Still think the Saudis are allies?

Warrigal

Warrigal

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Sydney, Australia
I regard Saudi Arabia as a pariah state because they are perverting Muslim majority countries in Asia with their Wahhabi brand of Islam. However, they seem to occupy a favoured position within US foreign policy. Not that I think the US trusts them as far as they can kick them but their leverage has always been oil.

IMO (and that of many others) the military adventures in Iraq was designed to cut their power by opening up another source of the oil that the American economy depends on so much. Then the rapid expansion into domestic oil production involving fracking of oil shales looked like the answer and a way to weaken the Saudi influence over foreign policy.

Not so, the Saudis have unleashed their counter measures.

[With one quick drop in the price of oil, the shale oil boom is officially bust. In less than a week, 61 oil rigs across the United States closed up shop, according to the most recent rig count from Baker Hughes. The U.S. has 1,750 oil rigs still hunting for new oil wells, but that number is expected to fall by another 400 rigs by the time spring rolls around.

The whole episode is a wake-up call about just how much of a fairy tale North America’s oil boom really was. It was a fairy tale with real drills, sure — and since it was exempt from the Clean Air and Clean Water acts, it will continue to have real consequences for the people living near it. But when it costs Saudi Arabia $10 to get a barrel of oil and it costs shale oil operations around $65 to make that same barrel, it should have been obvious that America was only a titan of oil production because another country was letting us be.

The U.S. got the excitement of overtaking Saudi Arabia and becoming the biggest producer of oil in the world for a few months this summer. Then Saudi Arabia did what it always had the power to do and raised its oil output so that prices fell.

“Those who are producing the most expensive oil — the rationale and the rules of the market say that they should be the first to pull or reduce their production,” Suhail Al Mazrouei, oil minister for the United Arab Emirates, told reporters recently, sounding more than a little like an Econ 101 professor. “If the price is right for them to produce, then fine, let them produce.”

That price — which was $110 per barrel this summer, and $80 three months ago — is now hovering at $46. Goldman Sachs estimates that it will drop to $40 in a few months, since it will take a while for production to slow down and adjust to the new pricing. the United States has cut 10 percent of its oil exploration, and Canada has cut back 25 percent

Since late November, the United States has cut 10 percent of its oil exploration, and Canada has cut back 25 percent. If this continues, expect the oil boom towns of Alberta, Texas, North Dakota, and Colorado to start looking more like ghost towns.

When are prices likely to rise again? Goldman Sachs estimates they’ll begin rebounding at the end of 2015. Others warn that the situation could be more like the oil price drop of 1986, which lasted about five years.

All of which means that TransCanada may well find itself delighted that protesters stopped it from building a big, expensive pipeline to get now-unprofitable tar-sands oil to market. I wouldn’t count on that one, though.

CORRECTION: This post originally misidentified the nature of the rig count referred to in the first paragraph. It is a measure of the number of rigs looking for oil, rather than the number of wells that are in production — so the drop is in exploration, rather than total production. Grist regrets the error, and has sentenced the writer to hard time served reading the rotary rig count FAQ page.

http://grist.org/climate-energy/turns-out-the-u-s-oil-boom-was-just-a-fairy-tale/
Click to expand...

Our fracking industry has not yet ramped up. Here's hoping the economics will stymie it because most of it will be exported and the end result will be increased prices for fuel for the Australian fuel. Not to mention the risk to our water systems.

What are your thoughts on this issue and/or the Grist article?
 

In today's market the Saudi oil is a deal. Foolish if the US just ignores their supply. Also using the cheaper Saudi oil help us to not bleed our latest finds way too fast. I don't think the middle east oil is done at all. If the crazy terrorist would just settle down we could help Iraq to get back into the oil business again. Maybe even Iran will be a decent supplier if the radicals can be removed.

I sure don't understand why you would drill and export, causing prices to go up in Australia. I would think place Australia first would be the best path to follow.
 
When oil started going down in price, unlike many people, I had trouble seeing the big boost to the economy. Sure, you might get to go out for dinner once a month on the money you saved at the pumps, but I was pretty sure there would come a point when people would start loosing their excellent paying jobs and then what impact does that have on the economy when they are forced to tighten their belts? Now even Alberta, which has NEVER had a sales tax is contemplating implementing one because this drop has screwed with that provinces budget big time. We are all too interconnected now to not be impacted by a change this huge.
 
North Sea Oil is really struggling; most of the wells are now unprofitable, and job cuts have already been announced.

at least hauliers, taxi-drivers etc can start making a little money, but long term I feel this is not good; use it then lose it....
 
6-8% of the U.S. is owned by the Saudis and that is just short term liquid assets. Who knows what that figure is if you count real estate. gnp growth for US fiscal 2015 will be around 3%. It's called diversification. Yes I think they are allies. The question could be more specific.
 
Gradual moderniser? How long does it take to recognise that women can drive their own cars without a male escort?

The next king won't be modernising anything much either. He's another old man from the same family.
 
Yep

http://edition.cnn.com/2015/01/23/middleeast/who-is-saudi-arabia-king-salman/

[h=3]There are concerns about his health[/h]Salman is one of Abdullah's younger brothers. But at 79, he's not particularly young.
There are unconfirmed reports that he may have various health problems. But with Saudi Arabian media tightly controlled by the state, nobody's really sure what his condition is.
Riedel says Salman has had a stroke, Simon Henderson of the Washington Institute says the new king's brain is "ravaged by dementia," and The Economist reports he's believed to be suffering from Alzheimer's.
"Reports do differ sharply over just how ill Prince Salman really is -- and medical reports on the illnesses of the Saudi royal family can be grossly inaccurate," cautioned Anthony H. Cordesman, a Middle East expert at the Center for Strategic and International Studies.
Salman's schedule of official meetings suggests a degree of health. But Henderson isn't convinced it proves he's highly capable.
"The fact that Salman appears in public at all is attributed to his determination to become king -- or, more likely, the ambition of his closest relatives that he should do so," he wrote last month.
[h=3]He has a successor waiting in the wings[/h]
 
That may be true some many years away. Far too much of the worlds flying, building stuff, driving for persons of business, heating of buildings and homes, just plain living will keep using our oil for several generations yet. This non carbon energy is just not yet ready to take over the 24 hour work load around the world yet.
 
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Pennsylvania has raised their gas tax, once last year and once this year and will do so next January. This is being done to fix the infrastructures in the state and is way over due. So, I see it as being a good thing and I do see work being done and hiring taking place.
 
In the Arab world and compared to the radicals that are attacking and killing everyone, including more Arabs, they are the better of the bunch. Hopefully their new leader will try to change some of their religious rules and start to judge and impose with more just means and method.

But then, religion is why this person is getting so many lashes. General justice has got to come from outside the religious teachings. Lashings are nothing compared to the punishments they gave to a young man and young lady that were in love. They got their heads cut off in public as punishment as they were not officially paired to be in love and be married.

It is not the nation to be feared, it is the radical ways their religion takes things. I don't believe it comes from the Quran either. It is from the religious groups and how they want to run things.
 

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