U.S. - Saudi Arabia: President Trump Says Saudi Arabia's King Wouldn't Survive "Two Weeks" Without U.S. Backing

Global Politics at its highest level - two world leaders each with something up their sleeve, something hidden and something to protect. Time will tell but, as they say, a week is a long time in (current global) politics ! 

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jaycee,

you struck a note with me concerning: "Only problem is the Saudis are being made to look bad and they really do have a serious issue about respect.",  so I figured, now is as good a time as any for the following, as on this board there are a good few people that I disagree with concerning my topic:

History is going to prove the Donald to be a disaster to the good folks of the USA.

Well, you voted him in, it’s of your own making, I won’t feel sorry for you.

The Donald believes, that it is acceptable to treat people from different nations and cultures as he has always treated his American “friends”, be they business mates, political buddies, employees, suppliers, or “even” women, i.e. without respect.

The people that got him into power (you), eventually will find yourselves in the same position, without respect from the man you voted for.

The list of nations/continents he’s offended is growing, Africa, Russia, Iran, Turkey, KSA, Canada, Mexico, China, Europe, while, I do have to admit and in his favor, he’s good friends with the politically influential Kim, you know, the “little rocket man”.

Less than two years of the Donald and the little respect left, that the USA had in the world, is progressively diminishing and that even at an astounding rate.

So, quite a lot of nations fold, or partly fold, to the bully’s wishes and he’s proud and happy, but do you really think they’ll forgive and/or forget? Proud people like the Chinese? The Arabs? The Africans? Maybe than the Europeans you used to have such good relations with?

They don’t blame the bully, he’s off in a couple of years time. No, they’ll blame the people that voted for him in the first place, i.c. the US electorate, the USA and they’ve got long memories and they'll want, "within reason", their pound of flesh.

Some nations with “democratic” histories will possibly accept that the Donald did not even win the popular vote and they’ll show you some compassion, sure, there’ll be a few.

No country in this world can go it alone, not even the USA.

There are quite a few clever people (non Donald voters, I’m sure) in the US who think what Robert de Niro said at the Tony awards, and who go their own way e.g. concerning climate (that's where is shows the clearest).

Throw in the tariffs, get all this outsourced industry back to the States. Then, as you have an almost record low unemployment rate, hire some Mexicans, Canadians or other foreigners to do the work that you don’t have good Americans for.

Let’s do some tax reform, get all the companies’ money back home, surely the economy will be booming. Companies buy back shares, dividends are up, (some) people are spending.

Sure the economy is booming and the man you’ve got to thank for this all, is the Donald.

But after the tide has risen, it falls. Then you’ll have to deal with the people with the long memories, the proud and offended ones.

I would like to offer all of you,

Good luck.

   

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On 10/3/2018 at 9:49 PM, franco said:

It's unusual, let's say an undiplomatic remark about close ally Saudi Arabia. But, it's a fact which we knew...

How long we will hide behind the diplomatic hypocrisy....    let us spell out facts and  act on it.    

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(edited)

13 hours ago, RuudinFrance said:

jaycee,

you struck a note with me concerning: "Only problem is the Saudis are being made to look bad and they really do have a serious issue about respect.",  so I figured, now is as good a time as any for the following, as on this board there are a good few people that I disagree with concerning my topic:

History is going to prove the Donald to be a disaster to the good folks of the USA.

Well, you voted him in, it’s of your own making, I won’t feel sorry for you.

The Donald believes, that it is acceptable to treat people from different nations and cultures as he has always treated his American “friends”, be they business mates, political buddies, employees, suppliers, or “even” women, i.e. without respect.

The people that got him into power (you), eventually will find yourselves in the same position, without respect from the man you voted for.

The list of nations/continents he’s offended is growing, Africa, Russia, Iran, Turkey, KSA, Canada, Mexico, China, Europe, while, I do have to admit and in his favor, he’s good friends with the politically influential Kim, you know, the “little rocket man”.

Less than two years of the Donald and the little respect left, that the USA had in the world, is progressively diminishing and that even at an astounding rate.

So, quite a lot of nations fold, or partly fold, to the bully’s wishes and he’s proud and happy, but do you really think they’ll forgive and/or forget? Proud people like the Chinese? The Arabs? The Africans? Maybe than the Europeans you used to have such good relations with?

They don’t blame the bully, he’s off in a couple of years time. No, they’ll blame the people that voted for him in the first place, i.c. the US electorate, the USA and they’ve got long memories and they'll want, "within reason", their pound of flesh.

Some nations with “democratic” histories will possibly accept that the Donald did not even win the popular vote and they’ll show you some compassion, sure, there’ll be a few.

No country in this world can go it alone, not even the USA.

There are quite a few clever people (non Donald voters, I’m sure) in the US who think what Robert de Niro said at the Tony awards, and who go their own way e.g. concerning climate (that's where is shows the clearest).

Throw in the tariffs, get all this outsourced industry back to the States. Then, as you have an almost record low unemployment rate, hire some Mexicans, Canadians or other foreigners to do the work that you don’t have good Americans for.

Let’s do some tax reform, get all the companies’ money back home, surely the economy will be booming. Companies buy back shares, dividends are up, (some) people are spending.

Sure the economy is booming and the man you’ve got to thank for this all, is the Donald.

But after the tide has risen, it falls. Then you’ll have to deal with the people with the long memories, the proud and offended ones.

I would like to offer all of you,

Good luck.

   

Ruudin

Welcome to the Oilprice. I am not sure where you got the idea I was American from or that I am in any way happy with the way Trump's America is conducting business just now.  I think you should readdress your post to an American Trump supporter.

Edited by jaycee
adding welcome
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2 hours ago, jaycee said:

Ruudin

Welcome to the Oilprice. I am not sure where you got the idea I was American from or that I am in any way happy with the way Trump's America is conducting business just now.  I think you should readdress your post to an American Trump supporter.

Ruudin,

I'm your huckleberry.  😎

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22 hours ago, mthebold said:

To be fair, I rarely explain things well the first time around - which is why I appreciate the dialogue. 

I'm not convinced large-scale wind & solar will win.  When people calculate the levelized cost, they tend to ignore:

1)  The quick-response (Read: "expensive to operate") backup  or extensive (read: "expensive to install") transmission lines required.

2)  The cost of unwanted electricity.  If the wind blows or the sun shines when we don't need it, the utility pays to dump that electricity - and passes the cost to consumers.

3)  Decommissioning costs.  What does one do with all those solar panels when they die, and how much will it cost to pull them down one-by-one?  Same for the wind turbines. 

Sure, the American Southwest, Middle East, Sahara, and niche applications will do well on renewables, but I don't see renewables competing with coal, nuclear, or CCGT on a large scale.  Of course, the market may prove me wrong.  Let's let the market work and see what happens. 

Hydro, HVDC, and triple redundancy also have question marks:

1)  There isn't enough hydro to power the economy.  We couldn't build it at any cost. 

2)  HVDC will certainly spread - it being a newer, cheaper, more efficient way to transport electricity - and we might see average network size increase, but I doubt anyone will build enough HVDC to achieve triple redundancy.  It's expensive and unnecessary.  Power engineers know how much excess capacity they need to meet reliability targets, and they provide exactly that; why throw money at a non-problem? 

Every time someone presents the "Widespread renewable/HVDC/Backup" argument, it follows this pattern:

1)  Create a reliability problem with renewables that barely break even on paper but are more expensive in reality (that's technological risk).

2)  Solve that reliability problem by installing expensive infrastructure. 

3)  Raise customer rates to pay for it all. 

As an alternative, I propose that we could just keep doing what's worked for decades: incrementally upgraded coal, natural gas, and nuclear with a seasoning of renewables and enough transmission to meet requirements.  It's cheap, it's reliable, and it's a known quantity.  That's a winning recipe. 

Climate change is an issue, so continued use of fossil fuels is not a good idea.  In most places the grid already exists, HVDC is a better option, but the HVAC grid is already a reality in the developed world, so not a lot of expense there.  All fossil fuels will peak by 2030 and prices will increase, the 3 times capacity compared to average load is not much different from existing capacity relative to average load, a dispersed and interconnected wind and solar supply for electricity will require between 1% and 10% of load hours to be supplied by backup sources (whether it is battery, nuclear, fuel cells, or natural gas, let the cheapest option win).  Costs for wind and solar are continuing to fall, also excess output could be used to charge batteries, heat water for later use, or make ice, depending upon local needs, it could also be used for pumped hydro (again storing energy for later use), and if no use can be found, it can be run to ground.  Disposal costs are an issue for any type of investment.  

 

The "winning strategy" you suggest is based on the assumption that coal and natural gas output will increase without limit, within 10 to 15 years, it will be clear that another strategy is needed as consumption growth will outstrip supply growth.  The "backup for renewables" does not need to be built, it already exists.  The growth in wind and solar will simply replace the most expensive existing coal power plants, when those are gone, then the most expensive natural gas power plants will gradually be replaced, with the best "peaker" plants being kept as backup where needed.  Eventually fossil fuel will be eliminated for electric power and only non-fossil fuel electric power will be utilized by 2050.  In the best areas for solar and wind, coal and natural gas are more expensive.  Great plains for wind, and Southwest US for solar, as technology drives down costs further for wind and solar the areas where wind and solar are the cheapest source of electric power will expand.  HVDC connections between the major grids in the US, Canada, and Mexico will allow excess power to be moved where it is needed.

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On 10/3/2018 at 10:50 AM, mthebold said:

The US seems to do poorly when remarks are "diplomatic".  I'd rather live in a world where the obvious is stated. 

 

We'll shortly be an oil exporter, and at that price, we could turn anything into oil.  It would hurt in the short term for sure, but high oil prices eventually benefit us. 

The US a net oil exporter? Key word being net.

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The Khashoggi case is casting a shadow on US-Saudi relations. Members of the Senate Foreign Relations Committee are  even considering imposing sanctions on KSA... Is the Trump-MBS honeymoon over?  Or are the oil strategic interests and the weapons contracts too big to be dented by any human rights considerations ?

 

"US President Donald Trump is facing increased pressure over the Khashoggi case. Late Tuesday, a bipartisan group of senators wrote to the President, calling for the White House to determine what happened to Khashoggi and whether sanctions should be imposed on whoever was responsible for his fate.
The letter, penned by the top Republican and Democrat on the Senate Foreign Relations Committee, triggers an investigation under legislation that allows the President to impose sanctions on individuals or countries that are deemed to have committed a human rights violation. The White House must respond within 120 days, setting out what actions it proposes to take."
 

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8 minutes ago, Guillaume Albasini said:

The Khashoggi case is casting a shadow on US-Saudi relations. Members of the Senate Foreign Relations Committee are  even considering imposing sanctions on KSA... Is the Trump-MBS honeymoon over?  Or are the oil strategic interests and the weapons contracts too big to be dented by any human rights considerations ?

 

"US President Donald Trump is facing increased pressure over the Khashoggi case. Late Tuesday, a bipartisan group of senators wrote to the President, calling for the White House to determine what happened to Khashoggi and whether sanctions should be imposed on whoever was responsible for his fate.
The letter, penned by the top Republican and Democrat on the Senate Foreign Relations Committee, triggers an investigation under legislation that allows the President to impose sanctions on individuals or countries that are deemed to have committed a human rights violation. The White House must respond within 120 days, setting out what actions it proposes to take."
 

To quote Top Gun:  120 days!  This thing will be all over in 120 days! (puff cigar vigorously)

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9 minutes ago, Guillaume Albasini said:

The letter, penned by the top Republican and Democrat on the Senate Foreign Relations Committee, triggers an investigation under legislation that allows the President to impose sanctions on individuals or countries that are deemed to have committed a human rights violation. The White House must respond within 120 days, setting out what actions it proposes to take."

 

I am struggling to see how the disappearance of a Saudi National in Turkey whilst in the Saudi Embassy gives America any jurisdiction. Does that mean America can intervene in any country it chooses because it has made a law, Global Magnitsky Human Rights Accountability Act, that says it can? Its beyond parody.

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7 hours ago, mthebold said:

Let's look at history to see if this is "beyond parody":  Britain invaded the US in 1812 because they thought they could win, France sold the Louisiana Territory to the US because Napoleon thought he could conquer us later, OPEC manipulated oil prices until about 2016 because they believed themselves invulnerable (I look forward to watching their fall from power.), China is fortifying the South China Sea because no one has the balls to oppose them, the EU exploited a loophole in international trade law to create VAT taxes that are functionally equivalent to tariffs... this list could go on forever.

I'm pretty sure any country can - and will - do anything its hard power can support.  This isn't news. 

The parody is America regularly claims to be the upholder of democracy around the world but creates laws to interfere in other countries. Hypocrisy is more accurate.

What other countries do is irrelvant unless you are saying America is just the same in which case we agree which is the point of my post. Now tell your current and future presidents to stop the hypocrisy as a lot of Americans believe them and support them in wars on that basis.

Edited by jaycee

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2 hours ago, mthebold said:

Do I really need to list the countries engaging in hypocrisy?  International relations is hypocrisy.

I do wish you would refrain from saying 'your' or 'yours' in you replies to me as though I am some kind of nationalist I am a realist I try and see the world through clear eyes and wipe away the BS you should try it sometime its cathartic. It has taken me a few years I must admit to see at least partially through the lies generated by all governments to get their populations to support them, and even die for them, so they can profit Bush and Iraq perhaps? Nationalism I am afraid only causes problems as countries fall out with each other and things usually escalate to war. If you think isolationism is going to bring peace to America just remember WW2 when an isolationist America was attacked by Japan.

So back to the topic do you genuinely believe America has selflessly protected the world since 1945? World trade has not benefited America at all? Nobody has bought into the American culture that has been exported all round the world? Where you can buy a McDonalds in most countries of the world. Your comments telling me how selfless America is does not impress me by the way all powers have done it over the centuries but always because it benefited them. The British navy policed the seas selflessly spending a fortune running a large navy protecting world trade, however they benefited most from trade, you see the similarities here to America? Russia who you say are not helpful to their allies are selflessly sending Syria large amounts of money, equipment and men to operate it to help restore Assad to power which has the little bonus of keeping the only port Putin can access in the Med open. America is not the only country to spend money and men to gain control if they stop doing it they will lose control to Russia and China. There will be a short term boost as spending is cut but when trade starts getting cut the problems will start. The cracks are there already if you look closely, Germany importing oil and gas from Russia, Europe, Russia and China looking to help Iran avoid sanctions, Saudi striking agreements on oil with Russia etc, Europe and the Middle East will face East and American influence will wane and much as you say America doesn't need the rest of the world I think you will find trade is what makes you rich and having no influence on it will hurt.

My original point however is the absurdity of America writing a law unilaterally to allow them to interfere where ever they want in the world. Tell me do you genuinely not see that as hypocritical for a country claiming to support democracy to have a law that lets them bypass elected governments in other countries. I think you can see it but are putting up a nationalist smokescreen to avoid saying it. Come over to the dark side say the words and start to wipe the BS out of your eyes :)

 

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8 hours ago, mthebold said:

Historically, empires attempting to gain wealth through trade bankrupt themselves keeping the trade lanes open.  Specific American corporations certainly benefit from trade, but America as a whole suffers.  Like every empire that came before us, we were wealthier when we minded our own business, and we'll be wealthier when we return to minding our own business. 

The Romans tried to seal off the empire under Hadrian, built walls at the borders and re trenched to protect their land it didn’t work the rest of the world had worked out what had made them strong, their military, and were then able to hurt them and reduce Rome to nothing. The British Empire was created on the back of trading, a strong navy and the fact the UK went into the industrial revolution first. Everyone caught up eventually and America took over after Britain spent too much on 2 World Wars trying to stop the Germans. Americans eventually helped a little towards the end of both, I know Hollywood history tries to say different :) The final and most painful loss though was inflicted by America after they took over the control of the default world trading currency in 1945 and thus condemning the UIK to almost bankruptcy due to them no longer having a strong £. America then effectively copied what previous empires had done over time and started throwing their weight around as they were the most industrially advanced, the others having been devastated by the 2 World Wars, and using the $ as exchange allowed them to run up large debts they could manage as they kept the $ strong. Now a new empire is rising in China which is copying America and will overtake it in time in all areas. America retreating into itself will hasten the end as when they leave the world stage they will lose the most important thing i.e. the $ as the world’s reserve currency. When that happens all that debt the US has built up in $s may suddenly become a whole lot heavier when it doesn’t control the exchange rate with the new global currency.

8 hours ago, mthebold said:

Russia, China, and Europe are jockeying for global position.  This contrasts with the post WWII era - when America alone could oppose the USSR - in that there are several non-American peer competitors.  As long as none of them obtains a global advantage, America's direct involvement isn't profitable.  We're better off building domestic industry and selling weapons/technology/raw materials to the direct competitors - which is exactly what we'll do. 

China and Russia seem to be becoming friends they are even doing joint military exercises. Europe seems to be siding with them too as America becomes more and more unreasonable under Trump. Very soon America will be isolated and have no influence. Nobody will buy American goods as they can be made cheaper in China and raw materials will be sourced from all round the world by China who are pouring money into many countries to secure their resources and develop them with their technology, mainly Africa.

8 hours ago, mthebold said:

America supported democracy to create a more stable world - global instability having caused us so much trouble.  Our support worked in Germany, Japan, and a few other places, but failed elsewhere.  I don't know the cause of failures, nor do I care.  What I do know is that, when a strategically important nation proves unreliable, America props up whatever government is to our advantage.  We do this to prevent foreign warfare and dickery from inconveniencing us like it did during the 20th century.  Since it was the world that forced us to be involved in the first place, I find our interference - anywhere and any way it's convenient for us - to be a perfectly reasonable preventative action.  If y'all don't like our management, develop some hard power, manage yourselves, and stay friendly.  It's that easy. 

There is still global instability America is involved in most of it. Once the European powers were broken the only fighting going on was between the USSR and America. Stopping communism that was clearly something America wanted to do, nobody asked America to invade Vietnam for instance. Now America still invades countries on spurious reasons. I am glad you agree they are doing all this for what the American rulers believe is in their best interest though, we are getting close to some sort of agreement you are almost calling them hypocrites there.. As for not liking your management as you put it well I think as I have been saying the world is leaving America to its madness.

By the way you dropped into assuming I am a nationalist again and believe in the country I inhabit currently, as I said I don’t, to me governments are all the same. I must admit to be seeing China and Russia as a whole lot better than the US just now and I see many governments thinking the same. The way Trump is trying to change everything in his own inimitable way is causing rifts throughout the world. These ‘wins’ he thinks he is getting are going to come back and bite him, and America, hard and as I have mentioned potentially cause America to lose its power and influence a lot quicker. The US having laws that it unilaterally writes allowing it to interfere in other countries is the thin end of the wedge that has been developing for a long time as America seeks to have all countries bow to its laws.

The world is turning against the US. I predict in a few years even the US’s strongest ally in Europe, the UK, will start cutting ties with it and become very close to Russia. The UK is only one general election from having a communist government currently.

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On 10/3/2018 at 3:53 PM, jaycee said:

The longer Trump stays in office the more I am convinced he is a Russian puppet. The consequences of the US leaving Saudi would be Russian control of the Middle East not the downfall of the House of Saud

The middle East only has value because oil has value. What would happen if oil became worthless ? Not only would the US drop the house of Saud but the Russians will too.

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40 minutes ago, mthebold said:

On that note, once both Russia and the US are net oil exporters, it would behoove both of us to slowly end OPEC production.  Less OPEC oil = more profits for us.  As a bonus, ruining OPEC would give the US and Russia increased leverage over Europe and China.  Think about that for a second: the two world powers most able - and willing - to project force will have every incentive to end OPEC.

How might this play out though?  Europe, China, India, and other major importers will, to the extent possible, wean themselves off imported oil ASAP.  They're already throwing massive support behind efficiency programs, electrification, hydrogen-based systems, biofuels, waste-to-liquids, coal-to-liquids, etc.  Europe might drag their heels on carbon-intensive programs, but China is already starting coal-to-liquids.  In the long run - which is probably shorter than projected, given the new political incentives - oil demand will decrease. 

Even as oil demand decreases, non-OPEC supply will increase.  The US and Russia will exploit new resources.  We will turn anything carbon into liquid fuel.  We will decrease internal demand through efficiency, electrification, etc.  As our ability to export increases, we'll have the option of picking off OPEC countries one-by-one.  Conveniently, Venezuela is destroying itself; no intervention necessary.  Iran appears to be the immediate target, undoubtedly because it made a pest of itself.  Libya seems to fade in and out; wouldn't be difficult to finish it off.  And so on. 

Eventually, the only OPEC producers left will be our "allies", like Saudi Arabia.  SA in particular is making a frantic bid to reform its culture, diversify its economy, reduce expenses, stock up on weapons, and build military expertise.  Why?  They know we won't need them forever, they know we're not happy about the times they screwed with us, and they know we have an incentive to destroy OPEC.  Their best-case scenario will be if Russia & the US leave them to fend for themselves.  Their worst case scenario will be if, when the time comes, Russia and the US instigate their demise.  A regional war between Middle-Eastern powers would be a convenient way to reclaim their wealth before assuming their market share. 

Even if Russia and the US don't proceed with the utmost efficiency, OPEC will know we have the power to pick winners and losers.  If they want to sell oil, they must play nice and keep prices low. 

All of that sounds pretty machiavelic.

I do agree though that demand will soon peak. What still seems very foggy to me will be the behavior of US towards OPEC once that happens. On the one hand when oil demand peaks the price drop will endanger shale US production which has high extraction costs and promote conventional oil such as is produced by OPEC, but on the other hand the prices will be so low that OPEC countries and Russia won't be able to balance their books even if the competition is out. Hard to tell how it will all play out.

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On 10/10/2018 at 12:36 PM, jaycee said:

Ruudin

Welcome to the Oilprice. I am not sure where you got the idea I was American from or that I am in any way happy with the way Trump's America is conducting business just now.  I think you should readdress your post to an American Trump supporter.

Jaycee,

please read again.

"you struck a note with me concerning: "Only problem is the Saudis are being made to look bad and they really do have a serious issue about respect.",  so I figured, now is as good a time as any for the following, as on this board there are a good few people that I disagree with concerning my topic:"

It may be my poor English, but I do not think that I indicated that I thought you were American, nor that you are a trump supporter. I'm sorry that you understood it that way.

I think that I did reach at least one supporter as he believes that USA actually "can go it alone" and if not, they would still get by. It was also stated that I don't understand "American culture", which may be true as I don't understand: "I'm your huckleberry.  😎".

And then, American interventionism entered the discussion. A few well chosen samples, that we're grateful for, but that had little to do with altruism. Have a look at all of them: https://www.globalpolicy.org/us-westward-expansion/26024-us-interventions.html                                          Maybe I'm wrong and all interventions in this list really were for the benefit of the world at large and they only cost the USA dearly with little benefit in return.

So, if the US can go it alone, why do they have the "Strategic and Critical Materials Stock Piling Act", which carries e.g. natural rubber (does the USA really have even the climate to grow these trees? In any case, the act also carries an impressive list: ttp://www.dla.mil/HQ/Acquisition/StrategicMaterials.aspx and more background https://www.kitco.com/ind/fulp/20120815.html, of course also the EU has such a list http://ec.europa.eu/growth/sectors/raw-materials/specific-interest/critical_en as may have many other countries.

Some of these materials are only produced in amounts of 4 tons a year. What if some unnamed party would purchase the next ten years of production? e.g. just to teach the USA a lesson in becoming just a bit more humble. Never mind, it can be done. It may even be done if present policy and behavior of the top man does not change.

The USA has so much production outsourced to the rest of the world that in case it all would come back, the country would have an insufficient number of workers to make those products. A few more people from north and south could very well be appreciated. e.g. https://money.cnn.com/2018/07/02/news/companies/auto-tariffs/index.html  and https://www.forbes.com/sites/greggardner/2018/06/13/trump-tariffs-could-cut-u-s-auto-sales-by-up-to-10/  and https://www.bloomberg.com/news/articles/2018-07-01/bmw-hyundai-join-gm-in-pressing-u-s-to-forgo-auto-tariffs, Google will supply you with an almost endless list of articles on the subject.

Mum calls for food (dinner), can't let her wait.

Have fun.

 

 

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(edited)

23 hours ago, mthebold said:

Agree to disagree.  Y'all have fun without us. 

Cheers it was fun and thought provoking talking hope I did the same for you. So long and thanks for all the fish.

Edited by jaycee

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20 hours ago, RuudinFrance said:

Jaycee,

please read again.

"you struck a note with me concerning: "Only problem is the Saudis are being made to look bad and they really do have a serious issue about respect.",  so I figured, now is as good a time as any for the following, as on this board there are a good few people that I disagree with concerning my topic:"

It may be my poor English, but I do not think that I indicated that I thought you were American, nor that you are a trump supporter. I'm sorry that you understood it that way.

RuudinFrance

no problems thanks for clarifying we do seem to have a few viewpoints in common however I think you need to be nicer in the way you say them to our American readers your post previously was a bit too aggressive don't get emotional in discussions you lose any credibility if you do.

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23 hours ago, JunoTen said:

The middle East only has value because oil has value. What would happen if oil became worthless ? Not only would the US drop the house of Saud but the Russians will too.

How soon will oil become worthless? I don't see oil demand crashing soon and if the oil price drops, which is possible, why will the cheapest producers, Saudi etc, not continue to sell and make a profit? You need to expand your point I can't see it.

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23 hours ago, mthebold said:

Oil will always have value, but let's modify his point to mean, "When the production capacity provided by some/all Middle Eastern nations becomes worthless."  Now we can ask, "Under what circumstances would the world not need some/all of the Middle East's production?"  That's easy: a combination of falling demand and rising non-OPEC production.  When the world can replace OPEC's production at existing market prices, OPEC becomes irrelevant. 

The remaining question is, "Why wouldn't the lowest-cost producer survive the longest?"  I would argue that being the lowest-cost producer matters less than people think it does.  To understand why, we should consider two points:

1)  Prices are not driven by the lowest-cost producer; they're driven by the highest-cost producer.  In economic terms, "on the margin".  That being the case, customers don't care if SA produces at $12/bbl; they care that the market price is $80/bbl.  If another supplier can produce at $50 and sell at $70, that producer will steal SA's market share. 

2)  Policing the Middle East and suffering its dickery is expensive:

  • The US alone sinks $80-90 billion/year into the Middle East, none of which is reflected in oil prices.  If you divide $90 billion across 20MMbpd (naive, ballpark number for what the world would lose if the US stopped providing this service), it comes to $12/bbl.  That's $12/bbl for the US contribution alone. 
  • The instability of OPEC nations causes price spikes.  OPEC creates these spikes for financial gain, but then ends them before they lose market share.  As long as OPEC has pricing power, this will be a recurring cost.  Again, it's not figured into the instantaneous market price. 
  • Oil markets bid up the price of oil to account for the "What if OPEC has an outage or does something stupid?" factor.  OPEC's lack of competence directly increases the price of oil. 
  • Instability affects economic growth independent of its effect on prices.  Industrial investments aren't made based on today's price; they're made based on what the price could possibly be.  If one of OPEC's price spikes could possibly bankrupt a project, that project doesn't happen.  In that way, OPEC is lowering the world's GDP.

The market price of oil w/o Trump's policy is theoretically $50-60/bbl, but what's the true cost?  Policing brings it to a minimum $62-72/bbl.  Add in the other factors, and we're certainly over $80/bbl.  $100-120/bbl is arguable. 

At $60/bbl, the world can't replace OPEC.  At $80/bbl, we might - esp. with near-future technology improvements.  At $100/bbl, we absolutely can today.  When you include hidden costs, we're already paying that.  That being the case, it makes perfect sense for Russia, the US, and others to divide OPEC's market share among themselves.  Eliminating the low-cost production would mean less profit for the sum total of oil producing countries, but the sum total is irrelevant.  The loss will be wholly borne by OPEC while non-OPEC producers would see increased profits through increased market share.  Non-OPEC societies would see zero change in the true cost of oil, a boost in their GDP, and fewer young men sent to foreign battlefields.  There are both political and financial incentives to eliminate OPEC production. 

To put it bluntly, Russia, the US, and others could increase profits by completely destroying OPEC nations.  Given OPEC's past, cutthroat treatment of their customers, this is arguably a reasonable and moral course of action.  I would argue it's inevitable.  OPEC is a dead man walking. 

Really not understanding your point here still. Saudi and OPEC produce cheap oil who is actually going to buy more expensive oil if they can buy cheaper? If you say weaker demand will happen then obviously the cheapest oil will sell first. The fact somebody else produces higher price oil is irrelevant if demand does not reach that level to make it needed. If it does then the cheaper producers can still sell their stuff and under cut others if necessary to sell all their product. Pretty much what happen with the US shalers when OPEC took the price down below their production costs when there was a glut of oil . I can see no pricing war those with higher cost production can win.

I don’t understand your costing for America protecting Saudi, they either do or somebody else will as a source of oil is very important as the feedstock to any industrial society. If Russia does not step in, as you seem to see them as allies of the US, how about China the Middle East’s biggest customer protecting its supply and avoiding having to rely on an unreliable US or devious Russia?

Regards this price you reckon oil will get to of $100 a barrel don’t you see $80 is already causing demand destruction in emerging markets and India? At $100 oil will spike down again and then where is all the North American expensive oil going?

Instability in OPEC you quote as an issue in oil price spikes well it is actually America that’s the problem. The current oil spike is completely American made. Bush’s invasion of Iraq didn’t help oil prices previously either. History is littered with American interference in the Middle East causing problems. Their use of puppets and effecting regime change to get them causes many oil price spikes. Please stop blaming others for what America has done its bad enough hearing Trump doing it..

I could go on but we see the world differently probably due to our experiences in it and doubt we will ever agree unless I start pointing out other countries weaknesses.

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On 10/14/2018 at 5:34 PM, jaycee said:

How soon will oil become worthless? I don't see oil demand crashing soon and if the oil price drops, which is possible, why will the cheapest producers, Saudi etc, not continue to sell and make a profit? You need to expand your point I can't see it.

You don't see it but it doesn't mean it won't happen. Some forecast peak demand for 2020, others for 2023...

Sure they will still make a profit but they won't balance their budget. They also made a profit when oil was 50 dollars but were in dire straits. Imagine how it would be at  10 dollars with the reason being demand coming down, which means a permanent drastic lowering of investments.

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27 minutes ago, JunoTen said:

You don't see it but it doesn't mean it won't happen. Some forecast peak demand for 2020, others for 2023...

Sure they will still make a profit but they won't balance their budget. They also made a profit when oil was 50 dollars but were in dire straits. Imagine how it would be at  10 dollars with the reason being demand coming down, which means a permanent drastic lowering of investments.

If I listened to all the peak oil predictors over the last 20 years I would have been not working in oil and lost a load of money.  You keep listening to people with an agenda I will live in the real world.

Why do you think KSA are diversifying heavily into petrochem and having a sovereign fund investing in new tech? As for demand falling why is is going to fall? In America petrol demand has fallen but petrochem has risen to take up the slack in oil consumption.  A modern world runs on oil products even battery cars are made using it
I keep hearing demand will crash and always these people have been proved wrong  I would not bet on it you will lose a lot of money.

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39 minutes ago, jaycee said:

If I listened to all the peak oil predictors over the last 20 years I would have been not working in oil and lost a load of money.  You keep listening to people with an agenda I will live in the real world.

Why do you think KSA are diversifying heavily into petrochem and having a sovereign fund investing in new tech? As for demand falling why is is going to fall? In America petrol demand has fallen but petrochem has risen to take up the slack in oil consumption.  A modern world runs on oil products even battery cars are made using it
I keep hearing demand will crash and always these people have been proved wrong  I would not bet on it you will lose a lot of money.

I'm not betting on it with my money, just expecting it to happen. At some point the electrification and robotisation of transports will lower oil demand. It may be sooner than later.

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8 minutes ago, JunoTen said:

I'm not betting on it with my money, just expecting it to happen. At some point the electrification and robotisation of transports will lower oil demand. It may be sooner than later.

Well I am betting with my job and my investments. Eventually electrification will have a effect on petrol demand but it's oil demand that is important.

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6 minutes ago, jaycee said:

Well I am betting with my job and my investments. Eventually electrification will have a effect on petrol demand but it's oil demand that is important.

Maybe you'd like to read this report https://www.rethinkx.com/transportation/ and make your opinion.

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