Cost and Surplus value of Saudi oil - Matthew Simmons: "You know one of the problems is coming up with a proper definition of what you are including as your costs. For years they [Saudi Arabia] were undoubtedly the world's lowest cost oil producer because they had already paid for the fields. And the only costs they were counting were the operating costs to pull the oil out and they weren't charging anything for electricity or water, which is most of the cost.

"It was a very artificial cost. Now, today they've announced that they are going to spend something like $50 billion between now and 2009 to try and create a million and half barrels a day of spare capacity. And so, if they properly for charging for their water handling and their electricity they would be not the highest cost, but right up there. There isn't any real cheap, low cost oil left. They will tell you their costs are $.40-.50 a barrel. Basically it's a fictitious number. If you take the costs of things that have been totally written off, they really aren't real costs and figure out how much you want to charge for the water and electricity it could easily be between $10-20 a barrel."

50c a barrel or $20 a barrel, it has always been cheap in Arabia. And with market prices of $50, $100, $500 - there is a staggering quantity of pure economic rent or surplus value to be had from control of this resource. It only gets more valuable as it runs out.

Cost and Surplus value of Saudi oil - Matthew Simmons: "You know one of the problems is coming up with a proper definition of what you are including as your costs. For years they [Saudi Arabia] were undoubtedly the world's lowest cost oil producer because they had already paid for the fields. And the only costs they were counting were the operating costs to pull the oil out and they weren't charging anything for electricity or water, which is most of the cost.

"It was a very artificial cost. Now, today they've announced that they are going to spend something like $50 billion between now and 2009 to try and create a million and half barrels a day of spare capacity. And so, if they properly for charging for their water handling and their electricity they would be not the highest cost, but right up there. There isn't any real cheap, low cost oil left. They will tell you their costs are $.40-.50 a barrel. Basically it's a fictitious number. If you take the costs of things that have been totally written off, they really aren't real costs and figure out how much you want to charge for the water and electricity it could easily be between $10-20 a barrel."

50c a barrel or $20 a barrel, it has always been cheap in Arabia. And with market prices of $50, $100, $500 - there is a staggering quantity of pure economic rent or surplus value to be had from control of this resource. It only gets more valuable as it runs out.