PFC Energy has come out with a report that argues that political factors are limiting production in Mexico, Venezuela, Iran, Iraq, Kuwait and Russia. Instead of reinvesting oil revenues to increase production, these nations are spending elsewhere. For the international oil company, opportunities are dwindling. Meanwhile, at least in the short-term, as Rob Cordray of PFC indicated to me, non-OPEC (a dwindling portion of which is not governed by resource nationalism) share of global supply is dwindling. Non-OPEC nations, most importantly Russia, are also moving toward resource nationalism. Combine this political factor limiting supply with growing demand, and the commonly accepted notion that increase in demand has also pushed prices upward, then we can see why this price boom may be here to last.
Russia's commitment to achieving a "cooperative price" for crude puts at least 54% of the world's oil production under resource nationalist control. There are, conceivably, two different mindsets within this group of resource nationalists. The shortsighted oiligopolists would want to increase their margins (or economic rents) in the short run. These countries would be less sensitive to changes in demand for oil caused by prolonged high prices. The longsighted oligopolists would emphasize their finite resources and seek to maximize the NPV of these resources by considering the user cost of selling now versus tomorrow. In the past, cleavage between these groups led Saudi Arabia, a member of the later group, to use its trump card as swing producer to keep prices "moderate." This oil boom is unique, in that Saudi Arabia has not significantly increased production to keep prices moderate and appears to be happy with a price in the $60/bbl range.