The managers of the oil extracting nations simply cannot manage more oil revenues.

Sir Martin Wolf in “A year of living dangerously for the world’s economy” July 16, quotes Daniel Gros of the Centre for European Policy studies on that oil producers (more correctly oil extractors) will leave oil in the ground if the rise in real oil prices is expected to be faster than the return on the alternative assets. Nonsense! Any private company would at current prices be selling oil like crazy to make their shareholders happy. The problem is that there are no real shareholders in many of the oil extracting countries and so even if their citizens, their equivalent of the shareholders, would love to see more oil revenues coming into their pockets, their respective governments have enough trouble managing the huge oil revenues as is.

Why should on earth should Venezuela extract more oil… if all what the government can thing of doing with it is giving it away to London?

Just another case of managers running their personal agenda.

Sir Daniel Gros writes that “it is no mystery that oil supply has not reacted to higher prices. Producers are just waiting for even higher prices tomorrow”, “The China bubble fuelling record oil prices” July 10 and this is far from the whole truth.

The problem lies in that in the many countries where the oil belongs to the State, the current oil revenues exceed their respective governments’ capabilities to use them rationally, and their respective leaders’ most immediate personal needs, and so there is not a lot of incentives for them to produce more.

If on the other hand in all these countries, where the population still suffers many unsatisfied needs, the oil revenue was to be shared out directly to the citizens, the true shareholders, you would see more supply. Again it is all another case where the management run their personal agenda.

Gros quotes King Abdullah of Saudi Arabia that if additional oil were to be found in his country he would advise leaving it in the ground because “with the grace of God our children might have a better use of it” and this he can say only because the current children of his land have no say on it.