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Then why are they pumping at max capacity?
Iran and every other owner of oil fields has two choices based on their expectations of future oil prices compared to today. They can pump today, and invest the money they make in financial markets, or they can hold off on at least some production and wait for prices to rise. If they choose the latter and need cash today, they can borrow from the markets with the plan of paying back the funds plus interest in the future, when prices are high.

So, any time prices are expected to go up faster than current interest rates for the same period, a rational actor would reduce production accordingly. So if they can see this coming, why are they pumping at max capacity today, when they could hold the resource and sell it later for $300 a barrel, as you pointed out in your previous post?
Posted by: enduser_z   Posted on: 08/19/05 You are currently: a Guest | Members login | Terms of Use
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Call 1-800-WAAAAHHH.  Jack-Booted EULA | 08/19/05
Whatever....  jtnixon | 08/19/05
Better to pay $200/barrel now than..  Nigel Johnstone | 08/19/05
Two problems with that prediction.  enduser_z | 08/19/05
Where is it then?  Nigel Johnstone | 08/19/05
Not trying to be cute.  enduser_z | 08/19/05
Show me the oil, not the rhetoric  Nigel Johnstone | 08/19/05
Wind Power is already at .3-.4c a kilowatt to produce  Paco20 | 08/19/05
Environmentalists can be a pain, can't they!  enduser_z | 08/19/05
25% of America's land mass can support wind farms as cheap as hydro.  osreinstall | 08/19/05
It really is economic viability.  enduser_z | 08/19/05
Thats why I think Iran needs nuclear  Nigel Johnstone | 08/19/05
Then why are they pumping at max capacity?  enduser_z | 08/19/05
So you dispute Opec is pumping at max?  Nigel Johnstone | 08/19/05
Opec is pumping at max  Jack-Booted EULA | 08/19/05
I didn't argue that they aren't at capacity.  enduser_z | 08/19/05
I don't see your point  Nigel Johnstone | 08/19/05
Huh?  enduser_z | 08/19/05
Either way, where's the oil?  Nigel Johnstone | 08/19/05
Because you don't know if $300 oil will ever arrive  voska | 08/22/05
Interesting reading  Wolfie52 | 08/29/05
Anything  Jack-Booted EULA | 08/19/05
NewEgg rocks  csa0307 | 08/19/05
RE: Rising gas prices fuel e-tailer anxieties  Linux User 147560 | 08/19/05
Working from home  enduser_z | 08/19/05
RE: Working from home  Linux User 147560 | 08/19/05
Where I really disagree.  enduser_z | 08/19/05
RE: Where I really disagree.  Linux User 147560 | 08/19/05
Ummm, it also costs more to drive to the brick and mortar store.  No_Ax_to_Grind | 08/19/05
And to ship the goods there as well (NT)  enduser_z | 08/19/05
There's a difference.  PMDubuc | 08/19/05
I don't see it  enduser_z | 08/19/05
Look at it this way.  Yen_z | 08/19/05
But you forgot the consumer  voska | 08/22/05
RE: Ummm, it also costs more to drive to the brick and mortar store.  Linux User 147560 | 08/19/05
Forgot one.  Jack-Booted EULA | 08/19/05
Must be nice  Real World | 08/19/05
RE:Must be nice  Linux User 147560 | 08/19/05
RE: Forgot one.  Linux User 147560 | 08/19/05
I welcome higher & higher gas prices  Paco20 | 08/19/05
Force the community by taxes/high prices  BitTwiddler | 08/22/05
It takes a crisis ...  George Mitchell | 08/19/05
Bush Doesn't Care About Your High Gas Prices  itanalyst | 08/19/05
No politician does.  HypnoToad | 08/20/05
Irony  Dave F_z | 08/19/05
Why should big business be immune?  HypnoToad | 08/20/05
The Max Pumping is to appease their own people..  evfain@... | 09/08/05

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