Posted on 11/09/2014 6:06:10 AM PST by thackney
Only by overlooking important forces in markets and politics can anyone assert that Saudi Arabia is letting crude prices fall mainly to extinguish competition from North American shale oil.
With oil, the Saudi regime always takes the long view. With security, however, its motivations are more immediate.
The kingdom faces unusually intense threats: Islamic State (IS) militancy in Iraq and Syria, the chance that Iran won’t agree by a Nov. 24 deadline to suspend its nuclear ambitions, terrorist insurrections from restive Yemen, durability of the menacing government of Bashar Al-Assad in Damascus.
Falling oil prices hurt the IS and Iran, exert pressure on Russia to end its support of Assad, and bolster faltering economies in Europe and Asia.
Saudi Arabia therefore has little immediate incentive to defend crude values and wouldn’t suffer greatly if prices ran below current levels for a while. The kingdom might welcome reduced competition from North American supply as a short-term side benefit. But it can’t reasonably see a punishing blow to supply from unconventional resources as a strategic victory. From the perspective of future generations—the characteristically Saudi perspective with regard to oil—that supply serves Saudi interests well. Yes, high-cost unconventional oil represents new competition at the margin of the market. But it also promises to prolong the Age of Petroleum, preserving demand for the kingdom’s economic lifeblood, potentially for many generations.
If Riyadh seriously wanted to fight unto death with shale oil, it would be unsheathing its competitive advantage by dismantling the elaborate subsidies that effectively weld national overheads to the otherwise low cost of producing oil. It’s not doing that.
The enduring threat to producers of oil, unconventional and otherwise, also takes the long view. It’s the off-oil political agenda, proponents of which also understand how oil from shale and bitumen from oil sands promise—in their view, threaten—to extend oil’s dominance in the energy market. From this agenda comes knee-jerk opposition to projects like the Keystone XL pipeline and to operations such as hydraulic fracturing.
Producers shouldn’t let low oil prices confuse them about where real problems reside.
ISIS stole rather than developed their oil fields. They have no capital investment in development to re-coup. To them, whatever they get is virtually free money.
The Saudi, doubtless rich, still had development and drilling cost they have to forego to be on the same field of cost-v-return.
I thought OPEC no longer controlled prices, it was speculators ? That all OPEC could do was open or close the spigot.
Nor do they know much about running it. That is why they area they took over went from 350,000 barrels a day down to 50~60,000 bpd.
That is going to continue to fall and they are only getting 1/2 to 1/4 the going price.
Why did you think that?
Do you know if the Middle East has any significant oil deposits that can only be developed by “fracking”?
"They have no capital investment in development to re-coup. To them, whatever they get is virtually free money." - KC Burke
That statement, right there, encapsulates all of Islam.
Islam invests nothing but brute force bloodshed and terror as it's economic platform.
After bleeding it's captive 'dhimmi' populations dry, Islam is an economic dead end. Period.
Hydraulic Fracturing is used in all types of formation, not just tight formation like shale.
Saudi Arabia has been using hydraulic fracturing for a while as they try to keep they production rate up and make it grow.
Saudi Aramco Makes Progress with Hydraulic Fracturing
http://www.spe.org/news/article/saudi-aramco-makes-progress-with-hydraulic-fracturing
Thanks for the info.
Sounds like what the democrat party did in Detroit.
“ISIS stole rather than developed their oil fields. They have no capital investment in development to re-coup. To them, whatever they get is virtually free money.
The Saudi, doubtless rich, still had development and drilling cost they have to forego to be on the same field of cost-v-return.”
Are you aware that the Saudis also stole their oil fields from legal contracts they had agreed to honor?
Is there a difference?
>>Islam invests nothing but brute force bloodshed and terror as it’s economic platform.<<
.
Bears repeating for our politicians to understand.
“Do you know if the Middle East has any significant oil deposits that can only be developed by “fracking”?”
Fraccing is the consequence of developing poorer and poorer quality formations. At this point, most of the oil fields being produced in the ME do not require this fraccing as they remain high quality reservoirs. These reservoirs have very low cost to develop, and fraccing is expensive.
However, most hydrocarbons found anywhere in the world exist in poorer-quality rock; hence, it is only a matter of time until fraccing becomes pronounced. The US is a mature oil country and most remaining resources will have to be extracted using fraccing.
In this country, Texas A&M performed an assessment of In-Place natural gas amounts for “conventional”(no fraccing typically) vs “unconventional” (fraccing required) and found there are 10X as much hydrocarbons in the ground for those requiring fraccing.
The target formations are truly staggering in size. A related document showing this is here
http://www.npc.org/study_topic_papers/29-ttg-unconventional-gas.pdf
Thanks.
http://www.washingtonsblog.com/2014/10/whats-behind-lower-gas-prices-bombings-syria-southeastern-ukraine.html
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“Here are the actual percentage-figures on that: Russia supplies 38% of it, #2 Norway (the only European nation among the top 15) supplies 18%, and all other countries collectively supply a grand total of 44%. That’s it; that’s all — in the world’s largest energy-market, Russia is the lone giant. But U.S. President Obama’s team are working hard to change that, to do a huge favor for the royals of Saudi Arabia and of Qatar, and yank that business for them. (Unfortunately, the residents in southeastern Ukraine are being bombed and driven out to become refugees in Russia, as an essential part of this operation to choke off Russia’s gas-supply into Europe and transfer that business mainly to those royals. This objective against Russia and for those royals is considered to be far more important than its many thousands of victims are, and no one in the Obama Administration has provided any indication — at least publicly — that tears have been shed there for the residents in southeast Ukraine who have been mass-murdered and for the roughly million of them who have fled to refuge and safety in Russia to escape being bombed by the America’s new client-state, the Ukrainian Government.)
Obama has initiated, and is leading, this international aristocratic team, consisting of the U.S. aristocracy and mainly two Sunni Moslem aristocracies — the Saudi and the Qatari royal families — to choke off Russia’s economic lifeblood from those European energy sales, and to transfer lots of this business, via new oil and gas pipeline contracts and new international trade-deals, over to the royal families of Saudi Arabia and Qatar. Those royals, in turn, are assisting Obama in the overthrow of the key Russia-allied leader of Syria, Bashar al-Assad, who has performed an indispensable role for Russia in blocking any such massive expansion of Saudi and Qatari energy-traffic into Europe, and who has thus been a vital protector of Russia’s dominance in the European energy-market.”
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Yet another take on what is going on.
http://www.globalresearch.ca/obamas-secret-deals-with-saudi-arabia-and-qatar-whats-behind-lower-gas-prices-and-the-bombing-of-syria-and-eastern-ukraine/5412311
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yet another take:
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“Why is the Ukrainian Government, which the U.S. supports, bombing the pro-Russian residents who live in Ukraine’s own southeast?
Why is the American Government, which aims to oust Syria’s leader Bashar al-Assad, bombing his main enemy, ISIS?
I find that both bombings are different parts of the same Obama-initiated business-operation, in which the American aristocracy, Saudi aristocracy, and Qatari aristocracy, work together, to grab dominance over supplying energy to the world’s biggest energy-market, Europe, away from Russia, which currently is by far Europe’s largest energy-supplier.
Here are the actual percentage-figures on that: Russia supplies 38%, #2 Norway (the only European nation among the top 15) supplies 18%, and all other countries collectively supply a grand total of 44%. That’s it; that’s all — in the world’s largest energy-market. Russia is the lone giant. But U.S. President Obama’s team want to change that. (Unfortunately, the residents in southeastern Ukraine are being bombed and driven out to become refugees in Russia, as an essential part of this operation to choke off Russia’s gas-supply to Europe.)
Obama has initiated, and is leading, this international aristocratic team, consisting of the U.S. aristocracy and Sunni Moslem aristocracies — the Saudi and the Qatari royal families — to choke off Russia’s economic lifeblood from those European energy sales, and to transfer lots of this business, via new oil and gas pipeline contracts and new international trade-deals, over to the royal families of Saudi Arabia and Qatar. Those royals, in turn, are assisting Obama in the overthrow of the key Russia-allied leader of Syria, Bashar al-Assad, who has performed an indispensable role in blocking any such massive expansion of Saudi and Qatari energy-traffic into Europe, and who has thus been a vital protector of Russia’s dominance in the European energy-market.
America’s aristocracy would be benefited in many ways from this changeover to Europe’s increasing dependence upon those Sunni Moslem nations, which have long been allied with U.S. oil companies, and away from the Shiite Moslem nation of Iran, and from its key backer, Russia.
The most important way that America’s aristocrats would benefit would be the continuance, for the indefinite future, of the U.S. dollar’s role as the international reserve currency, in which energy and energy-futures are traded. The Sunni nations are committed to continued dominance of the dollar, and Wall Street depends on that continuance. It’s also one of the reasons the U.S. Treasury’s sales of U.S. Federal debt around the world have been as successful as they are. This also provides essential support to the U.S. Federal Reserve.
Furthermore, Obama’s effort to force the European Union to weaken their anti-global-warming “
Sorry..it was rhetorical ...global prices are mostly set by the West Texas Intermediate price index or the the Brent Crude Index or the OPEC Basket.
The Mid-East really hasn’t set raw global prices since the mid 80’s. They only open or close the spigot.
ping
Saudi’s prices are a set discount relative to the current price on the Dubai exchange, not a fixed dollar amount.
Thanks thackney:
1000s of bbl 2009 2013 United States 9130.08493 12342.5012 Saudi Arabia 9819.17231 11600.35468 Russia 9933.82661 10533.74244
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