IEA Predicts More Trouble for OPEC
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  • wigwag

    It’s easy to react with glee that OPEC’s stranglehold on the oil market is coming to an end. Surely lower oil prices will be like manna from heaven for a struggling world economy. It’s a natural reaction to celebrate the comeuppance of the reactionary, antisemitic and tyrannical regimes that rule Saudi Arabia and the Persian Gulf States.

    But there’s another side to the story. Like us, these nations view Iran as their enemy and like us, they view instability in the Middle East as a major problem. Many of these nations have had to increase their social welfare and transfer payments tremendously to avoid the unrest that characterizes what used to be called the “Arab Spring” and now looks more like an Arab winter. Lower oil prices make it far harder for Saudi Arabia and the rest of these nations to buy off their citizens.

    A successful Shiite uprising in Saudi Arabia or a mass movement that threatened to topple the ruling family would be absolutely calamitous for the United States, the world equity markets and probably for the world economy.

    As Oscar Wilde once said, “there are but two tragedies in a man’s life; one is not getting what he wants and the other is getting it.”

    When it comes to lower oil prices and the demise of OPEC, be careful what you wish for.

    • rheddles

      Given that they’re both tragedies, I’ll be happy to live with getting what most of us want.

      Frankly, I’m tired of bribing them to bribe their citizens to do nothing productive and remain in a 7th century culture.

      It is time for the United States to return to its true revolutionary roots. We should view instability in the Middle East as a good thing if it leads them to modernity. And if it doesn’t, I don’t care which set of barbarians is killing more of the other.

      As Jefferson wrote: “The tree of liberty must be refreshed from time to time with the blood of patriots & tyrants. It is it’s natural manure.”

      • wigwag

        That’s all fine, rheddles, as long as you don’t own any stocks or bonds. If you have retirment savings or if you work for a living, a collapse in the equity or bond markets is nothing to take lightly. Professor Mead has written about the perilous state of American pension funds; a collapse in the stock market would make this problem far worse than it already is.

        You should not underestimate how stable the Saudi Government is or how important the stability of Saudi Arabia is for American prospects. In his new book, “The Dispensible Nation: American Foreign Policy in Retreat,” Vali Nasr describes in chilling detail what a fall in oil prices might mean for the Saudi Government.
        If you think that an unstable Saudi Arabia, (getting what it surely deserves) that gets progressively weaker and finally collapses won’t have horrendous consequences for the United States, you should think again.

        • rheddles

          Bernanke and Greenspans’ decades of easy money policies have assured there will be another collapse regardless of what happens in SA.

          If you think a country that gives 300 lashes and 6 years in prison to someone for converting a person to Christianity is a stable country that won’t get progressively weaker and finally collapse, I’ve got ocean front property in Kansas for you.

          Years from now our support of the Saudis will be seen as a moral stain on the order of the Indian campaigns and slavery.

  • d1stewart

    No way, man. Liberals and environmentalists have been telling us for three decades that increased oil supplies are never significant enough to affect oil prices in a downward direction. You know–ANWR would only provide six months’-worth of US oil consumption, and if oil production increases in one place, OPEC just reduces production in order to keep prices up. That’s what lefties have insisted for years.

    • Rich K

      And yet I’m pretty sure many of them are REAL nervous about this right now,Bwahaha.

  • Rich K

    Yes in deed,less easy cash for Russia means their economy will stay moribund as they have still to this day not developed an internal economy that can compete with the rest of the world in consumer exports much beyond military equipment.And they will still have to maintain all that worry about the neighbor to the east.Boy is the sun getting brighter by the day.

  • But what about refineries? When are we going to start building new refineries? After O leaves office, I suppose.

  • A global oil glut with plummeting oil prices is no boon for the US either. The Saudi’s can pump oil out of the ground for MUCH less than the cost of producing unconventional (oil sands, tight oil) and offshore oil in North America. In a glut situation, Saudi Arabia can open the flood gates of production and make all expensive production uneconomical, destroying all the capital deployed to produce it. It has happened before. Look at the low prices in 1997. It only took a few years to drive the expensive producers out of business before oil prices started climbing again.

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