[extropy-chat] Re: peak oil debate framed from a game theorystandpoint ?

kevinfreels.com kevin at kevinfreels.com
Sat Sep 3 18:33:27 UTC 2005


>
> --- Rik van Riel <riel at surriel.com> wrote:
>
> > On Thu, 1 Sep 2005, Hal Finney wrote:
> >
> > > If you were an insider and knew that oil was going
> > to be worth that much
> > > in a few years, why would you be pumping for all
> > you were worth and
> > > selling it today for $70/barrel?  That doesn't
> > make sense.
> >
> > If you were a 60 year old CEO, would you try to
> > maximise
> > profits today and keep shareholders happy, or would
> > you
> > gamble that prices will be higher 15 years in the
> > future
> > and hope you can string the shareholders along for
> > that
> > time ?
>
> Precisely. From your 60 yr old CEO's point of view, it
> would be most advantageous to keep your investors
> thinking that the oil was plentiful and that
> everything was going smoothly. Even if you were in
> reality pumping the dregs of your wells. After all, if
> you are waiting to see if you die before you go out of
> business, you might as well make every buck you can
> while you can.
>
>
If I were 60 and CEO, I would make the world think I was about out of oil
and charge 3 times as much for it so I could make a ton more money and spend
it before I die. The investors, seeing that prices were soon to go way up
would hang onto and maybe even buy more stock. They could always get out
later just before the oil ran out, and would in fact stay in till the last
minute to maximize the profits.




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