Friday, August 22, 2008

Osama's $144 target.

When oil prices crossed $ 144 a barrel last month, I read somewhere that this was exactly the figure that Osama Bin Laden had targeted as “the fair price of oil”.

Apparently, in a 1998 interview, he had claimed that “the United States has carried out ‘the biggest theft in history’ by buying oil from Persian Gulf countries at low prices. According to bin Laden, a barrel of oil today should cost $144. Based on that calculation, he said, the Americans have stolen $36 trillion from Muslims and owes each living Muslim about $ 30,000…"

This he said, ten years back, when oil price was less than $20 a barrel.

I couldn’t locate the 1998 interview on Google search, but I found this quote in a NYT article written in 2001:

''If bin Laden takes over and becomes king of Saudi Arabia, he'd turn off the tap,'' said Roger Diwan, a managing director of the Petroleum Finance Company, a consulting firm in Washington. ''He said at one point that he wants oil to be $144 a barrel'' -- about six times what it sells for now. "

So, the story is true. Did Osama single-handedly manipulate the oil prices and push it up just teasingly over the $144 mark, to prove his point, and then let it drop again?

Maybe, $144 a barrel is indeed the fair price of oil? Don’t look at how much it costs the Arabs to produce the oil. It may be only $5 a barrel. So, they may be making enormous profits. But, if we followed the same logic of cost of production, most of the items that we buy in the supermarket are overpriced by three to four times.

Instead, view it in the manner suggested by Coyote Blog- that oil even at $140 a barrel is a steal, a modern miracle, given the complexity involved in the exploration, drilling, transportation over thousands of miles, distribution, etc. When gasoline was selling at $2.5 a gallon in the US, he reminded the Americans that they were paying $3.5 a gallon for milk taken out from a local cow.

We pay more than Rs 25 a litre for a bottle of Coke. Don’t you think that a litre of petrol is worth at least twice as much, for all the efforts put in?


Anonymous said...

Thought provoking, really. Now let's stop complaining about gas price alrighty!

Vinod_Sharma said...

Laden got it right, but the petrol is still not really overpriced. Forget milk, even bottled water is not any cheaper. You may like to read my post on the subject:

Anonymous said...

The comparison is not logical, but I agree that Coke is over priced sugared water, Which is why I dont drink it.

Raj said...

anon, right,

Vinod: I agree

maduraiveeran : Do you seriously expect logic on this blog?

Anonymous said...

I think the pricing strategy of Petrol has changed to pricing based on "Value" instead of "Cost Plus". Its like the IPL auction of MS Dhoni.

Sometimes it is important to think without logic. We don't mind paying the price for 1 lit Coke but we do for Petrol!! FUnny that