(1) It could spur concerted efforts to cut dependence on oil as prime energy source.
(2) It could weaken the political power of environmentalists, allowing oil exploration in areas which have been off limits, which could undercut their clout in world oil market.
Ping!
Opec president rules out any hike in oil production (Democrats still against Domestic Drilling)
3. Long term, might result in actual political and military shifts to control the largest oil resources.
The Saudis learned in the oil crisis of the 70s that it is in their long term interest to provide oil at reasonable rates, which in their view is the highest rate at which the world will not begin developing alternatives to Saudi oil. This has now been crossed, and it is out of their hands to control the prices now.
At the current rate of things...it wouldn’t take more than two or three years for people to start considering their other options. For example...the guys who live 80 miles from their job site...might just decide it’d be better to move within twenty miles and cut out that 120 miles of driving per day, thus saving four to five gallons a day ($20).
The companies who regularly send employees to conduct site visits...might just go to teleconferencing. The $6 million they spent each year on airline travel cut down to $1 million.
The RV crowd? They might decide to just park the RV in one location and stop driving the thing...thus saving $5k a year in gas cost.
Dad might decide to skip buying Junior a car at 16...offering him one at 18 instead. Junior might start riding the school bus again which would save the family $1500 a year in gas cost that Junior used.
Europeans might decide that airline costs are too much for their yearly exotic vacations...thus staying closer to home.
The US military just might buy into the blimp development game, and dump its cargo planes for blimp transport...which would save on fuel costs.
Someone might accidentally discover the cost of transporting goods from China to the US...is fairly significant. But transporting from Mexico to the US would be cheaper...so they start building more factories in Mexico, thus cutting more fuel usage.
And somewhere down the road...is the hydrogen vehicle. The odds of one in your local town by 2012...almost zero. But by 2020...there might be a fair population of hydrogen stations thus allowing the population to have more of these cars.
The Saudis lose in the long run. No one will pay $12 a gallon for gas...we’d go bankrupt.
it will also hurt their investments abroad in nations like us that import their oil
the return on those investments is paramount to the sale of daily crude....especially in the long run
It could spur the United States to put him and his stinking regime on the terrorist list where he should have been long before.
High prices are making America get serious about a real energy policy, like drilling.
Pray for W and Our Troops
4) Maybe they are afraid we will charge them the same for a bushel of corn as they charge us for a barrel of oil.
(hefty export tax to OPEC countries who do not grow their own food )
If we pass legislation for drilling they will lower that price.
Also the Saudis have a tremendous amount of money invested in the west. They are depending on those assets for the future of their country after the oil runs out. If the world economy tanks, so does the value of their investments. That in turn puts their own future at risk.
That is exactly what is going to happen. In 1986, oil was $26 a barrel, down from $34. The American Oil Industry spent a ton of money to gear up for oil shales. Then Opec dropped the price of crude to $8 per barrel for a year and wiped out the resource plays in the US (and also wiping out a lot of domestic companies.) The will not let us become sufficent unless the American people allow it—i.e. set a floor on crude prices at about $50 per barrel.
Wall Street Journal top headline - “Oil Summit to Take on Speculators”
First Der Spiegel is an excellent source of information which I didn't know about. So thanks for exposing me to it.
Second. The article links to another on peak oil - a very good one. In particular it's worth comparing the two on what they say about Saudi Arabia.
They have to believe that, if we wanted to, we could develop an alternative form of energy.
Ibrahim al-Muhanna is an avid reader, and his desk is piled high with books. At the top of the stack is Fareed Zakaria's bestseller "The Post-American World." "It's a great book," says Saudi Arabia's oil strategist. "It's all about leadership in times of crisis."
Looks like the Saudis and US congress are seeking out the same leadership?
True, but I suspect that the Iranians scare the Bejeebers outta the Saudis and they fear the consequences of an Obama victory.
The Saudis like having the U.S. play Middle Eastern cop. They mostly get the results they want with few risks. If the U.S. packs up and goes home, those sorry bastards are going to have to sort things out for themselves. The results would make the Iran-Iraq war (one million or so dead) look like a family spat.