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Last week, OPEC called on Russian oil companies to lower production in response to reduced demand from China and a Eurozone bound for recession. They said no.

Just like that, oil took a nosedive, losing 25% of its value on Monday. The price of a barrel of oil closed at $33 dollars, compared to $45 late last week.

For the last decade, America’s rise as an oil exporting power thanks to the expensive shale exploiting process has allowed neocons to cripple the economies of Venezuela, Iran and Russia. Cheap gas is a welcome perk that has kept many working families afloat, but it is only a side effect of a broader geopolitical attack on countries the Jews that own Washington see as threatening. The impact has indeed been devastating on these countries. The inflation adjusted price of a barrel of crude oil in 2008 was $109.25.

The Russian government has responded to US-led efforts to “deplatform” them from the world market via low oil prices and aggressive interventions to block projects like the Nord Stream 2 by nationalizing key industries, including oil, and setting aside 100s of billions to stabilize the ruble while the country pursues autarky.

While the Russian gambit is counter-intuitive and will lose them money in the short-term, the long-term goal appears to be to hang American capitalism with its own rope. Shale oil production is immensely unprofitable. It is an industry floated by about $1 trillion in Wall Street money — what it cost to explore it and get things up and running. From 2011 to 2019, the industry has been running at a loss, though the economy as a whole has benefited from the global reduction in gas prices. Nevertheless, some analysts are predicting that up to half of the heavily indebted shale oil companies could go bankrupt, wiping out 10s of thousands of decent paying jobs in the process.

In the immediate term, the US-Israeli puppet state of Saudi Arabia and its corrupt sheiks have found themselves speeding in the desert in one of their Ferraris with the breaks cut. 87% of Saudi budget revenues come from oil production and they don’t know what to do. While Russia, Venezuela and Iran have already weathered sudden and unexpected attacks on their economy from Wall Street and the liberal powers, the Saudis are much like American citizens with the corona virus pandemic: assuming Uncle Sam will figure it all out for them.

The only solutions on Trump’s table is 1) to nationalize the American oil industry, or 2) use protectionism to try and artificially keep prices stable.

The second option is much more likely than the first, but both may prove unpopular with capital and Trump’s Goldman Sachs “economic advisors.” Suburban consumers may also like the dirt cheap prices at the pump, even if it means plunging the Dakotas, Appalachia and beyond into a regional depression.

The Russians are banking on capitalist greed, neoliberal orthodoxy, and the individualist nihilism pervasive in our culture. It may be their most profitable endeavor yet.

(Republished from National Justice by permission of author or representative)
 
• Category: Economics, Foreign Policy • Tags: Oil Industry, Russia, Saudi Arabia 
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  1. The Saudis kicking up in the traces, combined with  Russian currency tanking, may be just enough for China and Russia to launch their gold backed cryptocurrency and sink the petrodollar forever.

  2. fnn says:

    Was there ever any logic behind Cold War 2.0 with Russia-or was it just Jewish hatred?

  3. Anonymous[234] • Disclaimer says:

    what happened to the rest of the american oligarch series? did the next subject of the series pay you off? I am of course kidding. but I do really look forward to it.

    I am an autarky proponent but the simple fact is that shale oil should have never been extracted. Ethanol might have even been a better option, like Brazil has done.

  4. Just like that, oil took a nosedive, losing 25% of its value on Monday.

    No. It lost 25% of its artificially high price.

    • Agree: PetrOldSack
    • Replies: @Paw
    , @Twodees Partain
  5. El Dato says:
    @fnn

    The logic was Jewish hatred and an easily instrumented mental disorder of western “decision makers” (really “decision takers”): identify a baddie, then export globalist/pansexual “liberty” to that general area in order to “help” oppressed people.

    • Replies: @PetrOldSack
  6. El Dato says:
    @Anonymous

    Autarky is not an option. Raw resources: Not produced in a Silicon Valley startup.

    Ethanol is not an option unless you are ready to transform the whole of Florida into an ethanol-harvesting area.

    But I agree that shale oil is bullshit.

    • Replies: @Svevlad
  7. @El Dato

    Global ethics and rules for local players, aligned interests of the elites and the surplus populations, in capacitating them equally, from oil to covid-19. A different kind of globalism.

    Psychologically this is of course beyond bounds. Still no other options that do not run into the wall. It all reminds me of the Latinas of the eighties, miniskirts and large belts on top(to hide expanding girth for most, and yet, the ugly fat-rolls kept creeping up and under), the makings of a farce.

    The options on the table do not matter, the tweak-ers and peddlers do not trust each other. So the unexpected is expected. Absurdity powered by nihilism is the word for it. Blind corners, out of ineptitude and sheer greed another way of putting things. The article is on to something, but regardless, there is some of this same rot in the other local players.

  8. Patricus says:
    @Anonymous

    Why should shale oil and gas not be extracted? Because of fracking we pay a lot less for fuel. Drops in the price of oil can put shale extractors out of business however the wells and infrastructure remain in place. Some companies can pick these up for pennies on the dollar. If oil prices rise again the fracking operations can produce again in 30 days. Shale extraction is a buffer protecting against energy cartels.

    So far no better source of energy than hydrocarbons is known. No chemical source is likely. There might be safe and economical nuclear solutions in the future.

  9. Antiwar7 says:

    The Saudis tried to bankrupt Russia earlier by increasing production and lowering the price of oil. It seems to me this is payback.

  10. @Anonymous

    As usual it is not as simple.
    Brazil can grow sugar cane, for an ROEI of about 2 which is at best marginal;
    trying to do the same in the US with corn does not even come close – it is a colossal money sink and subsidy for Big Ag and always has been; and it ruins the topsoil – and small farmers everywhere.

    But I´m looking forward to a little revolution in KSA 😀

  11. Svevlad says:
    @El Dato

    Really, America can go the autarkic route no problem. It has nearly all resources, thanks to it’s size, except cheap oil.

    Absorbing Canada would make it completely autarkic, probably.

    Anyways, why not this solution for energy:

    1. dig really deep hole (to a depth where water would quickly evaporate) at a few locations in let’s say the great basin
    2. dig a perpendicular tunnel that leads to the ocean
    3. construct tall tower/smokestack over the hole
    4. cover it in capacitor plates
    5. place turbine on top
    6. water flows into the hole, evaporates instantly, goes up, turns the turbine, gets out, forms a cloud
    7. this grows in a perpetual storm, lightning hits the smokestack capacitor plates for extra energy
    8. the ensuing rain fills up all the little basins and overflows them into rivers, officially eliminating their endorheic status and creating huge freshwater reservoirs

    there, i killed 3 birds (energy, deserts, water supply) with one stone. Say goodbye to Logan, Ogden, Salt Lake City, Provo and Reno though.

    All that needs figuring out is how to keep the hole clean – the minerals and salt from sea water would quickly clog it

  12. @PetrOldSack

    Absurdity powered by nihilism

    Epitaph of the 21st century.

    Nietzsche couldn’t have said it better.

    Like the demon-possessed pigs who plunged themselves into the sea.

  13. Stan says:

    The irony of the president supposedly elected with Russian help losing the re-election because of Putin’s crude revenge.

  14. Paw says:
    @WorkingClass

    Do they want to commit suicide, in order to destroy Russia, again?

  15. Fracking is pretty nasty shit. Kiboshing it is probly a good thing.

  16. anon[112] • Disclaimer says:

    Lots of business are sink holes for capital. Where it goes to hibernate. Auto manufacturing. Farming. Airlines. They aren’t disappearing. Why do people invest in these things? Because that’s what they do.
    The marginal cost of oil is maybe 1/2 the all in profit hurdle. They will never repay invested capital and produce a profit. But they can keep drilling for short term positive cash flow. Or pumping at even lower prices.

    Also consider who is really dumping oil. It’s the US with round heels here. The US won’t limit production to stabilize prices, because it’s not who we are. And we think like an oil consumer and haven’t adjusted to thinking like a producer.

    However, 2014-16 was round one and the weakest producers are gone. The majors won’t go belly up. Nor the large independents. The weakest are really small and can fail without blowback. Meanwhile the cure for low oil prices are low oil prices. April WTI is back to $34. A lot of wishful thinking here.

    • Agree: Redneck farmer
    • Replies: @PetrOldSack
  17. While the Russian gambit is counter-intuitive and will lose them money in the short-term, the long-term goal appears to be to hang American capitalism with its own rope.

    The economic variant of how they beat the French and Germans by falling back while all the way grinding them down. Russians still live closer to the dirt than we in the West, so our downfall will be even more painful for us than what we’ve inflicted on them thus far.

    Nevertheless, some analysts are predicting that up to half of the heavily indebted shale oil companies could go bankrupt, wiping out 10s of thousands of decent paying jobs in the process.

    Then there’s the huge hit to banks and investors who have floated huge sums to keep fracking going. The only people who really consistently make money in fracking (aside from origination fees) are bankruptcy lawyers.

    • Replies: @Sam J.
  18. @Svevlad

    … there, i killed 3 birds (energy, deserts, water supply) with one stone ….

    You’re going to kill a lot of real birds with that kind of infrastructure 😏

  19. eah says:

    This article is a a bit sloppy; it contains some half-truths.

    Last week, OPEC called on Russian oil companies to lower production in response to reduced demand from China and a Eurozone bound for recession. They said no.

    Yes — and the Saudis, who are members of OPEC (Russia is not), were in favor of (modest) production cuts — the meeting of OPEC and non-OPEC oil-producing states, called OPEC+, officially failed on Fri Mar 06, although it was more or less known the day before that Russia would not agree to cuts — you can see the effect of this failure on the price of USO (which tracks WTI), which ended at 9.61 on Mar 05, but fell to 8.73 on Mar 06, a loss of 9.1%.

    The word from insiders was that since Russia has reduced both its dependence on oil exports, as well as its cost (per barrel) of production, Putin is trying to deal a fatal blow to (some) American shale producers by allowing the price to fall.

    Just like that, oil took a nosedive, losing 25% of its value on Monday. The price of a barrel of oil closed at $33 dollars, compared to $45 late last week.

    This is a half-truth — it’s assumed Russian intransigence angered the Saudis, who decided to 1) unilaterally cut the price of their oil, and 2) raise production to meet any increased demand — this decision was taken/announced on Sat Mar 07, i.e. on the weekend after the OPEC+ failure:

    Aramco Slashes Crude Pricing, Starting Oil War as OPEC Flops

    This weekend action by the Saudis was the proximate cause of the big fall in oil on Mon Mar 09: USO fell to 6.52, from a close of 8.73 on Fri, a loss of 25.3%.

    Obviously the Saudi move hurts all producers, including fellow OPEC members, not just Russia.

    Shale oil production is immensely unprofitable.

    While it’s generally true that fracking costs more than (drilling and) pumping, North American shale producers have done a good job of lowering the production cost per barrel over the last few years — but many are laden with a lot of debt, used to acquire land in the past when the price of oil was much higher (CHK is a good example) — without all that debt, many would have far less trouble surviving these lower prices (which may not last too long).

    • Replies: @eah
  20. Vojkan says:
    @fnn

    Hatred combined with greed combined with vanity. Hardly any synapse left for logical thought.

  21. Realist says:

    The Russians are banking on capitalist greed, neoliberal orthodoxy, and the individualist nihilism pervasive in our culture. It may be their most profitable endeavor yet.

    A bet that never goes wrong.

  22. Realist says:
    @Svevlad

    I’m going out on a limb…and guess you have no background in science or engineering.

    • Replies: @Svevlad
  23. Svevlad says:
    @Realist

    I don’t. Don’t care either, not really my idea anyway

    • Replies: @Realist
  24. Barr says:

    Russian behavior is baffling . It should have never met any of Saudi royals . It should have told Saudis clearly that they need to pick the Jihadist and take them to Saudi. Instead of agreeing with Saudi or even contemplating economic cooperation with Saudi ,it should have entered into economic barter system with Iran for food and medicine in exchange for oil being sent to Russia through third countries like Armenia or handed over to China in 3 party barter agreements.

    China shall learn from the Corona virus and choose its actions in UN accordingly .
    Both Russia and China could have offered Taliban a blue print of help . It is not lost on Taliban that it is fighting alone . Now Taliban has mended the fences with USA. This doesn’t portend well for the neighbors .

    Saudi royal partly thinks that it can get away with Russia through Israel . Israel holds lot of power in Russia . But the fossilized system of Saudi can’t last long . I can see israelis arriving and staying inn Medina and mecca for the symbolic conquest of the Saudi and Islam. Pakistan Egypt and UAE will offer platitudes to explain the developments away . Reckless MbS as foretold by Iran is the proverbial anti -Christ but for Muslim .

    American jobs based on borrowed money from the bank supporting a highly noxious risky and pricey endeavor of oil from shale are the only jobs in town . That says a lot about the country’s economy.
    Politically it seems ,it has run into slow moving mud .It can’t even plod. Afghanistan , a deal between the 2 shows how US has lost its mojo . It takes chances and hopes for the best . It has already allowed its democracy to flounder on the shoulders of the rival candidates for presidency without dealing with it before the election or inauguration. Now it has allowed Taliban to extract from the crumbling Ghani government something it never wanted to give .
    It is correct to assume that the Taliban and US are now in cahoot to spread each other aims and purposes just like it was between other Jihadist and USA.

    The more one sees ,the more one is forced to conclude that 911 was not a defining moment in the character of USA. It only ensured and provided full throated citizen’s support to the Zionist plan for USA and for US’s vassals in plain sight .

    Only help from Taliban that USA can appreciate and can negotiate is this – Taliban will work for USA to realize Zionist goals in China Iran Russia , Pakistan and later India.

    There is a good chance that the overt warmongers will be back attacking the deal between taliban and US for their own short term political career . Cruz or Rubio or Cotton might decide to bolt and challenge Trump or Pence or Biden down the line But that would be just a ruse , a show . American will use the terror and GWOT for foreseeable time just to use it for political gains at home and sometimes against Venjuala or Iran but nothing has actually changed other than clear US’s surrender to Zionist and American merger with Jihadist

    • Replies: @NoseytheDuke
  25. eah says:
    @eah

    But make no mistake: low oil prices are a very serious problem for US producers and the financial markets generally:

    “Fallen Angel” Day Arrives: $140 Billion In Energy Debt At Risk Of Imminent Downgrade To Junk

    Also, a certain degree of energy independence can be seen as a national security issue — in that light, it makes little sense to allow US energy companies to fail en masse.

    • Replies: @eah
  26. @fnn

    Was there ever any logic behind Cold War 2.0 with Russia-or was it just Jewish hatred?

    Cold War 2.0 is really about Russian sovereignty and resisting neo-colonialism after disastrous post Soviet economic reforms that were prescribed by (((Goldman Sachs))), the IMF and like which resulted in hyperinflation, the economy shrinking by nearly 50% between 1991-97 then financial collapse in 1998 plus enabled the looting of national state by named tribalists.

  27. eah says:
    @eah

    A collapse of the US shale oil industry should be prevented.

  28. Sean says:

    Shale oil production is immensely unprofitable

    Given the Federal Reserve’s decision to slash US interest rates by half a percentage point? In Saudi America: The Truth about Fracking, Bethany McLean says as long as cheap capital is available fracking pays and although although that will change someday.Also the big players see renewables as the future, it is only a matter of when. The Saudis already tried to put the frackers out of business and it didn’t work.

  29. @Barr

    The Taliban depend on Allah alone with regards to the mending of any fences. They will do whatever is pragmatic for them in the short term and will continue to consolidate their hold. They will stay true to their goals and beliefs, to think otherwise is to have learned absolutely nothing from this past 20 years.

  30. anaccount says:

    The only thing I disagree with is the mention of US-Israel controlling Saudi Arabia, that might imply that there is some form of equality between the US and Israel, even though I’m quite sure that was not intended by the astute and honorable Mr. Stryker.

    Israel controls both countries and we (the US) are Israel’s bitch first. Now given the amount of US boots in Saudi Arabia it’s clear that our bitch ass is on loan to the Saudis, at interest. Hopefully the US will become a throwaway bitch soon so neither dirty desert pimp will take any interest. Otherwise things could get messy.

    That’s putting it politely, I’m in a good mood and I don’t want to get sore over this stuff.

  31. Svevlad says:
    @fnn

    It’s spite. “REEEEEE HOW DARE YOU NOT WHORE YOURSELF TO ME”. Russians play on their own playbook, which makes the subhumans in charge apoplectic

  32. Delta G says:
    @fnn

    Given the facts most humans on this planet would decidedly HATE jews. If they did not they would have to be brain dead.

    So yes, the Russians have long hated Jews but kept it under control. A true Orthodox Christian has to be Anti-Jewish because they Murdered “The Christ”.

    The Jews who murder Russians during and after the Revolution did so because they are Filled with Greed and Hubris. They hated the Orthodox Russians because they were True Christians and the Russians had no use for the Jews who Murder the Christ.

    The Jews have not yet paid their debt to the Russians. But it appears that the Note is being Called as we speak.

    Since Putin has found his Center in Orthodox Christianity he has become a much more balanced and intelligent Statesman.

    Word on the Street is that Vlad the Impaler has been stocking up on wooden stakes. Whether they have a Cross of David burnt into them or not I cannot say.

  33. Realist says:
    @Svevlad

    I don’t. Don’t care either, not really my idea anyway

    Yet you passed it on…without attribution.

  34. @anon

    The gamble can be gamed by any sizable insider from a thousand angles. “May the rats eat your intestines, while alive”, paraphrasing, neither Chinese common speak, but Financial World specific. The language of the Gods.

  35. @WorkingClass

    Exactly right, WC. The large surges and drops of the gold spot price are another indicator of artificial pricing in markets. It seems that without artificial pricing, we wouldn’t have no pricing at all. Hey, that could be a blues song.

  36. @PetrOldSack

    Good points, but the illustration, using fat Latinas as an example, kind of makes me feel like a fool. I always loved those chubby little ol’ Latin gals.

  37. @Svevlad

    Svev, you are a got-danged genius.

  38. Sam J. says:
    @The Alarmist

    “…Nevertheless, some analysts are predicting that up to half of the heavily indebted shale oil companies could go bankrupt, wiping out 10s of thousands of decent paying jobs in the process…”

    “…Then there’s the huge hit to banks and investors who have floated huge sums to keep fracking going…”

    Notice what the only two solutions we get to this problem are,

    “…The only solutions on Trump’s table is 1) to nationalize the American oil industry, or 2) use protectionism to try and artificially keep prices stable…”

    Which is, give the banks more free money or give the banks free money.

    Here’s a different solution one that solves the problem long term. Give every penny of the present ethanol biofuels subsidies to anyone who can make electric cars and any of the industry chains they need, batteries, power electronics, etc.

    Give the zero interest loans to car buyers of electric cars instead of Jew bankers. Cut the banks out all together.

    The shale industry will not go away only marginal players. All this equipment to frack will not vanish and as soon as prices go back up the whole mass of it will come back out and fracking will ramp back up.

    I don’t run an oil company but it’s my understanding that fracking pays back it’s cost much faster than traditional oil so it allows faster and quicker ramp up than traditional producers so the Russians or whoever can not really kill fracking. They can only bring it to a halt temporarily by losing a lot of profit. As soon as there is any profit fracking will skim the cream off the top rapidly.

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