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Oil's Collapse Is a Geopolitical Reset in Disguise

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Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#191

Post by Iv »

nl wrote: post #135
Iv wrote: post #91

Earlier quoted context omitted.

To me the most relevant part was this: > She was an assistant to Paul Bremer in the Coalition Provisional Authority. She was Senior Director for Iraq at the United States National Security Council. Around that time, Bremer decided to bar former ba'ath officer from either serving the new military or getting pension. That decision almost single-handedly created the backbone of the terrorist networks that would become I…

As a huge critic of Bush and the disaster that war caused, I'm no fan of Bremer. But O'Sullivan came to Iraq via the State Department, and Rumsfeld didn't want her there, which seems to indicate that perhaps she wasn't as insane as the Rumsfeld/Wolfowitz/Cheany neo-con people. In anycase, I think this article makes a good basic point: lots of countries are going to be in deep trouble with this oil price.

> lots of countries are going to be in deep trouble with this oil price.

Yeah, I really needed a State Department analyst to tell me that.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#192

Post by dredmorbius »

RobertoG wrote: post #165
rckoepke wrote: post #29

Earlier quoted context omitted.

Indeed: https://commons.wikimedia.org/wiki/File:Islamic_Republic_of_... (edited to 2017) 79% of their exports is unrefined crude oil. While exports are not always the whole story, in this case it is extremely relevant. If Iran's economy was 99% domestic and 1% trade, (essentially autarkic) then it wouldn't really matter at all what the price of oil is, as Iran makes everything it needs for itself, whether that be aut…

This is a great comment. I would add that, in order to spin up domestic industry or increase the value of their exports they need expertise and technology. Due to the sanctions that will not be easily available to them. This is really economic warfare.

The resource curse is another major hindersnce.

Countries with both a large, long-term energy-export sector (that is, oil) and a significant high-end industrial base are ... rare.

The US and Norway come to mind. Few others.

The US was the first country to the oil game, Norway one of the last. And Norway's industrial capacity ain't tremendous, but does exist.

The UK had already fallen enough by the time North Sea oil came online, and its economic policy was sufficiently poor, that it didn't recover.

Most major industrial countries have, or had, a large coal resource. Japan being a notable exception.

Saudi Arabia, Venezuela, Russia (mostly), Nigeria, Iran, Libya, Indonesia: little industry.

Even in the US, oil states (Texas, Oklahoma, Louisiana, California, Alaska) tend not to be heavy-industry states (CA being the possible exception). Those were Michigan, Pennsylvania, New York, Ohio, Illinois, mostly, old rust belt.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#193

Post by jeffdavis »

itsspring wrote: post #179
boomboomsubban wrote: post #170

Earlier quoted context omitted.

I can't find the full funding breakdown, but I'd guess Obama contributed more. Purely as he had 8 years to Bush's 5 though.

> to Bush’s 5 How did Bush get a fifth year from a four year presidency?

GWB was elected twice (Nov 2000 and Nov 2004) and served in office for two terms from January 2001 to January 2009.

Why is this complicated and where did the number 5 even come from?

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#194

Post by dredmorbius »

ashtonkem wrote: post #130
selectodude wrote: post #70

Earlier quoted context omitted.

Sure, but Norway is really the exception to the rule. Dutch disease is pretty much universal.

It’s not though. America’s an oil producing nation, as is the UK and Norway. Dutch disease is common, but hardly universal. There are known mitigation techniques that can be applied, including a sovereign wealth fund.

As I just commented elsewhere in thread,[1], the US is an exception. But there are multiple factors:

1. The US ceased being a net oil exporter, and began importing oil, in 1950, over 70 years ago.[2]

2. When the US was an oil exporter, both global oil use and industrial capacity were far lower than today, and cargo shipping costs much higher. The US was among the early industrialised nations (with the UK, Germany, France, and Italy, generally), all (save Italy) with major coal reserves. For the US to meet industrial demand it largely needed to self-provision.

3. WWII.

4. Even within the US, oil-producing regions and industrial regions tended to be quite distinct.

Norway became an oil exporter quite recently (major production largely coming online in the 1990s), and its economic and industrial policy has been excellent. The UK similarly, though it's arguably been hindered by a legacy industrial system as well as its role as a major finance centre (another form of Dutch disease).

________________________________

Notes:

1. https://news.ycombinator.com/item?id=23060290

2. With fracking, over the past 5 years or so, the US has exported ... some petroleum-based products, mostly lease condensate and natural gas liquids (NGLs), very light fractions of petroleum. This is unsuitable for motor fuel (its octane rating is too low, and much is sold to Venezuela and Canada, effectively to make their tar-like oil more soluble. This is likely a tem-orary circumstance.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#195

Post by boomboomsubban »

majewsky wrote: post #182
boomboomsubban wrote: post #170

Earlier quoted context omitted.

I can't find the full funding breakdown, but I'd guess Obama contributed more. Purely as he had 8 years to Bush's 5 though.

George W. Bush held office for 8 years. You may be thinking of his father, George H. W. Bush.

Bush started that program in 2003.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#196

Post by boomboomsubban »

jeffdavis wrote: post #193
itsspring wrote: post #179

Earlier quoted context omitted.

> to Bush’s 5 How did Bush get a fifth year from a four year presidency?

GWB was elected twice (Nov 2000 and Nov 2004) and served in office for two terms from January 2001 to January 2009. Why is this complicated and where did the number 5 even come from?

The program started in 2003.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#197

Post by garrettgrimsley »

Fjolsvith wrote: post #176
pm90 wrote: post #99

Earlier quoted context omitted.

In addition to everything you said, the compounding factor here is that sanctions 1) Make it harder for Iran to take advantage of foreign financial markets and 2) Make it harder for them to get the best value for their exports. Sanctions may not sound very bad but they’re economic warfare on a larger time scale. I felt the world was healing somewhat when the Obama admin eased sanctions on Cuba and got the Iran nuclea…

> I felt the world was healing somewhat when the Obama admin eased sanctions on Cuba and got the Iran nuclear deal where Iran was offered a reasonable path to becoming a part of the global economic system. I am not an expert on it, but it seems to me that while Iran may have been offered a "path" to join the global economic system, they were not mature enough to "play nice" in the global playground.

I am also not an expert on it, but I think you ought to read up on it some. Even after the US withdrew from the JCPOA, Iran continued to comply with the terms of the agreement until at least Feb-May 2019 [0, 1, 2]. Keep in mind that this is long after the US announced in October 2017 that they would not re-certify [3] that Iran was complying with the agreement and in May 2018 when the US withdrew [4] from the agreement. In the October 2017 briefing, President Trump mentions that Iran "has committed multiple violations of the agreement. For example, on two separate occasions, they have exceeded the limit of 130 metric tons of heavy water." I looked into it and found the relevant language in paragraph 14 of Annex 1 of the JCPOA [5]. From page 24 of the PDF:

"All excess heavy water which is beyond Iran's needs for the modernised Arak research reactor, the Zero power heavy water reactor, quantities needed for medical research and production of deuterate solutions and chemical compounds including, where appropriate, contingency stocks, will be made available for export to the international market based on international prices and delivered to the international buyer for 15 years. Iran's needs, consistent with the parameters above, are estimated to be 130 metric tonnes of nuclear grade heavy water or its equivalent in different enrichments"

Refer to IAEA reports [6] dated 26 February 2016 [7], 9 November 2016 [8] for the two occasions that are referenced. Iran's needs of heavy water were estimated to be 130 metric tonnes. Beyond that, they would have to sell and deliver the water to an international buyer. IAEA reports indicate that this is what Iran was doing. Paragraph 10 of the Nuclear section of the JCPOA contains more language relating to heavy water. From page 9 of the PDF:

"There will be no additional heavy water reactors or accumulation of heavy water in Iran for 15 years. All excess heavy water will be made available for export to the international market"

Again, it appears that this is in-line with what Iran was doing. Heavy water in excess of 130 metric tonnes was sold and delivered to international buyers. In addition to the 130 metric tonnes stored within Iran, heavy water was allowed by the Joint Commission to be stored outside of Iran, with some sources [9] calling this a loophole in the cap. Regardless of whether or not you believe that exceeding the 130 metric tonnes of heavy water constitutes a violation, there's a dispute resolution mechanism included in the JCPOA. See paragraphs 36-37 on pages 19-20 of the PDF. The US could have used this dispute resolution process to address concerns about violations of the agreement, but did not.

I will take your "path" to refer to the JCPOA. It should be clear that rather than Iran first stepping off this path, it was the US that did so. It was not after all processes set forth in the agreement were exhausted that the US left the agreement, but instead the decision is made in lieu of engaging in dispute resolution. Note that in the withdrawal briefing [4] President Trump made no references to violations of the JCPOA by Iran, but instead lists criticisms of the JCPOA itself. Given that the US did not utilize the dispute resolution mechanism process established by the JCPOA, and the fact that criticisms of the JCPOA greatly outnumber the Iranian violations of the JCPOA, it is my view that the withdrawal from the JCPOA by the US was not in response to Iran straying from the path.

There are a couple of other grievances that President Trump cited in his October 2017 [3] briefing, but I could find no support for them, and so I don't address them here.

[0] https://www.iaea.org/sites/default/files/19/06/gov2019-21.pd...

[1] https://news.yahoo.com/iran-still-holding-end-nuclear-deal-i...

[2] https://www.reuters.com/article/us-iran-nuclear-iaea/iran-st...

[3] https://www.whitehouse.gov/briefings-statements/remarks-pres...

[4] https://www.whitehouse.gov/briefings-statements/remarks-pres...

[5] https://assets.documentcloud.org/documents/2165399/full-text...

[6] https://www.iaea.org/newscenter/focus/iran/iaea-and-iran-iae...

[7] https://www.iaea.org/sites/default/files/gov-2016-8-derestri...

[8] https://www.iaea.org/sites/default/files/16/11/gov2016-55.pd...

[9] https://isis-online.org/uploads/isis-reports/documents/Closi...

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#198

Post by jeffdavis »

boomboomsubban wrote: post #196
jeffdavis wrote: post #193

Earlier quoted context omitted.

GWB was elected twice (Nov 2000 and Nov 2004) and served in office for two terms from January 2001 to January 2009. Why is this complicated and where did the number 5 even come from?

The program started in 2003.

Oh, now I see what you mean.

I think this is splitting hairs over who gets credit. Remember that Congress needed to raise the money and the taxpayers needed to pay it.

From a practical standpoint, usually some credit is given for leadship to the one who gets a program off the ground. It seems fair in this case that GWB gets credit for that. You can also look at later people over a longer span of time and give them credit/blame for maintaining and administering it, as well (or letting it stagnate, like his pandemic plan, unfortunately).

The main point here is that the GWB presidency was not black and white. I think he was a good person and made many good decisions and one really bad one. Quite possibly, with a different VP, he would be a lauded and dignified president, and a lot of things would be different.

Or, if his pandemic plan had been maintained, and bore fruit today (that is showed benefits in fighting coronavirus), it may have redeemed his presidency entirely.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#199

Post by ashtonkem »

dredmorbius wrote: post #194
ashtonkem wrote: post #130

Earlier quoted context omitted.

It’s not though. America’s an oil producing nation, as is the UK and Norway. Dutch disease is common, but hardly universal. There are known mitigation techniques that can be applied, including a sovereign wealth fund.

As I just commented elsewhere in thread,[1], the US is an exception. But there are multiple factors: 1. The US ceased being a net oil exporter, and began importing oil, in 1950, over 70 years ago.[2] 2. When the US was an oil exporter, both global oil use and industrial capacity were far lower than today, and cargo shipping costs much higher. The US was among the early industrialised nations (with the UK, Germany, Fr…

I agree that America is unique, but the presence of several examples of oil exporting nations avoiding Dutch disease proves that it’s not a guaranteed process, even if it is a likely outcome.

Heck, the fact that America setup an industrial economy while being an oil producing nation is a fascinating counter example to Dutch disease.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#200

Post by [deleted] »

jariel wrote: post #188
twomoretime wrote: post #186

Earlier quoted context omitted.

The entire global economy is grinding to a halt and we may be sitting on top of a global depression for years to come. Those 5 billion are going to have to wait. Also, it may be harsh but if history is any indication, these people are unlikely to gain access to oil themselves - which means they're dependent on probably their neighbors (developing countries probably are sensitive to shipping/deliver charges) which mea…

No, they will get the oil, and low prices will only expedite that. Nobody, not the entire EU/West and certainly not anyone else is going to say to poor Africa and Asia: 'you can't use Oil', moreover, nobody is going to send troops to Nigeria to stop exports, or embargo Indonesia and Pakistan or wherever from receiving oil. It's like telling 5 billion people they can't use tapped water or water wells that they have to…

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