest about the Ghawar field for fear of losing control over prices in their quasi-cartel – they haven’t allowed an audit of the fields since the 1960s (half a century; imagine how the technology has changed) and are said to be vastly overstating their reserves, perhaps by a factor of four. <br /><br />Chris Westlandwestlandhttp://uic.edu/~westlandnoreply@blogger.com