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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

#211

Post by JackFr »

dantheman wrote: post #114
jeffdavis wrote: post #97

Earlier quoted context omitted.

"People from that admin should be shunned from any published analysis" Interestingly, it was GWB that also put a lot of effort into pandemic preparedness. See: https://georgewbush-whitehouse.archives.gov/homeland/pandemi... History is kind of a weird place.

GWB is war monger and torturer. Sure he may have done some things that are good, but he made many horrible decisions.

I’m not sure anything I can say will convince you that he had any but evil intentions.

But consider at the time, the United States had just suffered an unprecedented terrorist attack, the conventional wisdom (and much intelligence) was that Iraq held chemical weapons and finally the United States was engaging the Iraqi military on a regular basis as the sole enforcer of the UN sanctioned no fly zone. I won’t argue that the Iraq War wasn’t a mistake. It was, but it was made in good faith and largely, I think, out of fear.

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

#212

Post by dredmorbius »

ashtonkem wrote: post #199
dredmorbius wrote: post #194

Earlier quoted context omitted.

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.

There's little in economics which is absolutely determinitive, and for a study whose formative work is titled An Inquiry Into the Nature and Causes of the Wealth of Nations, there's remarkable little by way of a generally accepted theory of national prosperity and decline, as leading luminaries will freely admit (Tony Atkinson and Paul Krugman do so here: https://youtube.com/watch?v=3l6E3mUNW70&t=38m53s).

There are several powerful mechanisms, however, of which Dutch Disease / resource curse is one. (There's also Twyla Tharp's wonderful "Whom the gods wish to destroy, they give unlimited resources.")

Understanding how it does apply, and why, and where it doesn't, is useful. I've pointed at mitigations for both. exceptions you note, though you don't appear to consider them.

Paper, pen, and ink are useful in communications. But neither paper, pens, or ink do this exclusively, nor by themselves. The blank page, the one uniformly covered in ink, or the one scribbled on at random, communicate nothing. This doesn't mean paper, pens, and ink useless. Markings made according to rules of recognised charactersets, words, spelling, grammar, reference to existing facts, references, and concepts, logic, narrative, metaphore, nuance, and culture ... may succeed in communicating something. Occasionally truth.

Theory of political economy operates similarly. Beware those offering blank pages, spilt ink, random scribbles, or writing lacking, or ignoring, coherence or correspondences.

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

#213

Post by prawn »

teruakohatu wrote: post #167
ilstormcloud wrote: post #151

Earlier quoted context omitted.

5 eyes are more of client states than partners at this point. That's not to say they have no utility, far from it, I think they are very potent. It's just that 'partner' is not the right word to describe them. I say this mainly because they don't seem to have opinions about foreign policy other than the one set by the USA. A better example of a partner in my opinion would be Germany, or France. As for NATO, The only…

My country, New Zealand, is in the 5 eyes. Other than intelligence, we have very little military interaction with the USA. Apparently they won't even allow us to buy high tech gear because we ban US Navy nuke ships from visiting. We are a long way off from being a client state.

But probably not big enough to be a partner?

(I'm from Australia and would consider the "client state" assessment for us to be fair.)

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

#214

Post by caf »

rckoepke wrote: post #133
caf wrote: post #118

Earlier quoted context omitted.

Basically, OPEC needs a situation where they can reduce supply by 10% and get more than 10% increase in price. Otherwise they may increase the price, but still lose revenue overall. That would only be true if you had a zero cost of production (and OK in Saudi Arabia's case, they nearly do). A decrease in volume decreases both your costs and revenue, but an increase in price goes all to revenue. So if, for example, at…

Hugely appreciate this addition. Do you have a good public resource showing current production & transport cost by country or by play? And/or a public list of breakeven prices to eventually earn back capex on new wells? I used to have these charts but haven't kept up.

I don't, sorry.

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

#215

Post by Daishiman »

JackFr wrote: post #211
dantheman wrote: post #114

Earlier quoted context omitted.

GWB is war monger and torturer. Sure he may have done some things that are good, but he made many horrible decisions.

I’m not sure anything I can say will convince you that he had any but evil intentions. But consider at the time, the United States had just suffered an unprecedented terrorist attack, the conventional wisdom (and much intelligence) was that Iraq held chemical weapons and finally the United States was engaging the Iraqi military on a regular basis as the sole enforcer of the UN sanctioned no fly zone. I won’t argue th…

I remember quite well when the US administration was displaying a parade of outright lies for months and months whose only purpose was to justify a war.

He was a warmonger. His aides and his vice president stood to make tons of money out of that war.

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

#216

Post by nl »

Iv wrote: post #191
nl wrote: post #135

Earlier quoted context omitted.

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.

Not sure what this means?

The point of analysis pieces often isn't to share new information, but instead is to share that fact that information is now very important.

Also I for one didn't realise that most of Saudi support in Congress had eroded enough in favor of the US industry to the point where is was now (to quote) "a sharp increase in hostility from members of the U.S. Congress who in the past appeared to appreciate the multifaceted relationship between Riyadh and Washington"

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

#217

Post by jariel »

demosito666 wrote: post #203
jariel wrote: post #188

Earlier quoted context omitted.

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…

> It's a non-starter. If half a year ago someone would tell me that the entire world will be shut down because of some kind of a flu, I wouldn't even consider this: it's a non-starter. And yet here we are. I can easily imagine a mind shift amongst current world powers that will be strong enough to reduce fossils usage to half of existing levels. And since they have all means to enforce this on developing world, I wou…

A 'Deus Ex-Machina' argument is not an argument.

Yes, we could invent some magical technology tomorrow that solved all of our energy problems, but lacking divine intervention - there is no foreseeable path in which the Oil stays in the ground.

Telling the 3rd world they must stay poor because 'we already used up all the Co2 emissions' is not going to work. Saudi Arabia, Nigeria, Iran, etc. etc. will sell Oil to willing buyers.

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

#218

Post by core-questions »

buboard wrote: post #150
core-questions wrote: post #90

Earlier quoted context omitted.

Pretty much. As soon as we all get moving again, the demand is going to ramp back up to previous levels; higher in some cases as industries work harder to fill backlogs. It's not like all the oil-consuming things have disappeared in two months.

we aren't going to 'get moving again' nowhere near the levels we were before

You're basing that on doom and gloom that you've read, not on what people actually want and intend to do.

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

#219

Post by Iv »

nl wrote: post #216
Iv wrote: post #191

Earlier quoted context omitted.

> 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.

Not sure what this means? The point of analysis pieces often isn't to share new information, but instead is to share that fact that information is now very important. Also I for one didn't realise that most of Saudi support in Congress had eroded enough in favor of the US industry to the point where is was now (to quote) "a sharp increase in hostility from members of the U.S. Congress who in the past appeared to appr…

That's for analysis such as "Saudi support amongst crongressmen is eroding" that you need to remember that the author is nowhere near competent enough to be trustworthy on that.

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

#220

Post by afjl »

mFixman wrote: post #158
Macha wrote: post #156

Earlier quoted context omitted.

1. It takes time to adjust to demand changes and they're hoping covid19 restrictions ease in a reasonable time frame and demand goes at least partially back. 2. Russia started flooding the market prior to this to disrupt the saudis and US oil producers. Cutting production would need their collaboration or they've ceded market share and influence to Russia.

Like that very article says, Russia needs a much higher oil price than most countries in the Middle East to keep a positive balance. Demand will come back after the pandemic is over, and the Russian government can't flood the market for very long.

They can flood the market for as long as they have foreign reserves. Over the last several years, Russia has steadily reduced its budget's dependence on oil revenues, and bolstered foreign reserves/gold. They probably do have enough foreign reserves/gold to outpump the Saudis and drive the price so low that the Saudis start burning through their own reserves.

And I believe Putin has a stronger grip over his own people than MBS, so in a race to the bottom I think Russia could definitely come out "on top".

I really dislike the article's mention of "balanced budget" oil prices, it distracts from more salient arguments when presented alone. For proper analysis, the author should have provided more numerical data, like foreign/gold reserves, budget comparisons (historically, and across countries), etc.

>> Demand will come back after the pandemic is over.

Man, I go back and forth with myself/other people over this all the time. I think there's a significant risk that energy consumption will be lower in the temporary short- and mid-term futures, and slight risk that energy consumption will also be lower in long-term future.

Take a look at US consumption: https://en.wikipedia.org/wiki/Energy_in_the_United_States#Pr... https://www.eia.gov/totalenergy/data/monthly/pdf/sec1_7.pdf We still haven't reached 07/08 levels of energy consumption, of which 67% is nat gas/oil. I also read a while back that US households have steadily decreased their individual usage of energy post-2008, despite economic gains. I forget where, I think it was in an article about nuclear power plants.

With that said, I think global outlook (for oil consumption) over the next 5 years is not good for developing economies. Their economies will suffer until developed economies recover and stimulate their under-developed economies. However, long-term population growth in SE Asia and Africa will demand greater energy consumption and I believe economic growth in these regions will be the primary drivers of greater oil consumption. That's because renewable energies will be much, much more expensive than non-renewables (until we tax the hell out of them) and developing economies must pursue the most cost-effective alternative.

Sorry, for the long response, I just love this shit.

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