Washington Eyes Crackdown On OPEC

(edited)

On 2/12/2019 at 5:25 AM, mthebold said:

What "cooperation" do we get from them, and do we still need it?  E.g. if they decide to play games, what's to prevent us from wrecking them now that we don't need their oil?  They're dependent on us for defense; we own them. 

it's not all about oil...

If Saudi regime fall apart which is going to happen for sure, there will be new rules for the game in MENA.

by the way, our MR BONE SAW is a real close friend to trump


https://twitter.com/mujtahidd/status/927580827495649280

Edited by العنزي ،،،

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I predict Trump would not sign such a bill.  It wreaks of globalism.   Why do such a thing when America is the number one energy producer in the world?  It's really not my problem as a USC if the Saudi's need to make $70 a barrel just to b/e on their bloated budgets.  America will merely crank up production to keep prices lower, at least that's what I would hope.    #MAGA 

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11 minutes ago, mthebold said:

Ok.  MENA was only relevant to the US when we needed the oil.  We no longer need the oil; why should we care?

Who is "MR BONE SAW"?

I suspect it’s a reference to MBS who is widely believed and likely to have called the play on the murder and dismemberment of “journalist” Jamal Khashoggi.

Edited by TXPower
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(edited)

On 2/12/2019 at 6:03 PM, mthebold said:

That's the usual story, but it doesn't work that way exactly.  Trump needs low oil prices until such time as:
1)  He gets re-elected
2)  OR he can blame high prices on something else (E.g. a massive war in the Middle East)
3)  OR the economy & wages improve enough to mask the effect of high oil prices
4)  OR he's able to use export controls to keep prices low for his constituents while they're high everywhere else. 

#3 is particularly salient.  During a recession, people are pessimistic and every dollar matters.  Pessimistic people notice fuel prices.  When the economy is booming, wages are rising, everyone is optimistic, and we're all buying new, fuel-efficient vehicles, $3-4/gallon gasoline doesn't matter so much.  It'll matter to poor, inner-city liberals, of course, but they don't vote for Trump and, thus, don't matter.  Once Trump gets enough of the economy sorted out, he'll have freedom to play games with OPEC.

#4 sound far-fetched until we realize that Trump Country burns domestic fuel while the North East, California, and Pacific Northwest - all liberal havens - import.  Thus, with a simple regulation, Trump could feasibly keep his constituents happy while financially screwing his opponents. 

The US is the world's biggest consumer of oil, but by the time this scenario happened, his constituents would be net exporters.  They even may be already.  The shale oil boom would accelerate to meet newfound foreign demand - further adding jobs and wealth to the US - even as domestic prices stayed reasonable.  US oil producers would accept lower profits at home because the alternative is oblivion under leftist politicians.  Keeping voters happy is the cost of doing business. 

#2 is particularly interesting.  Trump doesn't necessarily want lower oil prices; he just benefits from railing about them.  The people think he wants prices bottomed out when, in fact, he wants prices to float in a happy middle: high enough to keep shale alive, but low enough to make OPEC suffer.  That's where we're at right now.  To accomplish this, Trump decided to turn OPEC into involuntary swing producers.  He need only look at current market conditions and, when sufficient production capacity exists, attack the next enemy.  If prices go too high, he could feasibly ease off one of his enemies.  He's in control of this process now, and he knows it.  The only actions that could wrestle control away from him would be major wars, and that would only give him more ammunition to expand domestic production. 

Heads he wins; tails they lose. 

This is an OIL forum,   and yet we tend to spend most of our time arguing about the POLITICS that affect the oil consumers and producers.

I have not commented on this thread yet because i believe the answer to the question of    "WHY IS CONGRESS RESURRECTING THIS BILL NOW,  AND WHY WOULD TRUMP AGREE TO SIGN IT IF IT PASSES ?    is very simple....

It has been the position of the United States for almost 100 years that MONOPOLIES are not allowed....

YET,  despite that,  the MONOPOLY that calls itself OPEC was created in the mid 1970's,  and has continued UN-CHALLENGED by the USA for almost 50 years......?

The USA was never in a position to do anything about OPEC before now....

At the moment,  OPEC is in disarray,   and the USA ,  through it's production,  and exports,  HAS MASSIVELY INCREASED IT'S WORLDWIDE INFLUENCE IN THE OIL SECTOR...

Therefore,    NOW,     TODAY,     THIS MOMENT IN TIME,      IS AN "OPPORTUNITY",    TO KILL OPEC ONCE AND FOR ALL........  TO ELIMINATE THE "ONE GREAT INTERNATIONAL MONOPOLY."

So that is my answer.   This bill would prevent OPEC from getting back on its feet...

As simple as that...

As i wrote above,  OPEC,  is perhaps that "greatest" monopoly that has ever existed....

If it were a building,  it would be listed as one of the "7 wonders of the world"...

But the world does not need OPEC.

Edited by Illurion
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On 2/13/2019 at 5:36 AM, mthebold said:

The US can produce anything it needs domestically.  Even after decades of globalization and terrible domestic policy, only 10% of our GDP involves foreign trade.  The rest of the world needs the US to maintain their interdependent economies, but the US has no need for the rest of the world. 

The standard line of "we're all in this together" is a lie the world tells US citizens because, quite frankly, the world profits from our benevolence.  When we finally tire of wasting our blood and treasure maintaining the globalist system, everyone else will be in trouble. 

Unfortunately for the world, about half the US population has already decided where y'all can shove that lie.  Personally, I'll get a good chuckle out of watching the ingrates of the world suffer. 

Cooperation is peace unless it gets out of balance and one participant takes advantage of another participant. Think China taking advantage of the rest of the world while still claiming to be a developing country. The European Union not negotiating with Britain on Brexit. Mexico allowing illegal immigrants to infiltrate our border and drugs to flow. 

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On 2/12/2019 at 10:10 PM, John Foote said:

The Arab Spring scared the bejeezus out of two sets of key people in Arab lands (Iran is not Arab for this discussion). . 

Iran's leaders mucked up a country that in it's nature is civilized and educated. Those current rulers are nothing if not resilient. We've been projecting their demise since mid-1979 and we keep getting it wrong.

IRONY  is the only term that fits my feelings about Iran,  in comparison to it's neighbors...

 

Iran used to be the United States greatest ally in the middle east other than Israel....

The Iranian people were the closest thing to a "westernized" population that you could find in the middle east...

 

A long long time ago,  when i was in college,  i had many Iranian friends.

The Shah was doing his best to westernize,  and upgrade the standard of living of the country at the time.

The Shah had taken thousands of his finest your officers and enlisted men from his Military,  and sent them to America to attend college,  and learn how to create,  and run businesses..

I went to college with over 20 of those guys...

The Shah had decided that the key to success in his country was to "create a middle class" that was made up of "small businesses."

These men that he sent to college in America were to be the backbone of that new "middle class."

Upon returning home,  the Shah had set up funding that the men could access to start businesses..

It was a great plan.

Then our President Jimmy Carter pulled the rug out from under the Shah,  and the Monarchy was overthrown.

 

My friends in College were called back to Iran in that last month to "Defend the Government."

Most of the guys i knew were executed by the Revolutionary Guard.............

 

Most of the "civilized and educated" citizens of Iran,  were subsequently executed by the Revolutionary Guard...

 

Over a 20 year period under the last Shah,  his SAVAK is said to have killed almost 10,000 muslim terrorists who had been trying to overthrow his regime...

 

The REVOLUTIONARY GUARD have killed millions of the brightest and best of the citizenry..............

 

The IRONY in all of this is that:

 

*  after the Gulf Wars,  even though the people of IRAQ do not like the USA,  we have spent BILLIONS on a NATION BUILDING project to rebuild Iraq....

whereas:

*  even after all these years,  polls show that the actual Iranian people still have a positive view of the USA,    BUT,   if there is a war between the USA and Iran,    after it is over,    you can damn well bet that the USA will make no attempt to rebuild Iran...

 

The feelings between us are just that bitter....

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5 hours ago, Joseph Scarafone said:

I predict Trump would not sign such a bill.  It wreaks of globalism.   Why do such a thing when America is the number one energy producer in the world?  It's really not my problem as a USC if the Saudi's need to make $70 a barrel just to b/e on their bloated budgets.  America will merely crank up production to keep prices lower, at least that's what I would hope.    #MAGA 

The long term future of oil may not be bright. Natural gas, renewables, biogas, ethanol, soy fuel, methanol are all competitors. Natural gas is actually lower in price and cleaner. Renewables say they are cheaper. Ethanol is cheaper sometimes but is limited in production. Methanol is an unproven fuel for mass use. Oil will always be of some value but it may not always be as profitable as it was in recent history. Those nations such as OPEC and Russia who are overly dependent on oil revenue better wake up and look at their options for the future. The Middle East is in the worst shape because it has had a population explosion since WW1 and has few natural resources. 

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2 hours ago, Illurion said:

IRONY  is the only term that fits my feelings about Iran,  in comparison to it's neighbors...

 

Iran used to be the United States greatest ally in the middle east other than Israel....

The Iranian people were the closest thing to a "westernized" population that you could find in the middle east...

 

A long long time ago,  when i was in college,  i had many Iranian friends.

The Shah was doing his best to westernize,  and upgrade the standard of living of the country at the time.

The Shah had taken thousands of his finest your officers and enlisted men from his Military,  and sent them to America to attend college,  and learn how to create,  and run businesses..

I went to college with over 20 of those guys...

The Shah had decided that the key to success in his country was to "create a middle class" that was made up of "small businesses."

These men that he sent to college in America were to be the backbone of that new "middle class."

Upon returning home,  the Shah had set up funding that the men could access to start businesses..

It was a great plan.

Then our President Jimmy Carter pulled the rug out from under the Shah,  and the Monarchy was overthrown.

 

My friends in College were called back to Iran in that last month to "Defend the Government."

Most of the guys i knew were executed by the Revolutionary Guard.............

 

Most of the "civilized and educated" citizens of Iran,  were subsequently executed by the Revolutionary Guard...

 

Over a 20 year period under the last Shah,  his SAVAK is said to have killed almost 10,000 muslim terrorists who had been trying to overthrow his regime...

 

The REVOLUTIONARY GUARD have killed millions of the brightest and best of the citizenry..............

 

The IRONY in all of this is that:

 

*  after the Gulf Wars,  even though the people of IRAQ do not like the USA,  we have spent BILLIONS on a NATION BUILDING project to rebuild Iraq....

whereas:

*  even after all these years,  polls show that the actual Iranian people still have a positive view of the USA,    BUT,   if there is a war between the USA and Iran,    after it is over,    you can damn well bet that the USA will make no attempt to rebuild Iran...

 

The feelings between us are just that bitter....

I disagree about American feelings toward the people of Iran. We might not be able to help rebuild Iran though. We wasted too much money in Iraq, Syria, and Afghanistan. 

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4 hours ago, ronwagn said:

I disagree about American feelings toward the people of Iran. We might not be able to help rebuild Iran though. We wasted too much money in Iraq, Syria, and Afghanistan. 

Yeah.....   Maybe you are right about the "average Americans' feelings"..... 

Who am i to speak for anyone other than me...

Maybe it is just ME that is bitter over the loss of my friends.

 

You may also be right that we would not have the money to rebuild Iran anyway...

Edited by Illurion
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4 hours ago, mthebold said:

Why did Jimmy Carter do that? 

Good Question....

He actually started with central America........

The policy of the USA had always been that,  while we prefer democracies,  we will deal with whoever is running a particular country,  as WHO runs their country,  and HOW they maintain power is "none of our business."

Then Jimmy Carter was elected President.

He started what he called his "Carter Doctrine"...

The "Carter Doctrine" essentially stated that the USA "would not deal with totalitarian strongmen",  and that the USA would use it's influence to destabilize such leaders,  and encourage them to be replaced with "democracies."

He started with various central American countries...

Then the media took the "Carter Doctrine" and stated that "how could Carter support the Shah of Iran,  who was a "Monarch",  whose SAVAK had killed almost 10,000 ?     (the media ignored the fact that the 10,000 were muslim terrorists who were trying to overthrow the Iranian Government in order to make Iran an Islamic State.)

Carter "publicly supported what the media stated,  that no-one should stay in power if they "massacre their own people."

Then the Ayatollah Khomeini in Paris announced that he would be taking a plane to Teheran to confront the Shah,  and Carter publicly demanded that the Shah not interfere with the flight.

The Ayatollah arrived,  riots began,  and the government fell....

............................

All of that was long ago...

I still have my "STICK A HOLE-A IN THE AYATOLLAH " dartboard......

.............................

I voted for Jimmy Carter in the 1976 election.    A decision i later decided was a mistake.

I actually met Jimmy Carter some 20 years later.   We were both volunteer workers that helped build houses for the poor... 

I consider Jimmy Carter to be a "good and kind person."    But he was a naive, and very bad President.

Edited by Illurion
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(edited)

13 hours ago, العنزي ،،، said:

it's not all about oil...

If Saudi regime fall apart which is going to happen for sure, there will be new rules for the game in MENA.

by the way, our MR BONE SAW is a real close friend to trump


https://twitter.com/mujtahidd/status/927580827495649280

Given that you say "our" mr bone saw,  i take it that you are Saudi.

Also given that you seem to want MBS to fall "for sure",   does that mean that you are against your own Government ?

If so,    i think you should second-guess what you want,     as you may not be happy with who MBS might be replaced by.

 

I have many friends in Cairo.    

When the "Arab Spring" happened a few years ago,  several of those friends were against Mubarak,  and stated they wanted him overthrown.

I told my Cairo friends the same thing i just told you.  ie:  that you may not be happy with the replacement.

 

But Mubarak was overthrown anyway,  and replaced with the Muslim Brotherhood.

 

Under the Muslim Brotherhood,  my friends were very alarmed and unhappy.   One of them was arrested and tortured,  but eventually released...

They are glad that  "El-SISI"   is in charge now,   but the revolution destroyed their economy,   and now no one is happy in Egypt....

 

In other words my friend,   BE CAREFUL WHAT YOU WISH FOR............

Edited by Illurion
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A considerable number of people on this site appear to have modified their view of how America should behaved in the world based on "oil independence".  America's main production is from offshore fields which are in significant decline due to a lack of investment.  This production decline is masked by the rise of un-economic shale oil production which is working its way through basins at an alarming rate. 

The reality is that over the last 100 years America has produced and used its onshore economic oil reserves and is dependent on oil imports and will be until a viable alternative to petroleum is developed.  The middle east has an abnormally large amount of oil, reservoired in high quality reservoirs (geologically unique). 

Oil usage continues to rise.  All alternative energy sources which are highly subsidised are only reducing the rate of this increase.

Sorry but God appears to have a poor sense of humour but the Arabs do have all the oil.  This is clearly understood by American strategist who maintain a military presence in the middle east so that reserves can be accessed by America in all circumstances. 

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12 hours ago, Illurion said:

Yeah.....   Maybe you are right about the "average Americans' feelings"..... 

Who am i to speak for anyone other than me...

Maybe it is just ME that is bitter over the loss of my friends.

 

You may also be right that we would not have the money to rebuild Iran anyway...

I made a $20,000 furniture sale to a very nice Iranian professor who had moved to Sacramento. I spoke freely with him in the store about the conditions in Iran. This was in the late seventies. When I met him at his home he cautioned me not to speak politics in front of his own family. I also met another very nice Iranian man in the area. I am bitter also about the Iranian regime. The communists in America supported overthrowing the Shah. Probably due to Russian influence and the Communist LIne. People need to realize that communists are the true leaders of socialist movements, and work behind the scenes to manipulate everything they can. This is especially in line with the way that groups of people are intentionally divided by Democrats in our country. Black versus White, straight versus gay, rich versus poor, urban versus rural, etc.

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11 hours ago, NWMan said:

A considerable number of people on this site appear to have modified their view of how America should behaved in the world based on "oil independence".  America's main production is from offshore fields which are in significant decline due to a lack of investment.  This production decline is masked by the rise of un-economic shale oil production which is working its way through basins at an alarming rate. 

The reality is that over the last 100 years America has produced and used its onshore economic oil reserves and is dependent on oil imports and will be until a viable alternative to petroleum is developed.  The middle east has an abnormally large amount of oil, reservoired in high quality reservoirs (geologically unique). 

Oil usage continues to rise.  All alternative energy sources which are highly subsidised are only reducing the rate of this increase.

Sorry but God appears to have a poor sense of humour but the Arabs do have all the oil.  This is clearly understood by American strategist who maintain a military presence in the middle east so that reserves can be accessed by America in all circumstances. 

All the oil business has to do when oil here becomes too pricy is to promote its natural gas for all heavy vehicles. They can even set up larger facilities for converting trucks from gasoline to diesel. Such conversions are commonplace in other areas of the world and far less expensive than they are here. Of course, there is also ethanol, methanol, soy diesel, biogas, electric vehicles, hybrids, new technology etc.

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Hello, Emma Muhleman here, new to the community. I'm an equity investor at a global macro hedge fund, increasingly interested in the energy and resources space. 

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16 hours ago, mthebold said:

The question is not, "How much oil?"; it's, "At what price?".  At $60/bbl, the US can produce as much as we need in the short run.  At $100/bbl - a price our economy can certainly sustain - we could produce far more than that. Offshore investment lagged, but at what price - and what was the breakeven when the decline begain?  IIRC, Oilprice had a whole article about technology & methods from onshore oil lowering break even prices for offshore oil.  Then there's the impending waste-to-oil, potential gas/coal-to-oil, potential increases in biofuels, potential oil sands, potential additional shale oil, etc.  These could all be implemented around $100/bbl - a price we know the US economy can sustain. 

The other element to this is that, while oil demand is forecasted to increase until 2030, that need not happen.  A recession - which is likely given the world's debt load, declining populations, and the populist trend - could wipe that out.  Equally importantly, electrification will destroy demand faster than is predicted.  We have a plethora of profitable applications; the limit is how quickly we can build batteries.  There will also be increased efficiency from internal combustion engines as old companies attempt to compete.  Finally, let's not forget basics like properly inflated tires, which most people seem to neglect.  Between all those factors, oil demand could quickly peak & fall - just as it did during the last two oil crises. 

This is all beside the point that oil demand for the US and our allies is already falling.  The increased demand is happening in Asia and Africa - places that can't easily endure high prices.  If hell breaks loose in the Middle East and prices spike, the US and our allies will be fine.  It's the people who complain so loudly about US intervention that will suffer.

Shale oil changes the situation because it's the last piece of our energy independence puzzle.  I say the Middle East isn't our problem any more; let China, India, and other oil importers deal with it.  Maybe they'll have the good sense to play hardball instead of using the liberal hippie nonsense we've bought into. 

Care to share how much reserves of oil offshore versus shale, in the US. Looking at oil production data from IEA - CY08-12 production growth in US was quite muted even in the face of US$80-100 WTI (mostly, 2009 was the exception). Shale had also started picking up around this time. Have not seen very good evidence of US offshore production increasing materially even at high prices. Happy to stand corrected, nonetheless!

Edited by AcK

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On 2/16/2019 at 8:17 PM, Illurion said:

Then our President Jimmy Carter pulled the rug out from under the Shah,  and the Monarchy was overthrown.

Carter didn't pull the rug out from the Shah, it was the people of Iran that did that and Carter did not use US force to prop up the Shah, which also scared the House of Saud, although since we didn't toss them after the '73 embargo, they shouldn't have worried. If the Iranians had known the consequences of their revolution, they probably wouldn't have. The Iranian army, to their credit, would not just shoot the general population. A civility now lacking in the Revolutionary Guard, and indeed most of the core guards in the region.

Carter allowed the dying Shah into the US, and refused to return him. That's what started the anti-US, which as you probably know is not reflected in the general population. 

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On 2/12/2019 at 7:55 AM, mthebold said:

What "cooperation" do we get from them, and do we still need it?  E.g. if they decide to play games, what's to prevent us from wrecking them now that we don't need their oil?  They're dependent on us for defense; we own them. 

No, the defence of middle east is not in USA hands. If anything, USA is a trouble maker,not security provider. The reason why Arabs had alliance with USA was the hatred against 'ATHEIST' USSR. USSR was deislamising areas after areas in central Asia and hence the Arabs decided to teach them a lesson by allying with USA.

 

Otherwise, the arabs existed perfectly well even without USA. In 1970, the strength of arabs relative to others was higher than what they have today. The USA Alliance only weakened Arabs and continuing it will only further weaken them. USA sells arms at extraordinarily high costs which is not really worth the price and provide minimum security. USA refuses to give technology to build the arms nor does it give them bigger arms like missile, nukes etc. So, the amount of oil they are selling in dollars and enriching USA economy is simply disproportionately more to what they get back

On 2/12/2019 at 8:06 AM, Tom Kirkman said:

The last time Trump tweeted demanding lower prices from OPEC, Saudi Arabia complied, then got burned.

I have long viewed Saudi Arabia as one of the worst absolute dictatorships in the world.

My ranking used to be North Korea the worst dictatorships, with Saudi Arabia and Iran and number 2 and number 3.

North Korea has improved.  Saudi Arabia and Iran, not so much.

I tend to think both of the current regimes of Saudi Arabia and Iran will be overturned domestically by their own hapless people, before Trump leaves office.

It was letter from India due to which oil price went lower, not Trump. Timings coincided but the actual reason was India. Khalil-al-Falih later even clarified this in interview with media that it was request of Modi (Indian PM), not Trump.

On 2/12/2019 at 8:15 AM, mthebold said:

I agree, but that doesn't address my point: SA can't survive without us.  They'll comply whether they like it or not, and they'll be grateful they're still alive. 

The alternative is that we could let a massive war erupt in the Middle East.  Russia and the US - the only two countries capable of interfering - would greatly benefit from increased oil prices.  Meanwhile, these dictatorships would be facing oblivion.  What's not to love? 

All countries need oil, not just USA. So, countries like China, India will step in middle East. Who said that middle east is surviving because of USA? Was middle East in war prior to 1970s when USA was not there yet? Who will attack whom in middle east just because USA left?

Atbest, USA economy will collapse when middle east stops selling oil in dollars but reverts back to 1970s method of mutual trade. USA will be unable to handle its $500 billion current account deficit and hence collapse. Middle east will get what they need from other sources. Food from Africa (Tanzania, Mozambique), electronics and goods from China, Arabian sea patrol from India etc

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17 hours ago, Bhimsen Pachawry said:

Atbest, USA economy will collapse when middle east stops selling oil in dollars from other sources. Food from Africa (Tanzania, Mozambique), electronics and goods from China, Arabian sea patrol from India etcbut reverts back to 1970s method of mutual trade. 

The 70s, really, back when the US was paying pennies on the dollar for oil. It wasn't until the 1973 embargo that KSA, and region, realized how little they were receiving. Today the Petrodollar's last great friends are the alternatives, Yuan, the Euro, don't even think about the Rupee. 

The big oil export countries, KSA, UAE, Kuwait, they are addicted to the west in so many ways, not just the oil sales. So much of the investment these countries have made are in the west, as opposed to in themselves. The rulers won't slice their own throats. The addiction can be broken, but African and India won't fund it.

I don't include Iraq or Iran because they can feed and cloth themselves. China is happy to step in to a large degree, but several thousand years of history suggest it's hard for the locals to come out ahead. I've worked economic development deals in the KSA. Chinese companies barely even pretend to develop the local industries. Most western corporations actually set up better development deals than the locals. Everyone does a better deal developing the local economy than the Chinese in industrial development. Much of the labor is from India and Pakistan, so they play well in the region. Right now MBS is running around, splashing the cash in Pakistan and India. 

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14 hours ago, John Foote said:

The 70s, really, back when the US was paying pennies on the dollar for oil. It wasn't until the 1973 embargo that KSA, and region, realized how little they were receiving. Today the Petrodollar's last great friends are the alternatives, Yuan, the Euro, don't even think about the Rupee.

Yes, Arabs simply did not bother to think about the importance of petroleum and thought it as just another Natural resource. They failed yo notice how WW2 evolved around petroleum. Germany attacked USSR for petroleum as its coal liquefaction required too much infrastructure and transportation which was not feasible considering its low iron reserves. Japan attacked USA due to petroleum sanctions.

But after the embargo, again the Arabs did not have to go for petrodollar. Even then the Arabs have more to USA than USA to Arabs. The main reason why USA-Arab alliance happened was because USA went and scared Arabs about USSR taking over and destroying Islam. USSR had destroyed Islam in Central Asia like Uzbekistan, Turkmenistan etc by demolishing mosque, doing patrol every friday evening to punish anyone doing namaz etc. This fear and USA assurance of helping to fight USSR along with a clear battle plan for Afghanistan war as a first step made Arabs agree with petrodollar. USA asked Arabs to overproduce petroleum in 1985, making USSR exports valueless and collapsing USSR eventually. At the same time USA reduced its oil production under the garb of environmental restriction and imported free oil (paid in arms supply to fight USSR in Afghanistan, Yugoslavia etc).

Aeabs have now understood that they were duped. So, they have asked USA to not import any oil from international market as USA is having too much current account deficit and violates the clause that USA can't simply print dollars and import petroleum. Petrodollar is unlikely to be changed into petro yuan, euro or rupee but simply converted into mutual trade as the Arabs don't want to be trapped again in another cycle.

14 hours ago, John Foote said:

The big oil export countries, KSA, UAE, Kuwait, they are addicted to the west in so many ways, not just the oil sales. So much of the investment these countries have made are in the west, as opposed to in themselves. The rulers won't slice their own throats. The addiction can be broken, but African and India won't fund it

The countries are addicted to west due to past legacy but the addiction is not absolute and can be curtailed. Food and clothe can come from Africa and Asian countries. Electronics can be imported from China, military patrol can be Indian. Essentially, USA-EU exists in middle east only due to the legacy alliance and not due to any other reasons. The replacement is rather simple. But it is being done in a slow manner to avoid sudden collapse scenario. Also, currently USA has boosted its oil production to be close to self sufficiency and hence Arabs are not in a position to arm twist USA. Europe can be arm twisted but the USA patronage to EU prevents drastic Arab arm twisting. So, currently it is the USA oil self sufficiency which is resulting in this continuity. The moment USA oil reserves deplete, then Arabs will make a move with an eye on Europe

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On 2/20/2019 at 10:29 AM, Bhimsen Pachawry said:

Essentially, USA-EU exists in middle east only due to the legacy alliance and not due to any other reasons. 

Large international companies don't really have an allegiance to countries. Total, Exxon, Mobil, etc., they are where there is money to be made, not a sense of duty to country though they have the lobby power to somewhat influence governments. Don't count on USA oil reserves being depleted in the next 100 years. Lift costs, yes, the Middle East is at a fundamental advantage. The Middle East disadvantage is trying to float their economy on oil exports.

The USA did OK as a net importer for almost 50 years though the policies certainly drove some, IMHO counter-productive foreign policy. This forum overrates the value of the raw materials, and undervalues the money associated what you do with the oil and gas once you get it. 

A lot of private capital has fled the KSA in recent years. MBS is making that harder, but the activities are not encouraging investments in kingdom by non-government entities. Money tends to have no allegiance except to itself. Governments do their best to influence and distort, sometimes to the good, sometime to good intentions, and other time various forms of corruption, but even absolute monarchies can't mandate what happens and often the end result is counter productive to intent.

And I happen to believe the world's best hope is raising the standards of Africa, and much of Asia and South America. The traditional harvesting of resources from these areas is wrong.

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8 hours ago, John Foote said:

Large international companies don't really have an allegiance to countries. Total, Exxon, Mobil, etc., they are where there is money to be made, not a sense of duty to country though they have the lobby power to somewhat influence governments. Don't count on USA oil reserves being depleted in the next 100 years. Lift costs, yes, the Middle East is at a fundamental advantage. The Middle East disadvantage is trying to float their economy on oil exports.

The USA did OK as a net importer for almost 50 years though the policies certainly drove some, IMHO counter-productive foreign policy. This forum overrates the value of the raw materials, and undervalues the money associated what you do with the oil and gas once you get it. 

A lot of private capital has fled the KSA in recent years. MBS is making that harder, but the activities are not encouraging investments in kingdom by non-government entities. Money tends to have no allegiance except to itself. Governments do their best to influence and distort, sometimes to the good, sometime to good intentions, and other time various forms of corruption, but even absolute monarchies can't mandate what happens and often the end result is counter productive to intent.

And I happen to believe the world's best hope is raising the standards of Africa, and much of Asia and South America. The traditional harvesting of resources from these areas is wrong.

No, the laege international companies are large due to political support of their government. USA always backs its companies. Recently, GE was given contract for power plant in Iraq due to USA pressure (earlier it was supposed to be Geeman company). Also, the very reason why countries like France gets Uranium for electricity from Namibia is due to USA pressurising Namibia. The reason why EU companies dominate shipping market despite ship manufacturing being a simple WW2 level technology (military ships are modern but others are WW2 era) is due to political pressure.

If a country has to get foreign resource, it must get foreign money. This is acquired by political pressure to foreign countries to allow the country to do business in a preferential manner. Otherwise, countries like India, China or other poorer countries would have easily been the best bet for reducing shipping costs.

Yes, the end result is not appearing to be good as eventually exploitation of resources is unsustainable and hence now the west is facing the heat.

I am not OVERRATING raw material. It is simply a fact that entire universe exists because of existence of natural resource. They may be hydrogen, oxygen, silicon or other element. Bit the fundamental essence of everything is natural resource. Money is just labour. Every man has 24 hours a day and hence can put in labour. But labour without resources make no sense. So, money is below resources. This is the reason why a person working for 5 hours in USA gets over 5 times the payment of the person doing same job in India. USA has access to large amount of resources on per capita basis Andrew hence it can afford to pay a larger amount of resources per person.

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15 hours ago, Bhimsen Pachawry said:

No, the large international companies are large due to political support of their government.

Or is it the other way around, the mega companies influence the government and power. Think anyone can tell Tata to take a hike?

I am personally familiar with the oddities of power/grid/production in the Middle East and the contracting award processes. GE and Siemens are in some ways all that is, and both are quite skilled at negotiating. One reason I am fan of solar and storage, is disruptive influences forcing these big institutions to compete a bit. These are rarely performance only proposals. A huge part of the award is how local industries will be developed. Some might say spreading the dole is more important, and you have to be creative. GE, at least in KSA, is genius in their key local hires. They know whasta. My speciality was the in country development portion of driving awards.

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LOL !!! Americans are flooding market with cheap oil even when their oil companies are going bankrupt because of huge losses, only to provide cheap oil to China and India , what a great sacrifice Americans are making.

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9 hours ago, JJCar said:

We would stop their price fixing . . . .  and if they don't comply attach their $20 Billion Refinery in Louisiana.

Some say congress wouldn't do anything.  This is not your fathers Congress.  

This Congress won't do anything either, face it, they have no authority outside the US borders

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