Lower Oil Prices Are a Free-Market Victory

[4est_4est_Gump]

Take a look at his thread on the politics board. He asserted that Obama gets the credit then bailed on his own thread, except for the brief cameo when he patted his chief economist Disgustipated on the head for the brilliant observation:

...

So the question is raised, if "consumer confidence" lowers the cost of oil and the price of gas, where did it come from (since clearly with some posters the desired outcome is politically-based and by that it is meant specifically Democrat politics)? Republican government shutdowns? Republican gains in the House? The clear trend heading into the elections over the gaining of the Senate? Continuing resolutions? Harry Reid burying legislation? John Boehner sending bills to the Senate to die? Was it executive order? Executive memos? The release of Terrorists? The rise of ISIS, the promised turnover of Afghanistan to the Taliban? Was it the signaling from the EPA that they were going to make it harder to produce energy? Is this a domestic policy victory?

I could really use some clarification here as how Public Sector policy increased oil production on private lands. Was it basic Laissez-faire or excessive and intrusive regulation? Was it because we kept the gas tax too low (that one is on the Republicans again, of course, because as Democrat-leaning botanyboi reminds us, Republicans are out to hurt Americans)? Was it because we are allowing Iran to join the circle of nuclear weapons nations that is making the free-flow of oil possible, or is it the turmoil in the crescent from Syria to Libya that diplomacy has created which allows terrorists to sell oil at a steeply discounted price? Is this a foreign policy victory?

I'll let query cull the answers. I have most of the die-hard Democrat crowd on ignore.

If a magic unicorn showed up tomorrow farting gild dust and skitttles...



It would be because the Democrats still hold the White House.

 

[4est_4est_Gump]

I see everyone is still on the "shale oil" mantra. What a crock of shit.

The Saudi's goals have NOTHING to do with the US oil production. Not even close to their goal, they want to fuck over the Iranian's. And they're doing a pretty good job of it. Venezuela and Russia are just beneficial side effects for the US.

As far as the US wells are concerned, as Query has already pointed out, they can be capped now and brought back on line again as prices rise and the Saudi's are as well aware of that fact as we are.

While the US economy is certainly effected by oil prices, our economy is not dependent on oil production. The Iranian's, Venezuelan's, Russian's, and other nations are totally dependent on oil production to support their economy. If they don't ship oil at at least break even market prices their economies go into a death spiral and they don't have the luxury of capping the wells and waiting for the prices to rise again.

To complete the picture, the US is still a net importer of oil (Close to 50/50 now. We import approx. 300K bbl/mo. and produce approx. 300K bbl/mo.). Cheap oil is cheap oil, doesn't matter whether it comes from S. Dakota or Saudi Arabia. The overall economy is NOT damaged even though certain local economies might suffer in the short term.

In summary the whole "shale oil" being the target of the Saudi's is a myth cooked up in the minds of morons ignorant of the economics of the situation. The Saudi's are imposing their own economic sanctions on the Iranians in the absence of the current US administrations willingness to do so.

Ishmael

You make a strong case, but I still believe it to be more happy side-effect that actual cause. I think that they are engaging in about the only behavior that they are capable of when being presented with a new economic reality. I do not think they are war with shale oil though I think it is the main reason for the price drop.

 

[4est_4est_Gump]

To me, it's one of those situations where you're can't be completely sure what they will do, but you're fully aware of what they're both capable of doing.

It would also not surprise me in the least if China hasn't been taken into the confidence of the Americans and Saudis on the matter, because China's big picture certainly isn't big enough yet to conquer either, but having Russia and Iran be put in a very submissive place surely entrenches their current ranking much more solidly.

It seems to me President Obama is trying to lead Iran out of the coming quagmire with a bushel of carrots, and I think Iran will eventually allow itself to be led out - for now; they can read the tea leaves. But I also believe they're still just playing the delaying game and as soon as they're nuke sated, we'll see the real Islamic Republic of Iran completely unveiled again.

Putin doesn't have the luxury of dealing and/or waiting; he stepped in the sanction trap big-time with his outright aggression against Ukraine. And he's set himself alone as the only person in Russia responsible for what's going on now. As you brought up, Russia's economy is direly dependent on the oil trade and the nose-diving Russian economy is proving that out.

So far it seems China is more interested in solidifying their ranking in place instead of uncharacteristic, wide-ranging, forceful expansion. They're showing they're not quite ready to make overtly forceful moves towards those expansion plans I believe they're intent on enacting in the not so distant future. A very economically weakened Russia can only be an exquisite treat to them as they wait.

If we begin to hear of massive protests and military/police suppression from Russia in this new year, I believe things are going to change for the good big time. But if the anti-Americanism Putin has purposely championed in the Fatherland is as stout as some of the propaganda issuing forth from Russia offers, then it ain't going to be pretty going to physical war against such a great people.

I don't know. The mullahs can clearly see what happens (Soviet détente) when tyrants ease up on a population with pent up frustration. This is why many of us are still scratching our heads over why Obama did not back their green movement. It appears that he got little in exchange. I think, for similar reason, Putin will use the fear of a bloodbath to keep his population repressed. There is a reason that he has picked up the mantle of the third Rome...

 

[Ishmael]

You make a strong case, but I still believe it to be more happy side-effect that actual cause. I think that they are engaging in about the only behavior that they are capable of when being presented with a new economic reality. I do not think they are war with shale oil though I think it is the main reason for the price drop.

I'll make the case even stronger then. The increase in US oil production afforded the Saudi's the opportunity they needed to fuck over the Persians. Without our increased production they could have never forced the prices low enough to make a difference.

The Saudi's hate the Persians. They hate them politically, economically, religiously, and racially (yes, the Arabs think themselves a race apart from the Persians). They will do ANYTHING short of armed conflict to fuck the Persians over. The last thing the Saudi's want to see is Persia as the dominant regional power. And they will even collude with the Israeli's to prevent the Persians from becoming a nuclear power.

So yes, US production played a role in this ploy. Without our increased production this opportunity would have never presented itself. The Saudi's don't want to fuck over the US economy, they remember well the last time they tried that gambit.

And I notice that the press emphasizes "Shale Oil" to the exclusion of any other oil. More bull shit from the press. Oil is oil, the source of that oil is virtually immaterial as far as the spot market goes. If we had somehow discovered a huge new field of "Texas light sweet", the Saudi's would still have used the opportunity to screw the Persians. The only difference is in the mind of the moronic reporters writing on the subject.

Ishmael

 

[4est_4est_Gump]

I agree about the press.

They have become as pernicious as Democracy.

I still have problems of a purposely executed strategy over fortuna.

 

[Busybody]

I agree about the press.

They have become as pernicious as Democracy.

I still have problems of a purposely executed strategy over fortuna.

HAVE become?

you been sleeping for a few decades

 

[4est_4est_Gump]

HAVE become?

you been sleeping for a few decades

They felt loosed from the constraint of appearing fair when FOX was launched.

Now they're positively rabid. Must be the internet...

 

[Ishmael]

I agree about the press.

They have become as pernicious as Democracy.

I still have problems of a purposely executed strategy over fortuna.

Follow the money, it's the only strategy that makes sense in the forum of Geo-politics. The Saudi's, along with the rest of the cartel, have the means of keeping the prices in the $80-$90/bbl range. Virtually everyone would make money at that price. Yet they, and they alone, are driving the price down to a level where certain selected nation states are forced into economic ruin. And we know the names of those nation states. The Saudi's don't care about the Russian's or the Venezuelan's. There is only one name on that list that qualifies as an economic target of the Saudi's.

The question that keeps nagging at the back of my mind is whether we are an unnamed co-conspirator in this project?

Ishmael

 

[4est_4est_Gump]

Okay, they shut down production and keep the price up.

Does that then not hurt mostly them, if as you say, it would help Iran?

Is not volume then the only way to keep the revenue stream that you have become accustomed to? that your economy (and proxy armies) depend upon?

This government? Conspiracy? That assumes a level of competence not yet displayed publicly...

~overcharge~

 

[Ishmael]

Okay, they shut down production and keep the price up.

Does that then not hurt mostly them, if as you say, it would help Iran?

Is not volume then the only way to keep the revenue stream that you have become accustomed to? that your economy (and proxy armies) depend upon?

This government? Conspiracy? That assumes a level of competence not yet displayed publicly...

~overcharge~

No, it's volume at price-point. Without getting into the dirty details it is possible to remain profitable at a lower volume as long as the price is at the proper point. At the current price point the Saudi's are losing money just like everyone else. Shipping volume below cost is not sound economics unless there is another goal, like capturing market share or driving an unwanted competitor out of business. The question is the rate as which they're bleeding and how long they can continue to do so? I haven't looked up their cash reserves but I would imagine that they're substantial. Neither the Persian's, the Russian's, nor the Venezuelan's have any cash reserves.

I would think that "a" strategy would be to eventually let the prices rise to the point where the Persians break even but the Saudi's pump at a profit. The Saudi's are happy and the Persians are left with a national deficit from which they'll have no hope of recovering from.

And the question still on the table is, "Are we unnamed co-conspirator's in this game?" On the pro side the game goes a long way to further our international interests. On the con side this administration has bent over backwards to kiss the asses of the 'victims' of the plan and their attitude towards oil, oil of any sort, is well documented. My guess is that the Saudi's are operating independently on this and our administration is just as trapped in the ploy as everyone else.

Ishmael

 

[4est_4est_Gump]

What I said:

http://www.nationalreview.com/node/395584/print

...

“They’re already dusting off their three-point plans for $2 gas,” Obama mocked. “I’ll save you the suspense: Step one is drill, step two is drill, and step three is keep drilling.”

...

Unfortunately for the Obama administration, the new age of sky-high oil prices proved an economic disaster. The natural cycle of recovery never quite followed the end of the recession in mid 2009, as U.S. budget and trade deficits soared.

Abroad, all the wrong countries were empowered as never before.

The late Hugo Chávez used his oil windfall in Venezuela to subsidize subversion throughout Latin America. Petrodollar-rich Russian president Vladimir Putin charted a confident anti-American foreign policy.

Iran used its growing riches to step up progress toward producing a nuclear bomb while upping subsidies to terrorist organizations such as Hezbollah.

Then, finally, oil and gas prices plunged owing to the “drill, baby, drill,” can-do attitude of the private sector. Americans should thank the U.S. oilman — from the drillers in the field to the engineers behind the scenes — who did the impossible. They vastly increased the supply of what was supposedly a permanently declining resource, and thereby helped to crash prices.

Oilmen, not the government, returned hundreds of billions of dollars to American consumers. They, not Ivy League experts and Wall Street grandees, kick-started the economy where federal subsidies had failed to. They, not the policies of the Obama administration or the rhetoric of Secretary of State John Kerry, weakened our enemies.

Almost everything Obama tried for six years in an effort to rev the economy — from near-zero interest rates and $1 trillion annual budget deficits to Obamacare and vast increases in entitlements — has failed. His foreign-policy stances of resets and leading from behind led to chaos and emboldened enemies.

Yet the United States economy is slowly recovering with cheap energy. Consumers have more money. Industries are returning to U.S. soil.

Abroad, spendthrift oil producers such as hostile Iran, Russia, and Venezuela are nearly broke. Friendly rivals such as Japan and the European Union can’t compete with the U.S. energy edge.

What Obama once ridiculed is now saving him from himself — after he had championed policies that nearly destroyed him.

The Greeks had a word for it: irony.

Victor Davis Hanson

 

[4est_4est_Gump]

You do not honestly harbor any thought that any strategic-thinking partner would ever give Obama any hint of a plan with his loose lips? He'd warn the very people they're trying to hurt (as per your contention) in order to foster a meaningful dialog.

 

[Ishmael]

What I said:

http://www.nationalreview.com/node/395584/print




Victor Davis Hanson

That answers the 'con' part of the posited question.

Our increased domestic oil production, which came about in spite of the administration efforts, has reduced our dependence on foreign oil by 25%. And that is indeed a HUGE percentage. But looking at the bigger picture, the EU/US/Japan oil consumption as dropped by 5 million bbl/day over the past 4 years. BUT, the demand by the rest of the world has increased by 12 million bbl/day over the same period. A net increase in demand of 7 million bbl/day. Our increased domestic production would explain an easing of market prices, but can not explain the precipitous drop that we're observing.

Again, our domestic production set the stage that is allowing the Saudi's to execute this plan. And now that that train is in motion are we up in the locomotive with the engineer, or back in coach with the rest of the passengers?

Ishmael

 

[Que]

The money quote in that article was: "“They’re already dusting off their three-point plans for $2 gas,” Obama mocked. “I’ll save you the suspense: Step one is drill, step two is drill, and step three is keep drilling.”"

According to Phrodeaux, who hate all forms of fossil fuels, the policy that led to increased oil production was "All of the above energy policy" Says right there on the White House's website that that is his policy.

Of course when they were scaremongering Romney/Ryans plan to give more control over drilling permits to the states, there was a little presidential debate:

http://www.factcheck.org/2012/10/obamas-drilling-denials/

Wonder why Romney was running on more production since Obama already had that covered with the slogan "all of the above" (just less of it.)

Surprising lack of snark from US News and World Report:

http://www.usnews.com/news/articles/2012/08/23/romney-energy-plan-pledges-more-oil-drilling-on-public-lands-energy-independence-for-america-by-2020

ABC news:

“Let me tell you what the benefits are: 3 million jobs,” he said. “That’s a million in manufacturing. That’s a lot of energy-related jobs. Three million jobs come back to this country by taking advantage of something we have right underneath our feet – that’s oil and gas and coal. We’re going to make it happen. We’re going to create those jobs.
“Let me tell you what else it does: It adds $500 billion to the size of our economy,” he said. “That’s more good wages, that’s an opportunity for more Americans to have a bright and prosperous future.
“It also means, by the way, tens of billions, potentially hundreds of billions of dollars of tax revenues going into states and the federal government, which can make sure we have a military second to none and schools that lead the world and care for our seniors, better roads and bridges,” Romney added. “Accomplishing what I described right now also means lower energy prices for American families and, by the way, for American businesses.”

Gee, I wonder who would have done a better job on predicting what drives an economy and fuel prices, the Harvard MBA who specializes in looking at balance sheets and effecting turn-arounds, or the Harvard Lawyer that was never a lawyer?

 

[BotanyBoy]

Gee, I wonder who would have done a better job on predicting what drives an economy and fuel prices, the Harvard MBA who specializes in looking at balance sheets and effecting turn-arounds, or the Harvard Lawyer that was never a lawyer?

If only that were the only issue........

 

[4est_4est_Gump]

That answers the 'con' part of the posited question.

Our increased domestic oil production, which came about in spite of the administration efforts, has reduced our dependence on foreign oil by 25%. And that is indeed a HUGE percentage. But looking at the bigger picture, the EU/US/Japan oil consumption as dropped by 5 million bbl/day over the past 4 years. BUT, the demand by the rest of the world has increased by 12 million bbl/day over the same period. A net increase in demand of 7 million bbl/day. Our increased domestic production would explain an easing of market prices, but can not explain the precipitous drop that we're observing.

Again, our domestic production set the stage that is allowing the Saudi's to execute this plan. And now that that train is in motion are we up in the locomotive with the engineer, or back in coach with the rest of the passengers?

Ishmael

What about producers other than the Saudis?

http://peakoilbarrel.com/world-crude-oil-production-geographical-area/

What about Eurasia? It seems the world without the US is only down about 2b barrels a day.

http://www.bloomberg.com/news/2014-...gest-oil-producer-after-overtaking-saudi.html

I am still having trouble with the idea, but I am not rejecting it out of hand.

 

[Que]

If only that were the only issue........

It used to be "It's the economy, stupid." How did it become Ok to have an obstinate, economic illiterate in charge? Used to be that presidents that did not have a good grasp on numbers (probably most of them) surrounded themselves with people that did. B all reports his inner circle are all youthful marketing-savvy people. No one with a finance, business or economics background advising the President.

Was there something more important than staying out of the way of a recovery the last two election cycles?

 

[4est_4est_Gump]

It used to be "It's the economy, stupid." How did it become Ok to have an obstinate, economic illiterate in charge? Used to be that presidents that did not have a good grasp on numbers (probably most of them) surrounded themselves with people that did. B all reports his inner circle are all youthful marketing -avvy people. No one with a finance, business or economics background advising the President.

Because he is a uniter, a token, a symbol of how far we have come and his concern for everything American is in shape contrast to McCain and Romney who were only concerned with everything un-American...



... he is the paragon of societal evolution and the giver of a new kind of economy where people do not have to fear and suffer illness, hunger or the ignominy of [minimum] wage labor.

The young should rule!

"The intellectuals and the young, booted and spurred, feel themselves born to ride us."
Eric Hoffer

 

[Busybody]

If only that were the only issue........

where the fuck is the link to DEFENSE companies and BANKERS giving all the MONET to REPOZ

 

[4est_4est_Gump]

where the fuck is the link to DEFENSE companies and BANKERS giving all the MONET to REPOZ

I was pretty sure that they were giving away Manets...

 

[Busybody]

where the fuck is the link to DEFENSE companies and BANKERS giving all the MONET to REPOZ

Im WAITING BUMBLING BAA BOON!

 

[4est_4est_Gump]

I'm waiting...



You're insufferable.

 

[BotanyBoy]

Was there something more important than staying out of the way of a recovery the last two election cycles?

Ending the WHARRRRZ!!! Was pretty high on the list and so was HC reform....fucked all that up. Which isn't helping things in the finance department at all.

And get out of it's way? Has he been actively trying to stop the recovery? How?

where the fuck is the link to DEFENSE companies and BANKERS giving all the MONET to REPOZ

www.Google.com has the answers you seek....and I never said all the money, you're just making shit up and slandering my good name.

 

[4est_4est_Gump]

Ending the wars was a pretty exceptional idea.



Winning would have been better, but yeah...

Stopping it with green investment, Keystone, and EPA madness which kicked in this week.

Fuck cheap oil, there's more than one way to extract blood from a turnip.

We Democrats will have our revenge!

 

[RobDownSouth]

Ending the wars was a pretty exceptional idea.



Winning would have been better, but yeah...

Armchair General-ing at its finest.

Not having any "real" children of his own, the Chief is more than willing to put other people's children in harms way.

Living vicariously through the bravery of others.

#MoarWar