Waiting for An Outcome
Election Day +1
Well, in spite of an impressive showing by President Bush in winning the first absolute majority in the popular vote since his father's election in 1988, it is not yet clear (as of 9:00 AM EST) who will win the Electoral College. With most of the country focused on the cliffhangers in Ohio and farther west, smaller news items are likely to get missed today. I spotted one in the Wall Street Journal that shouldn't be overlooked, because of its potential to affect oil prices.
On page 2 the Journal reports (subscription required) that Saudi Arabia has ordered enough new drilling rigs to increase their total by 70% and move towards a target of doubling the number of active rigs, to 60. This is solid evidence to support the Saudi's assertion that they intend to increase both oil production and sustainable production capacity by a meaningful amount. Whether these rigs are used to tap previously undeveloped fields or to rejuvenate the legacy supergiant fields, the result should help reverse the negative trends about which a number of outside observers have speculated.
While it might take a couple of years for the full impact of this move to begin to show in actual output, it constitutes an important earnest of intent, after a great deal of rhetoric that the market has frankly discounted. Many other things will affect oil prices and prices at the pump over the next two years, but this is at least one welcome piece of news offering some eventual relief.