Posted on 11/18/2014 7:30:44 PM PST by 2ndDivisionVet
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RUSH: Okay. I mentioned the plummeting oil price, and there are a lot of people trying to figure out, why is this happening? There are a lot of people that do not understand what it is that's driving down the crude oil price. What explains it? When it happens and it's a mystery, people look to traditional explanations, "Well, are people driving less? Is the demand for gasoline down? The economy bad? What's going on?" And in this case that's not the answer
The simple explanation for much, not at all, but for much of the drop in the price of oil is found in Saudi Arabia. The Saudis are lowering their price because they are scared. They are very worried about the amount of oil now available in the United States and North America via fracking. Shale gas and oil. And it's been reported in a number of official publications that the amount of oil, the reserves that are available in the United States and North America since fracking has become affordable, the reserves we have are greater than the reserves in Saudi Arabia.
Now, the Saudis have owned the notion that they have the world's greatest supply of oil. And they are threatened gravely by this. They are lowering the price that they are charging in order to strangle their competition, which is in this country, in the Dakotas, anywhere where there is shale gas and oil and fracking going on. We got a Big Oil boom in this country, and they are doing everything they can in Saudi Arabia to strangle it. They're trying to lower the price, get it to the point where it's no longer profitable or sensible for the companies in this country to continue to frack and produce the oil. About $65 a barrel is that price, and the Saudis are doing what they can to get that price down there.
And of course if they arbitrarily decide to lower the price of oil, they are going to increase the demand for their oil, and this is, hey, competition in an open market, it's bloodthirsty. I mean, capitalism, you can say good, bad, but when it is in full swing, it is just amazing to watch it. That's exactly what happening here. That's why the oil price is plummeting, is Saudis are trying to run their competitors out of business. The Saudis are trying to freeze the frackers, in essence. The Saudis, they have many more reserves at their disposal. The reserves the frackers have are yet to be produced. We just know they're there.
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RUSH: Do you remember how many people made fun of us when we said, "Hey, all we gotta do is drill, baby, drill?" Drill for oil will bring the price down, drill for oil will raise the supply, drill, baby, drill? Oh, you can't, silly, made fun of it. We've drilled, we've drilled, we've fracked, and here are the Saudis lowering the price of oil. It works every time it's tried.
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RUSH: How many times were we and other people laughed at and mocked and made fun of for saying that the US can lower the oil price by drilling more? I mean, remember Sarah Palin? Drill, baby, drill? Remember how she was laughed at and made fun of and mocked? Anybody else who echoed the sentiment was laughed at, made fun of, and mocked. But that's what's happened. See the Saudis?
Because of our drilling -- we're fracking, same thing -- we're producing oil left and right in places heretofore it was unable to be had. We're producing it, and the Saudis are threatened. They are lowering the price of their own oil to make it less profitable for the domestic producers in this country to bring that oil out of the ground or out of the shale. It's cutthroat, and it's bloodthirsty.
This is the way competition and capitalism work. UK Telegraph last Friday: "Oil Price Rout to Deepen Amid Supply Glut, Warns IEA -- Brent crude tipped to fall to $75 per barrel as investors short the market and supply outstrips demand." It's another reason Obama doesn't want the Keystone pipeline. Obama doesn't want the oil industry going nuts. He doesn't want oil cheap. He doesn't want it plentiful.
Obama wants "alternatives." He wants this idiotic solar, idiotic green, idiotic wind and all of this stuff, because that's how he is able to make his cronies rich. But it's also how he can wreak further damage on this country. Making sure that the oil that's produced in this country can't be produced? He's all for all of that. He's conflicted in a lot of ways about it, but it is what is happening, and that is why.
It's because the Saudis are doing everything they can to damage the domestic market in this country which is just literally booming.
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There are a couple freepers (apologies, their screen names escape me) that can explain the fine line between drilling our butts off and the impact it can have locally as the price drop actually means lower output in the long run (costs more to extract than to sell). I don’t know all the numbers, but we should not be exporting our “energy” or means to produce thousands of products through petroleum. Let the Suad’s twist, let opec fall apart. I’m not talking total isolationism, but I am talking use our own stuff at a price point that keeps our own companies thriving and our costs low; it can be achieved.
Michelle Bachman promised $2 gasoline if she became President. A lot of Freepers scoffed at the idea.
I just got my fuel bill yesterday, and it was down 35 cents a gallon from last month. And last month was down from the previous bill.
I’ll take it!
I heat my house with a wood stove and a pellet stove, partly because it’s cheaper and partly because I’d rather buy local than pay a bunch of Arabs. But, of course, Sarah was right. Drill, baby, drill! Not everyone has firewood in their back yard like we do, and the more of every kind of fuel there is available, the better.
The pellet stove and wood stove involve a lot of work to keep them going. I certainly wouldn’t mind going back to oil heat, if it was good, cheap, American oil. Then all you have to do is sit back and twiddle the thermostats.
I wouldn’t be surprised if hussein turned the EPA and IRS on the oil companies to stop them and help his muzzie buddies.
I think there are a lot of dem congressmen getting paid from the muzzies too, to vote down any legislation that would help the USA become oil independent. Just one of the ways they get so rich when they become congressmen.
You all knew it was the right thing to do and would only help us.
He already has. And will continue to do so.
However like I told my wife the other day, the lower the cost of fuel/gasoline the more discretionary income the consumer can spend on large ticket items. Sure you know how that cycle works - the more purchased, the more produced. Think inventory build-up and lowered prices which does what? Continues the cycle of expansion.
All our goods are distributed by rail or trucks, even those imported at the docks. Think of the built in price we pay when fuel costs are high and how much less discretionary income we have, and that includes the foreign ship's fuel costs which are huge.
Basic capitalism, which many liberals, most socialists and all communists just can't comprehend. Talk about a rising tides lifts all boats. They prefer we all sink to mediocrity so long as the "gimmes" get their unearned "fair share". Pfft.
Glad the Saudis won't be able to replace the gold on their toilet handles as often. Wish those f*cks would just slink back into their camel-humping days before Western civilization drilled their oil out for them.
The real oil guys will hopefully weigh in but I don’t think the Saudis have “lowered their price”. I think they are continuing to produce and not cutting production in the face of increased supply on the worldwide market. They also aren’t calling on OPEC members to cut production.
If I’m correct, the market is not being distorted by OPEC and/or the Saudis and the price is down due to increased supply.
Lower and middle classes most helped.
Obama hates that part, Rush is right about that.
Some believe the Saudis are generating as much income as possible before ISIS takes a foothold in their country. The Saudi royalty flees with the money while the rest of the country suffers.
F*** the GD Saudi raghead pederast b@stards!
Real question: just how many billions do the Saudi royals make from all their fellow Muslim hajjis who come swarming into Mecca every year on their `pilgrimage’?
Lay you ten to one it’s as much or more as their oil revenues.
In other words, Nuke Mecca Now!!!
It makes sense, the more oil we produce the less we need the oil of the terrorists nations.
I’m head-over-heels in love with Rush since Sacramento —some of my UCD profs were buddies with Rush. And Rush is 100% correct about the Supply/Demand effects he’s pointing out here.
But my understanding is that mainly the Saudis want to screw Russia, Iran, and Syria much, much more than they want to screw over USA frackers —Thackney here is our resident, consummate expert, and he has made lots of postings about this:
Everybody on our team is going to want to say the target is US, and it’s actually baddies in the M.E. whom the Saudis want to screw over, and it’s all about Saudi fears of immediate regional security.
I was surprised also to read this.
Rush here also errs in equating Fracking and drilling (”same thing”) and those are not at all the same thing —fracking only occurs *after* drilling.
But again, I’m nuts about Rush.
I used to rollerblade in the parking lot adjacent to where he first started broadcasting in Sacramento, next to the UFO-dome theaters, across from the Sacto fairgrounds.
“If I’m correct, the market is not being distorted by OPEC and/or the Saudis and the price is down due to increased supply.”
The OPECkers had a meeting recently. From what came out of it, they know that they no longer control the levers in the oil business. Cutting production will not bring about an increase in the price per bbl. as it has in the past. The other thing that’s critical here is what this lower oil price is doing to two countries, Russia and Iran. Both of these country’s economies demand $100 per bbl. oil. The Russian equivalent of our Fed, is not able to regulate the exchange rate between the Rouble and the Dollar any longer. Putin (and his towelhead buddy in Iran) go into the $hitter if oil goes down just a few more bucks a barrel. If it works, it’s a whole lot better than fighting these two SOBs.
He did not mean they were the same thing, only that they produced the same result, he knows the difference.
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The above is Rush's take. It is true if the Saudis can slow us down fracking more costly to get oil they will do it for a while. Not forever but for a while. Truth is fracking is not unique to the US. Many other countries worldwide are taking a hard look at fracking. So if the Saudis can slow them all down for a while they will do it no question!
What Rush has conveniently ignored probably because he read it here and does not always want to seem in agreement with us lowly bloggers is that historically the Sauidis have always lowered their production to accommodate keeping the prices up.
At ten and a half million barrels per day,their current production, all they have to do is cut it in half and prices stabilize.
Screwing us,the newbies in the fracking world, is about 1/3 of the equation but the other 2/3 of the equation is Russia and Iran. Russia is desperate to create a pipeline that goes through Syria a close ally that will feed new customers energy from them. They want new markets and when the get them they squeeze the last drop of profit out of them like in the Ukraine an elsewhere.
this would permanently screw the Saudis. They don't want that to happen(unless its their pipeline) so they lower prices to screw the Ruskies. Even more important is the fact that the Iranians want to turn the kingdom into glass and have for some time.
It's the old Sunni vs. Shia BS with the Mullahs the shia and the kindgom embracing Sunni. So there you have it Rush is 1/3 correct.
Saudi Arabian Oil Co. lowered the cost of its crude to the U.S.
Not to get lost in the talk about lower oil prices is the rising dollar, the value or purchasing power of the dollar is rising.
We can buy more gasoline, or toilet paper, more food products, a nicer car with our dollars now.
Watch products in the store get larger or 30% more in packaging as time goes on so long as the dollar stays strong and gasoline stays low.
Hope every one noticed since 2008 that packaging of products in stores got smaller ?
Now watch as you see buy 2 for one sales, or 20% 30 % more for the same thing and same price just as few months ago.
The market, stores, manufactures will be forced to lower price by and through competition, the market forces at work.
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