Word: bbl
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Even the most pessimistic forecasters were cheered when OPEC decided last week to allow its 13 members to increase production to make up the shortfall of roughly 4.6 million bbl. a day lost in the U.N.-mandated embargo on Iraqi and Kuwaiti crude. In the wake of the cartel's action -- Iraq and Libya did not attend the meeting in Vienna -- petroleum prices dropped about $2 in one day, to $26 per bbl. Toward week's end, however, traders began fretting once again about a possible gulf confrontation and a disruption in energy supplies; with that, the price for October...
...struggle of their lives. For the first time in decades, they will have to pay the market price for energy instead of relying on subsidized oil from the Soviet Union; they must also make do with a 30% cut in Soviet supplies. Even with oil at only $20 per bbl., Bulgaria would be forced to use 80% and Czechoslovakia 60% of hard-currency reserves to pay for supplies. Though the Soviet Union stands to gain an additional $7.5 billion in hard-currency earnings as a result of the price run-up, Moscow cannot expect a bonanza: its oil industry...
...damage Saudi oil fields, reducing supplies even after the war was over (though some experts say much of the damage could probably be repaired in a few months). The shortages would exacerbate the already startling run-up in oil prices. How much is anybody's guess, but $50 per bbl. for crude, vs. a bit less than $32 now and $18 as recently as mid-July, is conceivable...
...free-market price for oil is something like $10 per bbl. That is what it sank to in 1986, when OPEC was in total disarray. At the last OPEC meeting, in July, production quotas were assigned to achieve a price of $21. That's what our "friends" the "moderates" wanted. Saddam wanted $25. The difference between $10 oil and $21 oil means, for the U.S., an extra $33 billion a year for oil imports. That doesn't even count an equal sum paid to domestic producers, or the dampening effect on the economy...
...extra $11 per bbl. would bring in about $22 billion a year for the Saudis. But now, thanks to our decision to defend them from Iraq, oil is selling for over $30 per bbl. That should temper our gratitude for their decision to pump an extra 2 million bbl. a day. It means another $22 billion or so, plus an $18 billion premium on the 5.4 million bbl. a day they were already pumping. Meanwhile, we are paying for the oil and also paying untold billions to defend their right to pump unmolested...