Cyrus, yes i see how ill formed my question was in the first place: we can't speak of anyone selling below the global market price unless we have some theory of how the latter is formed in the first place. yet there remains (I believe) the question put forward by Patrick. Let me first quote your analysis from the URPE newsletter, Fall 1995 (p.13): "During the oil gluts, when the larger supply of oil from more productive regions is rendering the production from the least productive regions unprofitable, the magnitude of the global differential productivity decreases. Conversely during the oil shortages the magnitude of global differential productivity increases. Persistent gluts thus would correspond with the smaller amount of differential oil rents and enduring shortages with the larger ones. This universal rule applies equally to both OPEC and non OPEC oil nations alike. That is why OPEC oil revenues are no longer immune from the determining (and often undermining) imact of (spot) oil prices in the global oil market. Therefore, OPEC may seem the 'clumsy cartel, as it apears to MA Adelman of MIT, during the gluts and tactful during the shortages. Adelman thus confuses the competitive formation of differential global oil rents with the anachronistic notion of a global cartel...OPEC's challenge, far from indicating the formation of a country cartel, was a direct consequence of the post cartelization of the oil industry. In reality, the so called OPEC offensive was, in effect, an offensive against the system of administrative pricing that allowed the companies to make large profits, while also skimming off the lion share of the differential rents that could have otherwise been received by the ownersof the oil in place." Now I believe that one way of reading Patrick's question is this: at times of shortage do the Sa'udis undermine their own short term maximization of revenue by ramping up production which (ramp up of production) is intended both to prevent a switchpoint to backstrop technology that would undermine the value of massive Sa'udi reserves and to maintain the US' good favor? That is, does the US indeed have an interest in more than just the disbursal of Arab oil rent--as you emphasize--but in the actual control of the output and pricing decisions of the Sa'udi 'swing' producer in particular? After all, there are those famous quotes from Yamani in the mid 70s about how the Sa'udi flooding of the market helped to prevent communists coming into power in Western Europe. In the latest Nation Ken Silverstein quotes U Penn Professor Robert Vitalis on the importance of controlling Sa'udi output and pricing decisions. I do believe that the importance of Sa'udi Arabia is being exaggerated here, and as you have argued, this exaggeration does have the implication of justifying aggressive imperialist control of the Arabian Peninsula, no matter the stated politics of the analyst. So I just wanted to restate the objection so that I can better understand your answer. All the best, Rakesh
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