That is a “side benefit” for Saudi Arabia, but even that side benefit won’t make any difference for shale oil. They’ll pick right back up again, as the price climbs up and some shale oil will be okay at $40 a barrel from what I read.
The real damage is to Iran, and I’m cheering Saudi Arabia on ... :-) ...
The real damage is to Iran, and I’m cheering Saudi Arabia on ... :-) ...
Spot on. I remember very well what Reagan and the Saudis did in the '80s to bankrupt the Soviets - though it only became clear in hindsight. It cut off their hard currency at the knees, while Reagan's defense build-up took all of their excess capacity and funds away from energy projects and other economy-improving projects. We sold, at a large profit, lots of military equipment to them, and got a giant tax cut for everyone using gas or diesel. Didn't work out too well for the oil patch, though. Lots of bankruptcies, lots of wells capped for good, not a great long-term thing for our energy independence...but technology and capitalism have rescued us.
I'd like to see oil level off around $50-$55/bbl., with gas in the $1.80/gal. range. Yeah, I'd love to pay a buck a gallon, but I don't want to see the shale revolution put up against a wall and shot. The cheaper energy prices will help virtually everyone, will kill Iran, Russia and Venezuela, and shale exploration and extraction will continue. Our energy independence might be postponed for a couple of years, but nothing quite so fatal as what happened in the mid-80s (with $8/bbl. oil at one point).