There’s an analysis on the internet that I don’t entirely agree with, in part, because of the magnitude of the prediction. The author predicts the price of oil will fall into the $20 range. I wouldn’t be surprised to see a move below $60 to $80/bbl due to our energy independence.
In the recent past the US has consumed 50% of the world’s oil production. We’ve produced half of that domestically. That means 25% of the world’s oil will be left on the table, so to speak, when we achieve full energy independence. Of course the growth of the world’s demand will take part of it.
That much oil overhanging the market limits the ability of traders to exploit incidents to drive pricing. As the glut undercuts the world oil price, those nations requiring money to support domestic programs such as Russia and Iran will have to pump more oil to maintain their income levels. It may not be a race to the bottom but it will destroy OPEC’s ability to price fix as oil exporting nations undercut each other.
Natural gas is slowly cutting into gasoline’s share of the market for vehicle fuel. As an example West Virginia is pursuing a state fleet powered by natural gas. Fueling stations are being built now with some already in operation.
What is happening is a perfect storm that will drastically reduce oil and gas pricing. Russia may be able to avoid some of that by locking in long term contracts. It will still dramatically reduce the 50% contribution to the Russian federal budget.
As a side note, Putin knows he’s in trouble. One of his recent moves was to tell the oligarchs they’ll have to pay more taxes. His only hope is that Obama doesn’t unleash capitalism in the form of natural gas exports on his ass.
While Putin may try to sell oil in South America he’ll be competing with Venezuelan oil we no longer buy. He’ll also be competing against against Brazil who has long been an oil importer but will soon be one of the world’s biggest exporters.
Sooner, or later, Putin is kaputin.
http://www.bloomberg.com/news/2013-11-12/brazil-to-boost-oil-exports-as-output-triples-iea-says.html
State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world’s largest producer of conventional gas to the largest consumer.
“May is in our plans,” a Gazprom spokesman said, when asked about the timing of an agreement. A company source said: “It would be logical to expect the deal during Putin’s visit to China.”
I still think Putin will pull out of this and oil will stabilize.....
Brussels Summit ...Clearly Eu?Nato is not going to do more than arm, possibly, Ukraine..and Nato admitance is off the table....Prime Minister even announced not in Ukraine’s interest. Ukraine’s financial picture is bleak at best and the EU will not close financial aid deal until a new government is in place and operating effeciently. So they are basically on their own.
Further..Brussels discussions allude to Wales EU summit ahead which would change how nations are admitted into the Nato....Poll taken at meeting 52% voted for ONLY supporting defense to countries which are Nato Members...out of four options presented.
Meanwhile while they’re trying to determine how to approach Russia’s advances....general opinion is they can do very little...Further recognizing the obvious that the USA will not be part of further crisis’s is generally understood now at Nato..as Obama has demonstrated.... as has been known in the past by other Us Presidents.
... Countries who have not been building defenses because they’ve depended on USA, will have to depend on NAto...thus Nato intends to increase defense spending via EU...which neither has a good relationship between them.
So...Nobody will be going to war for Crimea or Ukraine as it stands now.....Putin knows this and what Obama does in sanctions will end shortly...Putin knows this as well.
Basically this is posturing for the USA...further today Russia announced it will no longer play tit for tat with the US on sanctions.
This is all a done deal and news about is simply for consumer consumption.