Saudi start to get "it"

Discussion in 'Politics, Religion, Social Issues' started by zap2, Jun 21, 2008.

  1. zap2 macrumors 604

    zap2

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    #1
    http://money.cnn.com/2008/06/19/news/international/saudi_oil/index.htm?postversion=2008061913

    Hign oil prices have, and will keep getting people to cut back on oil usage, and looking into replacing oil, which is great. But not really what the Saudis are hoping for. High gas prices get the mass pushing for new form of energy, which again is amazing.

    Any thoughts on this? Can the Saudi's (with the help of the US, EU, OPEC etc) lower prices? Or are these prices here to stay, and with it a continued push away from oil?
     
  2. iJohnHenry macrumors P6

    iJohnHenry

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    #2
    OPEC is walking a fine line between greed and future disaster.

    They are smart enough to know when action must be taken to protect their rich income.
     
  3. Gelfin macrumors 68020

    Gelfin

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    #3
    Well, here I was enjoying the value of my savings going down the drain, but if the Saudis say we need to take steps to strengthen the dollar, I guess we'll have to consider it. :rolleyes:

    While this may align with our interests in the short term, it will behoove us all to remember what game the Saudis are playing here. They know oil is running out, and things are going to get ugly fast when it does. Everything they do is calculated to ensure the maximum possible amount of the world's wealth is concentrated in Saudi hands when that happens.

    The "it" the Saudis are getting is that if oil prices go too high too soon, we will divert money into alternate energy sources sooner, which in the worst case could cause a price crash and leave some of their oil in the ground, worth less than the price of bringing it up.

    They need to make sure we're still desperately paying through the nose for that last drop of oil. Otherwise they haven't capitalized their resources as effectively as they could have.
     
  4. TwinCities Dan macrumors 603

    TwinCities Dan

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    #4
    I doubt we'll ever get under $3 again, hopefully this will give the lil' kick in the pants to SERIOUSLY start exploring other technologies on a wide scale. ;)
     
  5. ham_man macrumors 68020

    ham_man

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    #5
    OPEC is very wary of shooting themselves in the foot like they did back in the seventies, and they are taking steps that really show this.
     
  6. PlaceofDis macrumors Core

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    #6
    bottom line: they're looking out for their best interests. they need to keep selling oil and a good rate to keep making good money. understandable. and they're afraid of losing control of the market.


    the rise in gas has finally made a lot of people sit up and realize that we can't be dependent on it forever. while its truly hurting a lot of people, which is horrible, its helped educate people on the realities of oil.
     
  7. Ugg macrumors 68000

    Ugg

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    #7
    So it's an American-Saudi clash now?

    The US does use ~25% of the world's oil and the US has the resources to devote to exploring alternative energy. However, US usage has declined and will continue to decline. The problem with your scenario is that growth will continue in the third world. India, China and Brazil are booming and their hunger for cars isn't going to stop soon.

    The other problem with your scenario is that oil isn't used only for cars and planes, but plastics, chemicals, fertilizers, etc. There are no viable plastic alternatives at this point and your Mac, of whatever flavor is filled with petroleum derivatives and aluminum needs a lot of energy to be produced.

    Fertilizer is the big one. Compost and cow poop aren't available in sufficient quantities.

    The ME, effectively having only one product to trade, needs to maximize its profits from oil. If Jobs or Gates were to announce to the world that they needed to restrain the pricing of its products because the poor of the world can't afford them, they'd probably be hung and quartered.

    There will be no price crash in the near future. There's simply too much demand.
     
  8. TwinCities Dan macrumors 603

    TwinCities Dan

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    #8
    Wow! Well said...
     
  9. iShater macrumors 604

    iShater

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    #9
    We are all missing the point that the type of Saudi oil is not the best for gasoline, and without enough refining capacity in the US, this might not do much. Besides, the weak greenback is a big reason oil prices went up as well.

    It is a big cycle that is hard to break, but the fact that people in the US are finally watching their use of gas is a welcome change.
     
  10. Gelfin macrumors 68020

    Gelfin

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    #10
    It seems like you might be reading something into what I said that I don't mean, but I'm not entirely sure what that is.

    All I mean to say is that this is the sort of gift horse we should look very carefully in the mouth. Keeping oil prices low enough to discourage alternatives is part of a calculated strategy to bleed as much money as possible out of the world before the party ends, so it is a little shortsighted to just say, "Yay, cheaper oil! Thanks, House of Saud!"

    It's not an "American-Saudi clash." It's business. We know we're being played, and we've got to play a smart game or one of these days we're going to turn up and ask for our ten million barrels and OPEC countries are going to say, "Sorry, we're tapped out. Thanks for all that cash though." Then the death starts.

    Not saying we shouldn't take or even encourage it, but we should do so carefully, and in full realization that there is an element of "deal with the devil" here. Cheap oil is far from our only interest, particularly in the long term.
     
  11. Ugg macrumors 68000

    Ugg

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    #11
    Hmmm, way too much fire, brimstone and pictures of Armageddon for my taste.

    Actually, the Saud's best interests are met by keeping the price of oil and the dollar stable. While they welcome the money, you have to remember it is all in dollars and that's fine if they only want to buy American gas guzzlers but their buying power in Euros and Yen has actually decreased.

    If history teaches us anything, it's that religious, media and female repression eventually lead to revolt of the masses. The House of Saud is way more concerned about keeping the masses under control than being our future overlords.

    The article's point about the US keeping a better handle on out of control banking snake oil salesman is on that you've all overlooked.

    The price of oil is to a degree, the fault of American greed.
     
  12. Gelfin macrumors 68020

    Gelfin

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    #12
    I should think any amount would be too much, but I get what you're saying.

    I'm not saying the Saudis aren't facing other problems, nor that there aren't other players whose interests complicate things, and as always the very worst case is unlikely, but the point remains that the longer we put off planning for a post-oil world, the uglier it's going to be when it happens. On the other hand, the Saudis' immediate interests depend in part on delaying any such planning as long as possible. Others have similar interests, but others aren't the subject of this thread. :)

    Without getting too armageddonny on you, it is looking to me as if simply "letting the market decide" how that post-oil world unfolds is likely to exacerbate the problems. The Invisible Hand sucks at taking the long view.
     
  13. Desertrat macrumors newbie

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    #13
    Ugg, if by "American greed" you're referring to the speculators and their (roughly) $250 billion in oil futures, remember that they're based in London. The regulations there are much looser than in the U.S.

    I've read comments about the dependency of OPEC countries on their oil incomes. Many of them have little domestic economy besides oil, so the money subsidizes their societies. Venezuela is said to require oil to be priced at $95 per barrel or the go even more into the red than they already are. For the Saudis, with their greater output, it's said to be about $35 per barrel. Other countries are apparently in the $50 to $65 range.

    My take is that world demand for the existing availability would mean oil to stay near $100/bbl, even with policy changes and this worldwide recessionary problem. However, all fiat-currency developed countries are having problems with inflation, except for Japan and Switzerland.

    The U.S. has the mixed-threat capability of both changing technology for transportation and adding to the world supply of oil. The first reduces demand, and the latter provides more time for transition away from oil-dependency. However, the latter is resisted for political purposes--which is economically harmful to our lower income group.

    The problem in regaining a "strong dollar" is that raising interest rates would slow the economy even more than is already happening--at a time of high inflation. IOW, even worse stagflation.

    No easy answers for any country, anywhere.

    'Rat
     
  14. iJohnHenry macrumors P6

    iJohnHenry

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    #14
    Perhaps instead, he is referring to the American Way of going bigger and better, no matter that their reach exceeds their grasp.

    They are now getting their hand slapped.
     
  15. Desertrat macrumors newbie

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    #15
    Context, iJohn, context. "Bigger and better" doesn't hurt at all as to use of resources--until others start playing the same game. Chindia, et al, are now in the game--and Economics 101 always wins.

    All the speculators are doing is betting that demand is higher than supply. That game is open to anybody with disposable income. For that matter, anybody who invests money in anything is speculating. Buying stock in a wind-generator or solar-panel manufacturing corporation is speculation--you expect the stock value to increase and the company's profits to pay dividends.
     
  16. solvs macrumors 603

    solvs

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    #16
  17. clevin macrumors G3

    clevin

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    #17
    i still dont believe the world wide demand for oil suddenly rise 300% in past two years.

    Saudi isn't innocent, but they are making a reasonable argument IMHO.
     
  18. solvs macrumors 603

    solvs

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    #18
  19. Desertrat macrumors newbie

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    #19
    clevin, the maximum oil pumping was in mid-2005; some 85 million bpd. There has been a mx of lessened demand in recessionary countries like the U.S. which somewhat matches the increased demand in growth countries. And, there has been a drawdown in above-ground supplies.

    A major problem is the reduction in oilfield output. Mexico's Cantarell field, from which we import a large amount, is declining at a rate (depending on source) of 8% to 12% per year. One estimate says that by 2012 Mexico's own increased internal demand when coupled to the decline in output means no more export.

    Indonesia is no longer in OPEC since it is now a net importer instead of being an exporter.

    But the details don't really matter: Any time supplies of any commodity reach some sort of limit in demand vs. supply, prices will rise. "Oil is priced at the margin," as some point out.

    Also remember that the posted prices that are shown in the news are for light sweet crude. It's the most suitable for transportation fuel as it's the most easily refined. It's only 25% of the oil that's pumped, nowadays. The sour crude sells for less but costs more to refine.

    Add in political problems, such as in Nigeria with the revolutionaries attacking oil supply systems. Iran's saber-rattling and nuke-threat against Israel doesn't help oil-price stability.

    It's a lot easier to yap about speculators and blame Bush's policies than to face reality, however...

    'Rat
     
  20. solvs macrumors 603

    solvs

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    #20
    Who's saber rattling again 'rat?

    I'm assuming that was aimed at my posts, though I'm guessing you didn't actually read the articles, and can't help but note once again your lack of links.
     
  21. Desertrat macrumors newbie

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    #21
    Links? Christ on a crutch, I'm just commenting from numerous articles from daily news! I can't help it if folks don't pay attention to what's going on. Nor do I save links from weeks and months back. I'm sure not gonna bother trying to link to a Marks Engineering Handbook, for that matter. Buy your own. :D I've been following information about the world of oil since the 1973 embargo. Same for lots of other stuff.

    It doesn't bother me at all for folks to disagree with my conclusions. But you'll note that it's been awful danged rare that anything I've presented as fact was in error. I can think of but a couple, mnaybe three--which I acknowledged...

    Iran's been the main source behind Hezbollah for years. If that's not saber-rattling, what is? Israel has been on the defensive since 1948, and from time to time has to remind a bunch of idiots that she's not to be trifled with--even though she's allowed an inordinate amount of trifling. When you're surrounded by a bunch of schoolyard bullies, every now and then you must remind them of their folly.

    'Rat
     
  22. solvs macrumors 603

    solvs

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    #22
    Links help prove your points. That's why we use them here. Or are supposed to. I'm sure "common knowledge" and colloquialisms are just as good though. As for you points, the reason I posted the link above about Bush and later McCain were to make the point that while OPEC and the oil companies, as well as the consumers ourselves, are partially responsible, so are the policies of our gov. Previous Presidents and others in the gov as well. Simply tossing it aside as some kind of Bush bashing or whatever your implying is disingenuous at best. Same with the saber rattling from Iran. Of course they are. But so are we. So then they do it more. And we play right into it doing it back. You seem to imply that it's only they who are responsible, doing the saber rattling. Ignoring that we sure are looking hard to find a reason to want to invade them, as noted in other threads, and have no problem openly threatening to do so, no matter the actually proof we have of reasons to do so.
     
  23. clevin macrumors G3

    clevin

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    #23
    i found above posts conflicting, and I do not pretend to know anything to object all of you guys. So, keep on and eventually tell me the result.

    I do not believe all those numbers, however, not to say they are fake, they are probably true, but there are probably more numbers that have not been mentioned, i do not think the numbers mentioned above can give me the whole picture.

    For whatever argument, no matter how "logic" it is (or they are), if final outcome is an absurd conclusion. I would really had hard time accepting it.
     
  24. solvs macrumors 603

    solvs

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    #24
    Here are some links about what I've been reading on the subject:

    Offshore Drilling Comes Up Empty
    Bush calls for offshore drilling, citing gasoline prices
    House Republicans vow push on oil drilling
    No New Oil Refineries Since 1976
    The Truth About America's Energy
    U.S. Refinery Utilization and Capacity
    Iraq, and Big Oil, and no-bid contracts … oh my
    Oil surges $11 to record $138

    Basically, refineries are nowhere near capacity, but if they did need new refineries, the administration and Congress would let them build them. They still aren't. They also already have plenty of viable land on which to drill, around 68 million acres. Of which only a small fraction are being even touched upon. Though even if we do drill in ANWAR, and other places they're wanting to, it would take about 10 years to be viable, and only low gas prices about $0.06 a gallon. Even if use was going up higher than production, which as I noted, it isn't. Use went up 1.5%, and has been dropping since. Production went up 2%, and can easily be increased using existing land and refineries. Especially considering all the new oil we're going to get thanks to those no bid contracts in Iraq we gave our oil companies. To "help" the Iraqis some more. Meanwhile we saber rattle back and forth with Iran, and the rest of the oil producing world (except for those who call themselves allies, like the Saudis, who say they won't help us when our leaders go begging to them, but then say they'll increase production after all, which seems weird to me, but I guess they realize prices are too high, so consumption is going way down) and wonder why everyone is forecasting more increases. Which are partially caused by our forecasting they'll increase. Not that we'll spend actual money to research better alternatives, we'll let the market do that, even though it really hasn't, despite talking a lot about it. Nor will we push for higher CAFE standards, while the rest of the world's cars pass ours by in fuel economy. And speaking of economy, the dollar is in the toilet, which is also contributing to the problem.

    I'm sure I missed a bunch of stuff, but for the record, another war we can't afford with places like Iran, or pretending production is at peak and consumption is way up when neither of those are factually correct, aren't among them.

    Here's an article on this by Thomas Friedman:

    Mr. Bush, Lead or Leave

    Yes, that Thomas Friedman.
     

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