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Oil at $75 Means Patches of Texas Shale Turn Unprofitable

Well, I wouldn't expect you to have a coherent response other than, nuh-uh! Most people don't when the realities of the free market are scrutinized.

It would seem the mantle of In-coherent Response has been claimed by you. It would seem you remain clueless as to who should control the oil market, but have all the answers to who shouldn't. A one wheeled bicycle is tough to sell.
 
Actually, your vehicle is probably about 1 1/2 tons and a full size pickup is just over 2 1/2 tons (though the new aluminum Ford F-150 is 700 pounds less).

Just sayin'...
Good point. it is almost 3K pounds. With me in it it is just a bit more.

My point remains the same.
 
'With crude at $75 a barrel, the price Goldman Sachs Group Inc. says will be the average in the first three months of next year, 19 U.S. shale regions are no longer profitable, according to data compiled by Bloomberg New Energy Finance.'

Oil at $75 Means Patches of Texas Shale Turn Unprofitable - Bloomberg

Shale Profits at Risk - Bloomberg


I (and others) have said for a while that shale oil is not the dream solution that the media is making it out to be.

I wonder what the profitability is at $69 a barrel because that is what it is now.
 
I wonder what the profitability is at $69 a barrel because that is what it is now.

Well now, it is even less profitable at $60/barrel. The Saudis do that and it squeezes Russia hard. At the same time the Koch Brothers (famous Republicans and energy developers Chesapeake Oil etc.) get put in a squeeze big time and perhaps won't be able to contribute on quite such a formidable scale. Everybody gets to blame the Saudis, but these things are certainly not predictable and who would conspire geo-politically. Move it all to the CT threads, eh?
 
Well now, it is even less profitable at $60/barrel. The Saudis do that and it squeezes Russia hard. At the same time the Koch Brothers (famous Republicans and energy developers Chesapeake Oil etc.) get put in a squeeze big time and perhaps won't be able to contribute on quite such a formidable scale. Everybody gets to blame the Saudis, but these things are certainly not predictable and who would conspire geo-politically. Move it all to the CT threads, eh?
:shrug: KSA can survive for a year if they have to with zero oil profits. They are likely trying to squeeze the Fracking industry out of production, and any hits to Russia (who support regional enemy Iran) is just foreign policy icing on the cake.We might also be seeing a long-term degradation in OPECs ability to steer oil prices.
 
:shrug: KSA can survive for a year if they have to with zero oil profits. They are likely trying to squeeze the Fracking industry out of production, and any hits to Russia (who support regional enemy Iran) is just foreign policy icing on the cake.We might also be seeing a long-term degradation in OPECs ability to steer oil prices.

I think you are dead on here.
 
Well now, it is even less profitable at $60/barrel. The Saudis do that and it squeezes Russia hard. At the same time the Koch Brothers (famous Republicans and energy developers Chesapeake Oil etc.) get put in a squeeze big time and perhaps won't be able to contribute on quite such a formidable scale. Everybody gets to blame the Saudis, but these things are certainly not predictable and who would conspire geo-politically. Move it all to the CT threads, eh?
:shrug: KSA can survive for a year if they have to with zero oil profits. They are likely trying to squeeze the Fracking industry out of production, and any hits to Russia (who support regional enemy Iran) is just foreign policy icing on the cake.We might also be seeing a long-term degradation in OPECs ability to steer oil prices. THAT would be interesting.
 
:shrug: KSA can survive for a year if they have to with zero oil profits. They are likely trying to squeeze the Fracking industry out of production, and any hits to Russia (who support regional enemy Iran) is just foreign policy icing on the cake.We might also be seeing a long-term degradation in OPECs ability to steer oil prices. THAT would be interesting.

Any "squeezing out of production" will only be temporary at best. Therefore the hits to Russia, and Iran for that matter appear to be the primary objective of the Saudis in exchange for US engagement in Iraq and Syria.
 
Any "squeezing out of production" will only be temporary at best.

:shrug: perhaps, I don't know what the appetite for continued loss is for those companies.

But KSA has been involved pretty heavily in the anti-Fracking movement here in the U.S., and see that (quite possibly accurately) as their chief competitor. And so a strategy designed to demonstrate to companies that fracking is inherently risky because, if you begin to produce too much, Saudi Arabia will lower oil prices long enough to destroy you is pretty solidly within their MO at this point. So why get in, lose all the initial sunk costs, and then not be able to produce? Better just to suck it up and never get in.

It's smart. It's what I'd be doing, were I them.

Therefore the hits to Russia, and Iran for that matter appear to be the primary objective of the Saudis in exchange for US engagement in Iraq and Syria.

Nah.
1. In case you haven't noticed, the Saudi's and us aren't exactly on good terms right now
2. The foreign crises that is closest and most dangerous to the Saudi's is probably a tie between ISIL (which is opposed by Russian backed regimes) and the Huthi taking over Yemen (which a drop in oil prices, if anything, makes worse).

Meanwhile, loss of the ability to heavily influence the global oil market is an existential threat to the Royal Family. Messing around with Putin is far and away a lower objective.
 
:shrug: perhaps, I don't know what the appetite for continued loss is for those companies.

But KSA has been involved pretty heavily in the anti-Fracking movement here in the U.S., and see that (quite possibly accurately) as their chief competitor. And so a strategy designed to demonstrate to companies that fracking is inherently risky because, if you begin to produce too much, Saudi Arabia will lower oil prices long enough to destroy you is pretty solidly within their MO at this point. So why get in, lose all the initial sunk costs, and then not be able to produce? Better just to suck it up and never get in.

It's smart. It's what I'd be doing, were I them.

Nah.
1. In case you haven't noticed, the Saudi's and us aren't exactly on good terms right now
2. The foreign crises that is closest and most dangerous to the Saudi's is probably a tie between ISIL (which is opposed by Russian backed regimes) and the Huthi taking over Yemen (which a drop in oil prices, if anything, makes worse).

Meanwhile, loss of the ability to heavily influence the global oil market is an existential threat to the Royal Family. Messing around with Putin is far and away a lower objective.

The fracking industry will not cause the Saudis to lose the ability to influence the oil market in the near future. One only need look to what is happening now to see this. Therefore there is no existential threat to the Saudis by the fracking industry. Of course the Saudis can hurt the fracking industry by doing this. But like I said before, this will only be temporary because the Saudis are not going to keep selling oil at such deep discounts. When they stop, the price will go back up, and the fracking industry will be back. Therefore, strategically, what is accomplished is a big hit to Russia, something the US wants, and a big hit to Iran, something the Saudis want, as well as the US. In exchange for US engagement in Iraq and Syria, something the Saudis have made public that they want, a temporary loss in profits is a small price to pay.
 
The fracking industry will not cause the Saudis to lose the ability to influence the oil market in the near future. One only need look to what is happening now to see this. Therefore there is no existential threat to the Saudis by the fracking industry.

That's interesting logic right there. A) The Saudi's are responding, possibly effectively, to a potential threat B) therefore it must not be serious.

Dude, that's like saying A) we have SWAT teams, therefore B) criminals must not be dangerous :lol:

Of course the Saudis can hurt the fracking industry by doing this. But like I said before, this will only be temporary because the Saudis are not going to keep selling oil at such deep discounts.

Permanently? No. Long enough to wreck U.S. fracking? Possibly.

When they stop, the price will go back up, and the fracking industry will be back.

:shrug: perhaps. But will companies be willing to dive in knowing that they are guaranteed to be shut down in the future by the KSA? It's a legitimate question, and that's what makes this an effective tactic.

Therefore, strategically, what is accomplished is a big hit to Russia, something the US wants, and a big hit to Iran, something the Saudis want, as well as the US. In exchange for US engagement in Iraq and Syria, something the Saudis have made public that they want, a temporary loss in profits is a small price to pay.

The Saudi's couldn't give a rats --- what we want. When we told them not to interfere in Bahrain they didn't even bother to take the call, they just sent tanks in. The Smart Power Set has managed to pretty much piss off every ally we had in the region. Russia isn't a big threat to them, and is even a bit of a help to the extent that they are fighting ISIL. Iran, meanwhile, is carving deals with China that are immune to KSA's actions.
 
That's interesting logic right there. A) The Saudi's are responding, possibly effectively, to a potential threat B) therefore it must not be serious.

Dude, that's like saying A) we have SWAT teams, therefore B) criminals must not be dangerous

No that is flawed. The logic is that the fact that Saudis are able to exert such a significance influence on oil prices is evidence that there is no near term, existential threat to the Saudis, from the fracking industry. It means that, near term, meaning over the next year, the Saudis face no existential threat from the fracking industry because the Saudis, can at will exert pressure that can hurt the fracking industry. What you refuse to see is that, the Saudis will only be able to do that temporarily, perhaps a year or two. Over that period of time, the fracking industry simply does not pose a threat to the Saudis. That is not flawed logic.


Permanently? No. Long enough to wreck U.S. fracking? Possibly.

The point is that they can only cause temporary damage to the fracking industry through such tactics. Therefore, strategically speaking, the Saudis are not gaining much by losing money by selling there oil at deep discounts, as any gains they will get from hurting fracking will only be temporary. Therefore the real targets here are Russia and Iran.


perhaps. But will companies be willing to dive in knowing that they are guaranteed to be shut down in the future by the KSA? It's a legitimate question, and that's what makes this an effective tactic.

Of course they will because they know the Saudis can only do that for limited periods of time.

The Saudi's couldn't give a rats --- what we want. When we told them not to interfere in Bahrain they didn't even bother to take the call, they just sent tanks in. The Smart Power Set has managed to pretty much piss off every ally we had in the region. Russia isn't a big threat to them, and is even a bit of a help to the extent that they are fighting ISIL. Iran, meanwhile, is carving deals with China that are immune to KSA's actions.

You are right, the Saudis don't care what we want, they care what they want, which is US engagement in Iraq and Syria. In exchange for this they are willing to drive down prices to hurt Russia, which is something the US wants. Iran is not immune from low oil prices because the Iranian government gets the majority of it's revenue from the sale of oil
 
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No that is flawed. The logic is that the fact that Saudis are able to exert such a significance influence on oil prices is evidence that there is no near term, existential threat to the Saudis, from the fracking industry. It means that, near term, meaning over the next year, the Saudis face no existential threat from the fracking industry because the Saudis, can at will exert pressure that can hurt the fracking industry. What you refuse to see is that, the Saudis will only be able to do that temporarily, perhaps a year or two. Over that period of time, the fracking industry simply does not pose a threat to the Saudis. That is not flawed logic.

Yes it is. It is (to continue the analogy) akin to saying that because SWAT teams effectively coral criminals, they must not be dangerous, because they are effective at doing so.

Saudi Arabia perceives the threat from Fracking, which is why they are a big part of the money behind the anti-Fracking movement here in the States. When American production rises enough to force prices to fall without the Saudi's approval and against the express wishes of OPEC, that's absolutely a threat, and probably quite the wake-up call in the ole KSA. This is part of their reaction to recently falling oil prices, just as their push-back against the desire on the part of the rest of OPEC to cut production was. They aren't going to try to hike up prices, they are going to try to underbid and drive fracking companies out of business.

The point is that they can only cause temporary damage to the fracking industry through such tactics.

We don't know that yet, and there are intelligent reasons for supposing that they do not believe that is true. Oil exploration and drilling is an industry with massive up-front sunk costs prior to production. If you create the reality that any company or set of companies that attempt to frack oil on a large enough scale will absorb all of those costs and then be driven out of business before they can get enough production to make their money back... you keep a lot of competition from entering the market in the first place.

Therefore, strategically speaking, the Saudis are not gaining much by losing money by selling there oil at deep discounts, as any gains they will get from hurting fracking will only be temporary. Therefore the real targets here are Russia and Iran.

Again, this does not follow. Iran is not the Saudi's immediate problem (ISIL and the Huthi are), Russia is a mixed bag (and they sure as hell aren't going to do it because we asked them to), and only rising American production at current poses a realistic existential threat to the Saudi Royal Family.

Think about it - if what you say is true, and their attempts to drive fracking out of business are doomed to failure, then the Saudi Royal Family is indeed screwed, because they will continue to lose influence over global oil markets meaning that their ability to buy off their populace is now curtailed. A non-nuclear armed Iran is not an existential threat to the Saudi Royal Family. Russia is not an existential threat to the Saudi Royal Family. Loss of the ability to steer oil markets (which is what we saw with the recent reduction in prices) is an existential threat to the Saudi Royal Family.

Of course they will because they know the Saudis can only due that for limited periods of time.

The Saudi's can do it for quite a while. A year is my lowball estimate, and that's without any cuts.

You are right, the Saudis don't care what we want, they care what they want, which is US engagement in Iraq and Syria. In exchange for this they are willing to drive down prices to hurt Russia, which is something the US wants.

Wrong for a simple enough reason - US involvement in Syria/Iraq is not driven by a deal with the Saudi's, but rather by domestic politics.

Iran is not immune from low oil prices because the Iranian government gets the majority of it's revenue from the sale of oil

to China. With whom they already have purchasing agreements that are immune to both sanctions and price fluctuations.
 
Yes it is. It is (to continue the analogy) akin to saying that because SWAT teams effectively coral criminals, they must not be dangerous, because they are effective at doing so.

No it is not. You are wrong because you said was that the loss of the ability to heavily influence the oil market is an existential threat to the Saudis, and fracking simply cannot do that in the near term.

Saudi Arabia perceives the threat from Fracking, which is why they are a big part of the money behind the anti-Fracking movement here in the States. When American production rises enough to force prices to fall without the Saudi's approval and against the express wishes of OPEC, that's absolutely a threat, and probably quite the wake-up call in the ole KSA. This is part of their reaction to recently falling oil prices, just as their push-back against the desire on the part of the rest of OPEC to cut production was. They aren't going to try to hike up prices, they are going to try to underbid and drive fracking companies out of business.

Of course the fracking players are competitors and as a result they are a threat, because competition is threat, otherwise it would not be competition. But over the time frame of the next year or two, fracking simply does not pose that type of threat to the Saudis, which is why that strategy yields very little and can be interpreted as an exchange for crippling Russia in exchange for US engagement in Syria and Iraq.

We don't know that yet, and there are intelligent reasons for supposing that they do not believe that is true. Oil exploration and drilling is an industry with massive up-front sunk costs prior to production. If you create the reality that any company or set of companies that attempt to frack oil on a large enough scale will absorb all of those costs and then be driven out of business before they can get enough production to make their money back... you keep a lot of competition from entering the market in the first place.

Yes we do know that because the only way that the Saudis can permanently damage the fracking industry is for them to be able to indefinitely keep the price of oil artificially low, and that is something the Saudis or no one else can do because it takes millions of years for oil to form and we are using oil at a greater rate that is it being replenished.

Again, this does not follow. Iran is not the Saudi's immediate problem (ISIL and the Huthi are), Russia is a mixed bag (and they sure as hell aren't going to do it because we asked them to), and only rising American production at current poses a realistic existential threat to the Saudi Royal Family.

No one is saying Russia is a problem for the Saudis. The Russians are a problem for the US because of the events that are transpiring in Ukraine. Again, in exchange for the Saudis hurting the Russians by driving down the price of oil, the US is agreeing to engage in Iraq and Syria, AND the Saudis have agreed to provide the US with bases to train forces, 5000 is the number I read, that will fight in Syria.

Think about it - if what you say is true, and their attempts to drive fracking out of business are doomed to failure, then the Saudi Royal Family is indeed screwed, because they will continue to lose influence over global oil markets meaning that their ability to buy off their populace is now curtailed.

No, they will continue to be able to buy off their populace because they will continue to be able to sell their oil at the high prices that are the result of a LONG TERM increase in demand for a limited natural resource.

A non-nuclear armed Iran is not an existential threat to the Saudi Royal Family.

Even a non-nuclear Iran is a PERCEIVED threat to the Saudis because of the tension that exists between Sunni and Shia Muslims and as a result of Iran's ability, through it's ability to influence the Shia dominated Iraq, to upset the balance of power in the Middle East.

Russia is not an existential threat to the Saudi Royal Family.

I have repeatedly addressed this point. No need to repeat.

Loss of the ability to steer oil markets (which is what we saw with the recent reduction in prices) is an existential threat to the Saudi Royal Family.

The recent reduction in oil prices is due to the Saudis selling their oil at lower prices.
 
The Saudi's can do it for quite a while. A year is my lowball estimate, and that's without any cuts.

No they cannot do it for quite a while because although Saudi production costs are quite a bit lower that those of the fracking industry, it is becoming increasingly harder for the Saudis to maintain such high production levels which means their production costs will keep rising, which means that they cannot indefinitely drive down prices in such a manner.

Wrong for a simple enough reason - US involvement in Syria/Iraq is not driven by a deal with the Saudi's, but rather by domestic politics.

No, it is not being driven by the Saudis, BUT RATHER THE SAUDIS DESIRE IN SEEING THE US ENGAGE IN IRAQ AND SYRIA IS CAUSING THEM TO COOPERATE WITH THE US BY DRIVING DOWN OIL PRICES TO HURT RUSSIA.
to China. With whom they already have purchasing agreements that are immune to both sanctions and price fluctuations.

It is a fact that Iran is not immune from the negative effects due to lower oil prices. Their government is struggling despite having purchasing agreements with China. It is a fact that Iran has called on OPEC to do something to stop the price of oil from falling.

Ali Marwi, head of the Energy Commission of Iranian parliament said that Iran demands a "serious decision" from OPEC members at the upcoming meeting.

"A serious decision needs to be made to to protect members' national interests. Most oil producers set the yearly budget based on above $80 per oil barrel price. OPEC should take a concrete step to support high oil prices, namely a price which be logical for both oil producers and consumers," he said.
 
What is shale oil?

Tar deposited in the shale strata.

8888888888888888888888888888888888888888888888888888888888888888888888888888


This make XL Keystone even more unattractive. More oil on the market hurts Texas producers.
 
No it is not. You are wrong because you said was that the loss of the ability to heavily influence the oil market is an existential threat to the Saudis, and fracking simply cannot do that in the near term.

Increased American production has already demonstrated the ability to cause control to slip from the Saudi's hands - that's why we are where we are now. It's also why the Saudi's fund the anti-Fracking movement here.

Of course the fracking players are competitors and as a result they are a threat, because competition is threat, otherwise it would not be competition

When your power and livelihood depend on control over an industry, loss of control of the industry is a greater threat than simple competition.

But over the time frame of the next year or two, fracking simply does not pose that type of threat to the Saudis

Ah. And it is your opinion that Saudi Arabia lacks the ability to plan out further than 24 months? Yeah, that makes total sense.

which is why that strategy yields very little and can be interpreted as an exchange for crippling Russia in exchange for US engagement in Syria and Iraq.

Even the Russians, who are among the most paranoid people on the planet, do not believe you. Instead, like everyone else that actually follows this crap, they know that the Saudi's are reacting to the losses in the market. This is a $$$ move.

Yes we do know that because the only way that the Saudis can permanently damage the fracking industry is for them to be able to indefinitely keep the price of oil artificially low, and that is something the Saudis or no one else can do because it takes millions of years for oil to form and we are using oil at a greater rate that is it being replenished.

Gosh, where to start.

1. The Saudi's do not need to keep the price of oil infinitely low to permanently damage the fracking industry. It is quite possible they only need to do so in order to bankrupt the current fracking investments and send the message to any who would follow them. This, for example, is what Wal-Mart is often accused of doing - taking a loss to underbid local businesses until they close up, at which point it raises prices safely as it is operating in a semi-monopoly.

2. The Saudi's have the ability to keep the price of oil low for quite a long time (relative to business), which is the relevant number. Boom towns can become bust towns pretty quickly. This is why you have a sovereign wealth fund of ~$750 Billion and an annual budget of $228 Bn. You think the nascent, hugely expensive, fracking industry, can stand three years of constant losses before investors flee?

3. We are actually discovering and gaining access to oil and gas reserves at a more rapid rate than we are using them - which is why known net reserves keep growing, despite annual usage. Peak Oil hysterics turned out to be just another fad.

No one is saying Russia is a problem for the Saudis. The Russians are a problem for the US because of the events that are transpiring in Ukraine.

Sort of. How much do you think we really care about Ukraine? Base your answer on where you see us putting foreign policy emphasis.
 
MildSteel said:
Again, in exchange for the Saudis hurting the Russians by driving down the price of oil, the US is agreeing to engage in Iraq and Syria

The Saudi's don't need to give us anything to join the counter ISIL piece. We aren't joining it because they made us a deal - we are joining it because of domestic political considerations. We don't care about Ukraine because it has no domestic political implications. We are busy giving Putin more "space" because it's "after the election" and we "reset" relations with Russia - those who think that Russia is a problem for us, "the 80s called and they want their foreign policy back", remember?

No, they will continue to be able to buy off their populace because they will continue to be able to sell their oil at the high prices that are the result of a LONG TERM increase in demand for a limited natural resource.

That is incorrect for a variety of reasons. Firstly (see above) the percentage of oil consumed that comes out of the Gulf is continuing to drop as proven reserves continue to expand, and secondly, technology is bringing a lot of power savings online, even as demand from China is likely to flatten in the near future. The Saudi's know full well that foreign exploitation growth - led by the North American continent - can knock the supports out in this house of cards they've built and maintained over the decades. That's why they say things like "Fracking is a threat to the Kingdom". That's why they are funding the anti-Fracking movement in the U.S., it's why they are willing to risk breaking up OPEC, and it's the major reason why they are dropping prices now.

Even a non-nuclear Iran is a PERCEIVED threat to the Saudis because of the tension that exists between Sunni and Shia Muslims and as a result of Iran's ability, through it's ability to influence the Shia dominated Iraq, to upset the balance of power in the Middle East.

Yes. That is correct. Also because the Huthi are Shia, and the Bahraini protest movement is Shia, and the Saudi's tend to see Iranian hands wherever they see Shia problems. They are not, however, perceived as an existential threat to the ruling family until they have nukes. At which point, the Saudi's have pretty much already announced they will begin to build their own.

The recent reduction in oil prices is due to the Saudis selling their oil at lower prices.

:doh The recent reduction in oil prices preceded the Saudi decision to lower their rates.

No they cannot do it for quite a while because although Saudi production costs are quite a bit lower that those of the fracking industry, it is becoming increasingly harder for the Saudis to maintain such high production levels which means their production costs will keep rising, which means that they cannot indefinitely drive down prices in such a manner.

See: size of SWF v size of Annual Budget (above) for an answer to this failed claim.

THE SAUDIS DESIRE IN SEEING THE US ENGAGE IN IRAQ AND SYRIA IS CAUSING THEM TO COOPERATE WITH THE US BY DRIVING DOWN OIL PRICES TO HURT RUSSIA.

That is a just-so statement with no supporting evidence, and quite a lot of evidence that demonstrates it is incorrect. They didn't lower prices when we started intervening against ISIL (that occurred months ago), nor is it something they would have to do to bring the U.S. on board for several reasons: firstly, the current administration would rather energy prices be high, as that would help meet their environmental goals; secondly, growth in the U.S. over the past couple of years is heavily driven by the energy sector - we would be agreeing to screw over ourselves; thirdly, the current administration couldn't care less about Saudi stability - but it does care about domestic politics, which is what pushed it back into the Iraq fight against its own preferences; fourthly, the U.S. is not (as near as anyone can tell) all that interested in hurting Russia. We do not perceive that any major U.S. interest was harmed by their seizing the Crimea and, if anything, we seem to be hoping that if we ignore the problem, it will go away.

It is a fact that Iran is not immune from the negative effects due to lower oil prices. Their government is struggling despite having purchasing agreements with China. It is a fact that Iran has called on OPEC to do something to stop the price of oil from falling.

China is Iran's major buyer and those deals are indeed immune. Iran is struggling due to a (somewhat surprisingly) somewhat successful sanctions regime along with still recovering from a bit of a currency crises.
 
If the car I drive is hit by a truck I will die. If that same truck hit the car I drove 40 years ago I would very likely live. I made my choice. But government continues to take my choices away.

Many people have been killed unnecessarily because politicians wrote laws that took steel out of vehicles.

Could be, but don't bet on it. I looked at a Youtube video of a vehicle test where they crashed a 1959 full size Chevrolet, I believe it was a Bellaire, head on into a 2009 Chevrolet Malibu. The driver of the Bellaire would have been killed where the driver of the Malibu would have walked away from the crash.

Here, take a look for yourself.

https://www.youtube.com/watch?v=mJ5PcWziXT0
 
The Saudi's don't need to give us anything to join the counter ISIL piece. We aren't joining it because they made us a deal - we are joining it because of domestic political considerations.

They don't necessarily have to give us anything to engage in Iraq and Syria, but we don't necessarily have to engage there at all. The President could say we will provide the Saudis et al, with nothing more than the arms and give some support with regards to intelligence and tell the Saudis, et al, to do it themselves. However, it makes it easier on the Saudis if they let us make use of their country to train the ground forces, and let us conduct the airstrikes. And to sweeten the pie, so to speak, they force down oil prices to hurt the Russians because they are a thorn in our side with regards to Ukraine.

We don't care about Ukraine because it has no domestic political implications.

That is complete nonsense and one need only look to the words and actions of Victoria Nuland to see this is bogus nonsense.

We are busy giving Putin more "space" because it's "after the election" and we "reset" relations with Russia - those who think that Russia is a problem for us, "the 80s called and they want their foreign policy back", remember?

It is total nonsense to say that we are giving Putin more space when we are strangling the Russian economy with sanctions.


That is incorrect for a variety of reasons. Firstly (see above) the percentage of oil consumed that comes out of the Gulf is continuing to drop as proven reserves continue to expand

The expansion of proven reserves is only temporary. Again, over the long term the world's consumption of oil is outpacing the rate at which it can be replenished, and as a result of the rise in demand and insufficient supply, the Saudis and no one else can keep oil prices down indefinitely. It is foolish to think otherwise.

and secondly, technology is bringing a lot of power savings online, even as demand from China is likely to flatten in the near future. The Saudi's know full well that foreign exploitation growth - led by the North American continent - can knock the supports out in this house of cards they've built and maintained over the decades.

Any decrease in rate of increase in demand from China will only be temporary. Technology can make it possible to extract oil that may not have been accessible in the past, but technology cannot make the Earth produce oil at a rate that matches the increases in consumption that will occur over the long term. Therefore again, oil prices will inevitably rise, long term, and the fracking industry will become profitable. Therefore the Saudi strategy can do no more than inflict temporary damage to the fracking industry, and to Russia as well, for that matter. The Russians know this full well, that is why they will simply wait this thing out and are simply positioning themselves strategically for the future.

The recent reduction in oil prices preceded the Saudi decision to lower their rates.

The Saudis accelerate the rate in which the price fell with their actions. And because of the Saudis, the price fell much lower than it would have, if they had done nothing.
 
They don't necessarily have to give us anything to engage in Iraq and Syria, but we don't necessarily have to engage there at all. The President could say we will provide the Saudis et al, with nothing more than the arms and give some support with regards to intelligence and tell the Saudis, et al, to do it themselves. However, it makes it easier on the Saudis if they let us make use of their country to train the ground forces, and let us conduct the airstrikes. And to sweeten the pie, so to speak, they force down oil prices to hurt the Russians because they are a thorn in our side with regards to Ukraine.

:lol: you are just making crap up.

The Saudi's say you are wrong, the Russians say you are wrong, US Oil companies say you are wrong, everyone involved in this says that your conspiracy theory is wrong, up to and including those who would benefit by spreading that theory.

That is complete nonsense and one need only look to the words and actions of Victoria Nuland to see this is bogus nonsense.

Oh. Some bureaucrat said words!?! Well, goodness gracious! Call out the Marines!

.....so..... how many Marines have we sent to Ukraine..... anywho? Lots?

It is total nonsense to say that we are giving Putin more space when we are strangling the Russian economy with sanctions.

:lol: well you'd have to take that up with President Obama.

The expansion of proven reserves is only temporary.

Sure... and it's been "only temporary" for about... a century and a half or so....

Again, over the long term the world's consumption of oil is outpacing the rate at which it can be replenished, and as a result of the rise in demand and insufficient supply, the Saudis and no one else can keep oil prices down indefinitely. It is foolish to think otherwise.

I think they'd be willing to take another century and a half, and figure stuff out then.

Any decrease in rate of increase in demand from China will only be temporary.

The flattening in demand (decrease would indeed be interesting, however) is actually likely to last for some time, for a variety of reasons. China is about to go through quite a hiccup, and if they try to ease the pain (which they likely will), then they will be looking at several years of sharply reduced growth, their own "Japanese Lost Decade" moment.

Technology can make it possible to extract oil that may not have been accessible in the past, but technology cannot make the Earth produce oil at a rate that matches the increases in consumption that will occur over the long term.

That is not necessarily true. Who says that we will not develop a process to artificially produce oil in the next few decades?

In the meantime, reserves keep growing faster than usage, and the claims that we are any minute now from Peak Oil keep coming and falling flat.

Therefore again, oil prices will inevitably rise, long term, and the fracking industry will become profitable. Therefore the Saudi strategy can do no more than inflict temporary damage to the fracking industry, and to Russia as well, for that matter.

Sure. And if all the Saudi's get out of this is a few decades or a half century or more, well, gosh, what an ineffective tactic that would be, huh. :roll:

I'm not saying they will. But that is probably what they are playing for.

The Russians know this full well, that is why they will simply wait this thing out and are simply positioning themselves strategically for the future.

Russia is about as boned "long term" as Saudi Arabia. If anything, Russia might be more boned.

The Saudis accelerate the rate in which the price fell with their actions. And because of the Saudis, the price fell much lower than it would have, if they had done nothing.

That is correct. Hey, guess what though, that in no way changes the fact that the reduction in oil process preceded the Saudi decision to lower their rates, and that your claim that the latter was the cause of the former therefore remains laughable.
 
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See: size of SWF v size of Annual Budget (above) for an answer to this failed claim.

No matter the size, it is finite and would be depleted if they tried to keep oil prices artificially down indefinitely.

That is a just-so statement with no supporting evidence, and quite a lot of evidence that demonstrates it is incorrect. They didn't lower prices when we started intervening against ISIL (that occurred months ago),

They started driving down prices after Kerry meet Abdullah in Saudi Arabia on September 11. After that meeting, on October 1, it was reported that the Saudis were cutting oil prices.

Saudi cuts official crude oil prices in battle for market share | Reuters

nor is it something they would have to do to bring the U.S. on board for several reasons: firstly, the current administration would rather energy prices be high, as that would help meet their environmental goals;

Again, this is only a short term strategy meant to hurt Russia in the short term, and to put pressure on Iran in the current nuclear talks. So in the longer term environmental goals will not be sacrificed.

secondly, growth in the U.S. over the past couple of years is heavily driven by the energy sector - we would be agreeing to screw over ourselves;

Russia will be hurt far more than the US by this, which is the purpose. Not only that, lower energy prices will provide a boost to consumer spending which will make up by declines in the energy sector.

thirdly, the current administration couldn't care less about Saudi stability - but it does care about domestic politics, which is what pushed it back into the Iraq fight against its own preferences;

This isn't about Saudi stability, it is about hurting Russia in the short term because of Ukraine.

fourthly, the U.S. is not (as near as anyone can tell) all that interested in hurting Russia.

That is incorrect. That is why we have sanctions in place on Russia.

China is Iran's major buyer and those deals are indeed immune. Iran is struggling due to a (somewhat surprisingly) somewhat successful sanctions regime along with still recovering from a bit of a currency crises.

They are struggling because of the sanctions. That is why the Saudi moves to drive down prices is making in worse.
 
No matter the size, it is finite and would be depleted if they tried to keep oil prices artificially down indefinitely.

They don't need to. They just need to demonstrate the credible ability to outlast U.S. oil companies, which they can probably do.

cpwill said:
They didn't lower prices when we started intervening against ISIL (that occurred months ago),
They started driving down prices after Kerry meet Abdullah in Saudi Arabia on September 11. After that meeting, on October 1, it was reported that the Saudis were cutting oil prices.

Saudi cuts official crude oil prices in battle for market share | Reuters

:doh We started bombing during summer. Like, in August.

But dude - look: even your own source says you are wrong.

Again, this is only a short term strategy meant to hurt Russia in the short term, and to put pressure on Iran in the current nuclear talks. So in the longer term environmental goals will not be sacrificed.

:lol: We are giving the Iranians exactly what they want in the Nuclear Talks. But you keep desperately trying to justify. ;)

Russia will be hurt far more than the US by this, which is the purpose.

No, it's not. No evidence suggests that outside of your imagination and the imagination of people like you.

Not only that, lower energy prices will provide a boost to consumer spending which will make up by declines in the energy sector.

:shrug: if we weren't in a period of deleveraging. We shall see.

This isn't about Saudi stability, it is about hurting Russia in the short term because of Ukraine.

We don't care about Ukraine. Certainly we're not going to just blindly "hurt" Russia over it without tying it to a plan. We gain nothing from simply "hurting" Russia with oil price reductions. You have to tie that to a strategy, which is something we don't have.

That is incorrect. That is why we have sanctions in place on Russia.

So... how many Marines in Ukraine, again? I see that our Armed Forces seem to be getting busier and busier in Iraq....

and our "Sanctions on Russia".... I mean, really? Please. Our "Sanctions on Russia" amount to "we froze a few guys bank accounts". :lol: we did zip and squat to "Russia" because we didn't care.

They are struggling because of the sanctions. That is why the Saudi moves to drive down prices is making in worse.

Iran is absolutely struggling because of the sanctions. That's why they are striking deals with China to make them immune to sanctions.
 
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you are just making crap up.

The Saudi's say you are wrong, the Russians say you are wrong, US Oil companies say you are wrong, everyone involved in this says that your conspiracy theory is wrong, up to and including those who would benefit by spreading that theory.

The crap is your assertion that the Russians have said that the notion that Saudi Arabia is driving down prices to hurt Russia is false. The Russians have said no such thing. What some of them have said is that the Saudis are doing it to hurt Iran and US shale oil. The crap here is your assertion.

Oh. Some bureaucrat said words

Yep, that's the typical neocon response. Victoria is just some bureaucrat who does not matter. Keep repeating that mantra. Someone will believe it.

.so..how many Marines have we sent to Ukraine..... anywho? Lots?

We don't have to have Marines in a particular location for it to matter to us. What an absurd notion.


:well you'd have to take that up with President Obama

It is a fact that they sanctions have hurt Russia. They will have to spend billions to keep Crimea in shape at a time when sanctions are eroding the value of the ruble and causing a significant amount of capital flight. That combined with the Saudis driving down oil prices is hurting Russia significantly.

Sure... and it's been "only temporary" for about... a century and a half or so....

Perhaps you didn't know it, but it is becoming increasingly harder for oil companies to expand their proven reserves. That's one reason why the majors took to acquiring smaller oil companies a few years ago.


I think they'd be willing to take another century and a half, and figure stuff out then.

That's what you call making crap up. What a load of baloney.

The flattening in demand (decrease would indeed be interesting, however) is actually likely to last for some time, for a variety of reasons. China is about to go through quite a hiccup, and if they try to ease the pain (which they likely will), then they will be looking at several years of sharply reduced growth, their own "Japanese Lost Decade" moment.

No flattened demand will not last for some time because although the rate at which China's economy is growing is slowing, it is still growing nonetheless. That combined with the growth in India and other East Asian countries will certainly strain the capacity of the oil industry to meet demand.

That is not necessarily true. Who says that we will not develop a process to artificially produce oil in the next few decades?

Have you identified that technology that will cause the Earth to replenish oil at a rate greater than it is being consumed? The answer is no, so again, you are making up crap.

In the meantime, reserves keep growing faster than usage, and the claims that we are any minute now from Peak Oil keep coming and falling flat.

In the meantime it is becoming increasingly difficult for oil companies to increase their proven reserves. In fact the CEO of Shell was forced out a few years back for lying about proven reserves, that demonstrates the type of pressure these people are under.

Sure. And if all the Saudi's get out of this is a few decades or a half century or more, well, gosh, what an ineffective tactic that would be, huh.

I'm not saying they will. But that is probably what they are playing for.

Here you are making up more crap. The Saudis are not going to get a few decades or a half a century out of this because they are not going to hold down prices long enough for that to happen. Therefore they are not playing for that because they know it's not practical.

Russia is about as boned "long term" as Saudi Arabia. If anything, Russia might be more boned.

That is true which is why Victoria Nuland did what she did in Ukraine in the first place, to screw Russia in the long term. But they are not as screwed as the would be if they did nothing about it. That's why they had to secure there naval base in Crimea and are creating a buffer zone against NATO expansion in eastern Ukraine. If they didn't do that, they would be in terrible position in the future.

That is correct. Hey, guess what though, that in no way changes the fact that the reduction in oil process preceded the Saudi decision to lower their rates, and that your claim that the latter was the cause of the former therefore remains laughable.

No because the rate greatly accelerated after the Saudi announcement and the price went from above 90 dollars before the Saudi announcement to below 70.
 
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