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Geopolitical Effects of Falling Oil Prices
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ghporter
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Dec 21, 2008, 06:06 PM
 
Crude is now selling for under $34/barrel. A LOT of relatively recent geopolitical players have gotten there because they had plenty of cash due to overinflated prices for oil. What do you see as some of the effects of these players no longer having all that money?

I personally hope Hugo Chavez learns to shut up. Maybe loses his grip on power in Venezuela, too. I have nothing against populist governments in South America, but Hugo is a wannabe "personality cult" leader. And a pain...

What about the Saudis? What about Russia? Will they have any impacts from oil selling for only a quarter of what it did this past summer?

Glenn -----OTR/L, MOT, Tx
     
Cold Warrior
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Dec 21, 2008, 06:51 PM
 
The Saudis are well-positioned to ride out the fall. They have a small population and lots of funds on hand.

The Russians have other resources like minerals and natural gas to help soften the blow, but it is going to mute some of the things they may have done like massive military modernization. However, Putin and the Russian government have never spent heavily on the Russian populace and their budget wasn't written for very high oil prices; those things will also help.

Iran and Venezuela are going to be the worst off.
     
turtle777
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Dec 21, 2008, 09:16 PM
 
Originally Posted by Cold Warrior View Post
Iran and Venezuela are going to be the worst off.
In other words: good news

-t
     
Helmling
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Dec 21, 2008, 09:37 PM
 
Imagine what would happen to them if we weened ourselves off oil completely.
     
ghporter  (op)
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Dec 21, 2008, 11:28 PM
 
Originally Posted by Helmling View Post
Imagine what would happen to them if we weened ourselves off oil completely.
Off of foreign oil at least. Here in Texas there are thousands of oil wells that were capped in the 1980s because they were more expensive to produce from that it cost to ship in oil form Saudi Arabia. Nobody seems to have reviewed that cost/benefit decision since then, but I'd wager that restarting those wells could be done for a lot less money than importation costs today, and we wouldn't have to worry about Somali pirates, whack jobs closing some other sea lane or other obstructions to shipping oil half way around the world. And I think that that sort of process would spark some "creative juices" in people who could come up with feasible and affordable ways to change from oil to something else while they were at it.

Glenn -----OTR/L, MOT, Tx
     
Big Mac
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Dec 22, 2008, 01:01 AM
 
Originally Posted by turtle777 View Post
In other words: good news

-t
You said it, friend! I think DiCaprio's character in Body of Lies said it best when he said something to the effect of, "When we're done with your oil, your countries will go back to the stone age." Of course, if any of us think cheap gas will last for any substantial period of time, we're most likely deluded.
( Last edited by Big Mac; Dec 22, 2008 at 07:15 AM. )

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
OreoCookie
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Dec 22, 2008, 04:22 AM
 
The oil price won't stay there. Just last week at the last OPEC conference, the oil producing countries have decided to cut oil production significantly by 4.2 million barrels a day. They would like to stabilize the price at about $70-$80 per barrel.
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Big Mac
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Dec 22, 2008, 07:16 AM
 
OTOH, the Saudis said they wanted to defend $100 oil on the way down, and look how successful they were.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
OreoCookie
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Dec 22, 2008, 07:47 AM
 
Fact is, they want to decrease oil production significantly to drive up prices. If they aren't successful, they will keep on cutting production. If it is in OPEC's best interest to cut production to drive up the price (and thus, their margin) to maximize their profits, then this is what they will do.

In any case, I think it's way, way too early to celebrate that we `can get back' at countries like Iran and Venezuela. They have us by our exhaust pipes. 75 % of American oil is imported and about $700 billion are transferred outside of America for that reason. Until these numbers change significantly, you won't really get back at these countries. For them, it's just a question how much they profit from our oil dependency.
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Big Mac
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Dec 22, 2008, 10:00 AM
 
True to an extent, but the last I heard Venezuela hasn't been doing that well since the bubble burst. Iran was experiencing rapid inflation even during the price peak, so I would assume that they're not doing so well economically right now, either. If we could snap our fingers and have a clean, cheap, domestic replacement for crude, that would be beyond wonderful, but until then $40 oil is far better than $140 oil - for however long it lasts.

"The natural progress of things is for liberty to yield and government to gain ground." TJ
     
PaperNotes
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Dec 22, 2008, 11:02 AM
 
Originally Posted by ghporter View Post

I personally hope Hugo Chavez learns to shut up.

What about the Saudis? What about Russia? Will they have any impacts from oil selling for only a quarter of what it did this past summer?
Chavez has been quite quiet of late. He used to pour more money into the pockets of politicians and rebel groups in neighbouring countries than he did into his own economy. Now that the price of oil has dropped he is worried that Venezuelans are going to hang him for not spending the money on their country. And now that Bush is leaving office, Chavez doesn't know who to maniacally yell about on his weekly Dear Leader TV address to the nation.

Russia is already feeling the hit. The leadership there got pretty spoilt on the money that was coming in and started to act like the KGB bullies that many of them always were - assassinating critics, hiring hitmen to kill businessmen, taking over companies by threat and force, allowing neo-Nazis to attack foreigners, etc.

Now employment in Russia has hit 10% and the Kremlin finally has to swallow its pride and start acting like real economists.

The Saudis will always do what Arab leaders do and spend like pigs on themselves and very little on raising the education standards that would allow the Arab world to be able to be innovative and competitive. Take a look at the UAE for another example. It's literally being built by foreign companies and Indian slavery when so many Arabs need work and would love to show that they also have the brains to design buildings and run companies.
( Last edited by PaperNotes; Jan 9, 2018 at 05:45 AM. )
     
Helmling
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Dec 22, 2008, 12:22 PM
 
Originally Posted by ghporter View Post
Off of foreign oil at least. Here in Texas there are thousands of oil wells that were capped in the 1980s because they were more expensive to produce from that it cost to ship in oil form Saudi Arabia. Nobody seems to have reviewed that cost/benefit decision since then, but I'd wager that restarting those wells could be done for a lot less money than importation costs today, and we wouldn't have to worry about Somali pirates, whack jobs closing some other sea lane or other obstructions to shipping oil half way around the world. And I think that that sort of process would spark some "creative juices" in people who could come up with feasible and affordable ways to change from oil to something else while they were at it.
We'll never produce enough oil domestically for our energy needs and trying would just trash the landscape and coastlines.

Developing renewable energy sources now is a no brainer on all fronts.
     
PaperNotes
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Dec 22, 2008, 01:33 PM
 
We need to drill for oil anyway, for plastics and other materials. And I really hate this "We shouldn't buy oil from foreigners" thing that is going around. It's racist, xenophobic and cuts off international relations which are always needed to keep humanity on a forward moving path. Sure some of it is problematic, but the good outweighs the bad. And if you're not buying Saudi oil someone else will, and that can form alliances against you that work against personal liberty and democracy.

That's why every leader since Carter has pledged to end foreign dependency on oil but hasn't. They say one thing to appease xenophobic voters but do the complete opposite for prosperity's sake. That's the way it will be until nuclear and hydro-electric become the dominant sources of energy. So be realistic and give hell to those Greenies who stand in the way of nuclear.
( Last edited by PaperNotes; Jan 9, 2018 at 05:44 AM. )
     
Uncle Skeleton
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Dec 22, 2008, 02:09 PM
 
Originally Posted by PaperNotes View Post
And I really hate this "We shouldn't buy oil from foreigners" thing that is going around. It's racist, xenophobic and cuts off international relations which are always needed to keep humanity on a forward moving path. Sure some of it is problematic, but the good outweighs the bad. And if you're not buying Saudi oil someone else will, and that can form alliances against you that work against personal liberty and democracy.
There's a middle ground between shunning foreign resources and being utterly dependent on them. "Getting off oil" doesn't mean abstaining entirely, it means developing a working fall-back solution so we have a stronger bargaining position with those countries who, right now, know that we are bluffing when we puff out our chests at them. Certain countries might return to the stone age once we don't buy their oil, but the flip side of that coin is that if they stop selling us their oil now, we are the ones who go back to the stone age. That's because we're "on" oil, as in, we would be pretty much completely helpless without it.
     
PaperNotes
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Dec 22, 2008, 02:17 PM
 
Originally Posted by Uncle Skeleton View Post
There's a middle ground between shunning foreign resources and being utterly dependent on them. "Getting off oil" doesn't mean abstaining entirely, it means developing a working fall-back solution so we have a stronger bargaining position with those countries who, right now, know that we are bluffing when we puff out our chests at them.
You are entirely correct, but then we would get back to the circular argument that Democrats and environmental groups have stood in the way of more oil exploration on US territory and more nuclear power stations. That argument will keep going around in circles because politicians aren't brave enough. They appease foreign oil producers and appease Democrat and environmental lobbyists at home at the same time. Take Obama for example, he admits the US needs a healthy mix of energy technologies and even though Illinois has more nuclear power feeding its grid than most US states, he wants to appease the Green lobby by raising more investment for solar and wind instead of nuclear. Solar and wind will always be expensive and futile compared to nuclear yet he wants to waste billions of taxpayer's money on it.

So the situation won't change at all, not under Obama for sure. The US will continue to import huge amount of oil and spend tons of money on useless renewable technologies instead of taking that brave leap into a nuclear and hydro-electric future.
( Last edited by PaperNotes; Jan 9, 2018 at 05:43 AM. )
     
Uncle Skeleton
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Dec 22, 2008, 03:20 PM
 
Originally Posted by PaperNotes View Post
You are entirely correct, but then we would get back to the circular argument that Democrats and environmental groups blah blah blah
For someone who frequently complains about partisanship in others, you sure seem to dwell on it yourself. Let's try to stick to the facts shall we?

Solar and wind will always be expensive and futile compared to nuclear yet he wants to waste billions of taxpayer's money on it.
From a purely national security perspective (which is basically what this thread is), rise of nuclear power use presents significant risks of proliferation of nuclear weapons. It may be a small risk, but compared to the zero weapons risk related to solar or wind, it's significant. Hydro power is pretty much maxed out already; as I understand it, all the advantageous locations for hydro power are already in use. And as for dumping money into renewables, it's basically our public policy right now that money has to be dumped into something to spur the economy, like what happened in the New Deal. If not solar and wind, then what? We should just count our lucky stars that the new corn-country president elect isn't pushing corn-ethanol, IMO.
     
PaperNotes
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Dec 23, 2008, 06:38 AM
 
Originally Posted by Uncle Skeleton View Post
For someone who frequently complains about partisanship in others, you sure seem to dwell on it yourself. Let's try to stick to the facts shall we?
Well at least correct me. I'm not an American, therefore not Democrat or Republican, so I'm entitled to saying that without being called partisan.


From a purely national security perspective (which is basically what this thread is), rise of nuclear power use presents significant risks of proliferation of nuclear weapons.
There's no risk at all within the US of that. We aren't talking about rogue nations, that's another subject.

Hydro power is pretty much maxed out already; as I understand it, all the advantageous locations for hydro power are already in use.
Not when it comes to vehicular transport. Hydro-electric is new and much cleaner than the lithium-ion operated cars.

And as for dumping money into renewables, it's basically our public policy right now that money has to be dumped into something to spur the economy, like what happened in the New Deal. If not solar and wind, then what?
Nuclear. And also refurbishing buildings. There are still so many buildings that don't have proper insulation or double glazed windows for example. Investing huge amounts of money in solar and wind will never pay back and those projects will have to be torn down one day when they fail to pay off and better technology such as nuclear becomes the only solution.
( Last edited by PaperNotes; Jan 9, 2018 at 05:43 AM. )
     
kylef
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Dec 23, 2008, 07:36 AM
 
Oil isn't following the generic demand and supply state anymore, it hasn't for a while. The Saudis are getting $40 less per barrel than what they want and despite OPEC cuts nothing is happening. It's just a matter of time before it backfires (which will hopefully spark an alternative energy revolution).
     
turtle777
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Dec 23, 2008, 01:38 PM
 
Originally Posted by kylef View Post
Oil isn't following the generic demand and supply state anymore.
Nothing really has, as of lately.

The high volatility in the markets has stocks, commodities, currencies etc. in wild up and down swings that can not be explained by traditional supply and demand theories.

-t
     
kylef
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Dec 23, 2008, 01:56 PM
 
Originally Posted by turtle777 View Post
Nothing really has, as of lately.

The high volatility in the markets has stocks, commodities, currencies etc. in wild up and down swings that can not be explained by traditional supply and demand theories.

-t
Very true, even before the 'crisis'. Maybe in North Korea
     
Uncle Skeleton
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Dec 23, 2008, 04:04 PM
 
Originally Posted by PaperNotes View Post
Well at least correct me. I'm not an American, therefore not Democrat or Republican, so I'm entitled to saying that without being called partisan.
No you aren't

There's no risk at all within the US of that. We aren't talking about rogue nations, that's another subject.
US secrets get leaked. We don't like to admit it, but it's true. And the more hands using the secrets, the harder to contain the leak.

Not when it comes to vehicular transport. Hydro-electric is new and much cleaner than the lithium-ion operated cars.
Hydro-electric means dams. Like solar, wind, nuclear and all the other things we've been talking about, it doesn't have anything to do with vehicles, other than that it's a way to supply electrons to your garage outlet. So....

Nuclear. And also refurbishing buildings. There are still so many buildings that don't have proper insulation or double glazed windows for example. Investing huge amounts of money in solar and wind will never pay back and those projects will have to be torn down one day when they fail to pay off and better technology such as nuclear becomes the only solution.
All of the above. Sound familiar? Nuclear hasn't met it's promise of providing power "too cheap to meter," and we'll some day be facing "peak uranium" as well, so putting all your eggs in that basket is no less foolish than putting them all towards solar and wind (or towards oil). I wager we'll also see tidal, geothermal and natural gas in there too, along with coal and other things we won't be needing perpetual warfare in order to keep flowing. The US is a hugely resource-rich country; it's preposterous that we've gotten ourselves into an arrangement where there's one particular resource that our whole culture depends on, but it's not one of the many we have an overabundance of.
     
   
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