Saudi stocks slump as minister warns of ‘painful’ measures ahead • Hacker News Board

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#21

Post by RC_ITR » Sun, May 03, 2020, 10:44 PM UTC

unreal37 wrote: post #16

ashtonkem wrote: post #9

Earlier quoted context omitted.

Needed, past tense. US foreign policy used to be shaped around our need for Saudi oil, and IMO hasn’t properly adjusted to the fact that America is energy independent again. The realpolitik question now isn’t “how can I secure Saudi oil” But rather “what’s the least I can do to reduce any risk of terrorism”.

The US "was" energy independent. But now all the US oil drillers are shutting down. The same factors hurting Saudi are hurting oil in the US.

Yeah, but now we’ve proven that we can supply our own oil without it being a major drag on the economy.

We may go back to importing one the short term, but losing access to Saudi crude is now a 100% solvable problem, because all we need to do is ramp up fracking again.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#22

Post by mrits » Sun, May 03, 2020, 10:45 PM UTC

grouseway wrote: post #12

ashtonkem wrote: post #2

Can the Saudi government survive a reduction in services? Their economy is largely built around the distribution of oil sale proceeds, I’m worried that cutting benefits might destabilize that regime.

Venezuela and Syria have survived much worse with fewer resources. There will definately be enough money for the police and military.

I think it's arguable that either of those countries survived.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#23

Post by ashtonkem » Sun, May 03, 2020, 10:50 PM UTC

unreal37 wrote: post #16

ashtonkem wrote: post #9

Earlier quoted context omitted.

Needed, past tense. US foreign policy used to be shaped around our need for Saudi oil, and IMO hasn’t properly adjusted to the fact that America is energy independent again. The realpolitik question now isn’t “how can I secure Saudi oil” But rather “what’s the least I can do to reduce any risk of terrorism”.

The US "was" energy independent. But now all the US oil drillers are shutting down. The same factors hurting Saudi are hurting oil in the US.

While price drops can hurt US oil companies, the US is now immune to price spikes, since it can spool up oil production quickly.

Maybe Congress needs to bail out oil producers during a glut, but that’s a lot cheaper than Saudi having to run most of their economy on credit.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#24

Post by bit_logic » Sun, May 03, 2020, 10:50 PM UTC

Many of these oil countries and companies are lacking in vision. They could survive and even thrive in a post-fossil fuel world if they would invest now and see oil as not just fossil fuel, but a means of storage and transport.

The key weakness of renewables (wind and solar) is a mismatch between production and use. It's intermittent, you can't control when the wind blows or sun shines. The solution many think of is giant batteries like those produced by Tesla.

But there are technologies that can take a CO2 source+water+electricity and create synthetic oil. The Middle East is a giant desert, perfect for covering with solar. Texas is known to be a great place for wind. Imagine if these economies went all in on solar/wind + synthetic oil generation. They already have the full oil infrastructure in place to process/refine/transport throughout the world. Just switch the source from the ground (fossil fuel) to solar/wind+synthetic oil generation. If they're smart, they would push hard for carbon tax at the same time. Because solar/wind+synthetic oil is carbon neutral (take CO2 from the air, burn later during combustion). It would put out of business their competitors still stuck on old fossil sources.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#25

Post by sjg007 » Sun, May 03, 2020, 10:50 PM UTC

ashtonkem wrote: post #9

101404 wrote: post #4

Earlier quoted context omitted.

That's what the US troops are there for. The US needs the Saudi dictators to maintain their influence in the region.

Needed, past tense. US foreign policy used to be shaped around our need for Saudi oil, and IMO hasn’t properly adjusted to the fact that America is energy independent again. The realpolitik question now isn’t “how can I secure Saudi oil” But rather “what’s the least I can do to reduce any risk of terrorism”.

Well US troops are there to be a check on Iran, China and Russia. Terrorism is a rare side effect.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#26

Post by emilsedgh » Sun, May 03, 2020, 10:51 PM UTC

Jerry2 wrote: post #7

Looks like Saudi regime is in big trouble. They won't be able to balance their budget with oil prices so low and they won't be able to make payments to thousands of their princes. I did some searching and found few interesting data points: > For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fu…

I'm an Iranian who moved to the U.S. only a few years ago.

Something most people here in the U.S. don't understand is that countries like Iran have a far different threshold of pain.

Iran, as a result of sanctions had already entered starvation-levels of economic collapse. There are people who are sleeping in open graves. Yet, the regime is not backing down in any way. It hasn't change course at all.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#27

Post by pcurve » Sun, May 03, 2020, 10:58 PM UTC

Jerry2 wrote: post #7

Looks like Saudi regime is in big trouble. They won't be able to balance their budget with oil prices so low and they won't be able to make payments to thousands of their princes. I did some searching and found few interesting data points: > For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fu…

Here's the break even breakdown

https://data.imf.org/regular.aspx?key=60214246

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#28

Post by loeg » Sun, May 03, 2020, 11:00 PM UTC

Etheryte wrote: post #19

The image caption used in this article, and in many similar pieces, is honestly somewhat scary: > Why Now Is the Time to Be Buying Big Oil Stocks This is dangerous advice given most investors, never mind casual investors, don't understand how the oil market works. Last I checked, there is no convenient way to invest in the spot price of oil eventually going up. People who buy "oil ETFs" like USO hoping to cash out if…

Oil stocks are very different from oil futures (USO). The advert/spam video isn't really part of the article, either, but it makes clear that it is revering to companies like Chevron ($CVX), etc; not USO.

(It's bad advice for investors anyway; if you're naive enough to take advice from a random website, you should just buy and hold low-cost whole-market index funds.)

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#29

Post by bagacrap » Sun, May 03, 2020, 11:01 PM UTC

bit_logic wrote: post #24

Many of these oil countries and companies are lacking in vision. They could survive and even thrive in a post-fossil fuel world if they would invest now and see oil as not just fossil fuel, but a means of storage and transport. The key weakness of renewables (wind and solar) is a mismatch between production and use. It's intermittent, you can't control when the wind blows or sun shines. The solution many think of is…

Texas is leading the US on wind. I don't think the American energy companies plan to die out as fossil fuels lose preeminence.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#30

Post by grouseway » Sun, May 03, 2020, 11:02 PM UTC

toomuchtodo wrote: post #14

grouseway wrote: post #12

Earlier quoted context omitted.

Venezuela and Syria have survived much worse with fewer resources. There will definately be enough money for the police and military.

Those countries are not surviving. They are failed states. Edit: So too will be Saudi Arabia; they waited too long to take meaningful action to diversify away from oil revenue. Norway is the model for how to avoid the resource curse. https://en.wikipedia.org/wiki/Resource_curse

Yes they are abysmal failed states but the parent said "government". The regimes in those countries are still in place and have survived. The rulers and recipients of their patronage are still in charge.