World Oil Politics 94


The fall in the oil price is a bad thing in that it makes hydrocarbons more attractive against renewables, although on the timescale that investment decisions in energy production are taken, it would have to be sustained a great deal longer to have a major impact.

Contrary to popular myth, the fall has not been caused by Saudi Arabia cranking up production on behalf of the United States to damage Russia. Hydrocarbon supply has increased, while the increase in demand has been slower than expected. The United States itself has been responsible for a significant part of the production increase, though it is from a number of diverse sources. What Saudi Arabia has not done is play the role of market regulator by cutting back production to stabilise the price.

If you wish to see a target of Saudi inaction, it is the United States, not Russia. The single largest increase in hydrocarbon production in recent years has come through fracking in the United States. Fracking is high cost, and the fracking frenzy in the USA was built on a mound of corporate debt. Nobody would have initiated a fracking investment with oil under $70 a barrel. A few deep sea operations aside, no producers are hurt more than US frackers by the current oil price. The Saudis are enjoying watching the Americans fall on their arse.

As for Russia, I have explained repeatedly that it is a developing country economy dependent on raw commodity export. I am willing to wager that we will find that in 2014 the total GDP of Russia fell below that of Spain. Oil is not the only commodity price that is struggling. Putin has complacently presided over an astonishingly undiversified economy of which the key markers are raw commodity export, very narrow distribution of wealth from that raw commodity export, capital flight of 80% of the profit from that raw commodity export, and a consequent crippling investment shortage. The pretend sanctions “imposed” on Russia are responsible for almost none of the economic pain Russia is now suffering. Russia’s lack of value-adding industrial base and capital incontinence is coming home to roost.

I can’t finish this survey of oil politics without noting the appalling decision of the United Kingdom to open a naval base in Bahrain to service aircraft carriers. This crazed neo-imperial venture by a struggling economy is shameful. An aircraft carrier has no defensive purpose. Its entire rationale is the projection of airpower into foreign countries. That, after the total disaster of Middle East policy in the last decade, the United Kingdom is still seeking to project air power in the Middle East is horrifying. Furthermore, when we are supposedly trying to reach an agreement with Iran on its nuclear programme, it is incredibly provocative to open a major forward western
base almost within eyesight of Iran. Lastly, of course, Bahrain has a brutal dictatorial regime that has been murdering and torturing its majority Shia population for decades, with both open and covert British support. Britain’s callous action is a kick in the teeth for anybody who believes that human rights has a role to play in foreign policy.

The sooner we break up the United Kingdom the better. It really is a force for evil in the world.


94 thoughts on “World Oil Politics

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  • Habbabkuk (la vita è bella)

    Canspeccy

    ” I am willing to wager that we will find that in 2014 the total GDP of Russia fell below that of Spain.”

    How do you expect this miracle to occur, Habby.”
    ___________________

    Apologies for not replying sooner, Canspeccy.

    Firstly, I don’t know why you’re addressing the question to me rather than to Craig, but never mind.

    Secondly, Craig is making a prediction for 2014 and we must await the final 2014 figures, which will presumably be available sometime next year.

    Thirdly, you have provided figures to back up your claim, but they refer to 2013. That is the point, is it not: in 2013 Russia’s GDP was greater than Spain’s (measured in USD) and Craig is willing to bet that the situation will be reversed on 2014.

    Can you point to any solid evidence which would appear to invalidate Craig’s speculation?

    Reversals, even of a rather startling nature, are not unknown. Although it’s not the same thing, who would have said that the share price of TESCO would almost halve in the course of a single year? Yet the reasons were there for anyone to see had they looked.

  • Habbabkuk (la vita è bella)

    Canspeccy

    As an addition : O omagoine that Craig thinks that Russia’s GDP will have fallen in 2014, not that Spain’s will have risen by the percentage you’ve plucked out of somewhere or another*.

    ~~~~~~~~~~~~~~~~~~

    * Let’s face it, you’ve form when it comes to percentages. Your posts on the “non-British ethnic” population of IK cities refer! 🙂

  • Herbie

    Habby

    GlobalResearch is the product of many writers. It’d be surprising if anyone agreed with everything it produced, and that’s as it should be.

    I’d argue that your uno duce, una voce preference in media, is perhaps not the best model, although increasingly what mainstream media has become.

    ============================

    “Every individual should be able to issue his or her own currency, without let or hindrance.”

    Do you mean each individual country or this statement truly as stupid as it appears?

  • CanSpeccy

    @ Habbabkuk

    Canspeccy

    ” I am willing to wager that we will find that in 2014 the total GDP of Russia fell below that of Spain.”

    How do you expect this miracle to occur, Habby.”

    Firstly, I don’t know why you’re addressing the question to me rather than to Craig, but never mind.

    Well you quoted it and thanked Craig for it, so I thought you could explain it. but in any case, for some reason, perhaps my deconstruction of his earlier assessment of the Russian economy, Craig won’t respond to anything I say.

    the percentage you’ve plucked out of somewhere or another*

    I didn’t use a percentage, I asked if Craig expected Russia’s GDP to fall by $800 billion a figure plucked from the CIA factbook (2013 data). But if you prefer the World Bank cited by N_ above, the number is still about the size of Saudi Arabia’s GDP: $739 billion.

    Let’s face it, you’ve form when it comes to percentages. Your posts on the “non-British ethnic” population of IK cities refer!

    No, it’s you, Habby: You simply don’t know the facts. Or perhaps you have form as you so delicately describe lying.

  • Habbabkuk (la vita è bella)

    Canspeccy

    “I didn’t use a percentage”
    ____________________

    to which I quote from your post at 22h10, as follows:

    “Will Spain… experience a 60% GDP growth this year..”

  • Ba'al Zevul

    Saudis have plenty of cash to drag this out. $750 Billion in reserves means they can absorb the loss at $40 for…….10 years.

    The Big Dog either is screwing with the petrodollar (US shale cutting into their game) or payback to Putin…or both.

    It’s a two-fer.

    And then again, Ben, there’s a third option. Which is that the weird dynamics of QE and of trying to hide/correct the enormous, inevitable inflation resulting from this, are interacting with unstable demand patterns – also the direct result of QE – to produce amplified peaks and troughs in prices. The only people benefiting from what’s going on in oil right now are consumers, and The Market has never intentionally favoured them.

  • Abe Rene

    I’m pleased to see the price of petrol coming down at the pumps. As for the exercise of British air power in the Middle East, it appears to have helped hold back the advance of ISIS, which is good for all concerned.

    As for breaking up the UK, the SNP did their best in a fair referendum. Their supporters sincerely believed they would win, and still failed. Therefore their cause is everlastingly lost, and the UK will stay U forever!

  • OldMark

    It’s a shame this otherwise cogent post is spoiled by the howler re Russian GDP. The other points Craig makes; that increased supply will pretty soon make fracking for further oil from shale grossly uneconomic (likely resulting in a stabilisation or dead cat bounce in the oil price), and that the opening of a naval base East of Suez by a bankrupt UK shows appalling judgment by the deluded coalition, are perfectly valid.

  • nevermind

    I would be pleased if the price of our bus fares would come down, as well as other commodities reliant on oil, whatever games the Saudi’s play, Ba’al.
    As it looks like the oil companies are now earning mega bucks pocketing the difference, as petrol prices are still relevantly high compared to the barrel price which has now nearly halved.

    122.4 per litre of unleaded down from 134,o2. but large users such as bus companies who buy to the daily wholesale price, or whatever their flexible contracts with fuel providers requires.

    These large users have consistently over the last 5 years raised their fares due to ‘rising fuel costs’ nothing else, and the treasury of all is asking local Government to negotiate flexible contracts with service partners and providers, public or private, so these fares ought to be flexible as well, decrease when the oil price is low.

  • J Galt

    If they base their sitting duck…er aircraft carriers in Bahrain they’re even bigger idiots than I thought!
    Nice and handy for the Iranian Anti-ship missiles if and when the balloon does finally go up!

  • OldMark

    Ben @ 2.01pm- interesting link to AEP at the Torygraph; seems I underestimated when talking of a ‘dead cat bounce’ in oil prices as one of the experts he cites expects it back at $80/$90 a barrel in late 2015.

    Priceless comment thread with, it appears, a good showering of gung ho stuff from across the pond revelling in the currently falling oil price, and what that means for ‘commies’ and ‘towellheads’.

  • Mark Golding

    That ‘force for evil’ has been frustrated by a recent Russian/Chinese protocol to establish a strategic underwater nuclear strike disincentive for the West to launch nuclear payloads against this alliance.

    According to the horses mouth China has entangled with Russian coordinates to program their 2nd generation JL-2S SLBM’s carried by Xia/Tang class submarines.

    This is a crucial advance on what was known by the West in 2012:

    http://www.defense.gov/pubs/pdfs/2012_CMPR_Final.pdf

  • Ben the Inquisitor

    “‘dead cat bounce’ ”

    That fateful response is exactly the public perception they want to dispel. When the liquid river of cash dries up the matchstick bridge starts to burn precipitously.. Yesterday EXXON said they could live with $40. Yeah. Uh huh. I can see each member of the Board, hair aflame saying ‘What about the Quarterlies’. I see large windows opening for the base-jump. They must spin this for investor comfort. If more money is printed, there has to be a concurrent belief it has real value. If they should dodge this bullet, it will be miraculous recovery.

  • Squonk

    http://peakoilbarrel.com/eias-world-production-numbers/

    Non OPEC production shot up in November, 2013 but has made no progress since. Though US production has continued to climb, declines in the rest of the world have kept it from increasing.

    Since that date, November 2013, US production is up 655,000 barrels per day through August.

    But since that same date last November the rest of non-OPEC has is down 920,000 barrels per day. Non OPEC less USA is down 1,665,000 barrels per day since peaking in November, 2010.

  • Ba'al Zevul

    It is a tangled web of finance, Ba’al. Placekickers being assigned to attempt at field-goal from mid-field.

    Roughly what I’m getting at. It’s a chaotic dynamic, which can kick itself a long way off the (imaginary) economic cycle for no discernible reason; and the place kicks are just as likely to end up over the bar at the wrong end of the field as the right one. Or travelling to the moon, for that matter. All economists are frauds…Mandelbrot had the right idea.

    Though the best available cyclical theory, the Biblical one, suggests that in 2015 another lot of seven fat years will be starting. Fat for whom remains to be seen.

  • CanSpeccy

    @HabbaEscapeArtist:

    Canspeccy

    “I didn’t use a percentage”
    ____________________

    to which I quote from your post at 22h10, as follows:

    “Will Spain… experience a 60% GDP growth this year..”Will Spain with a youth unemployment rate currently over 50%, experience a 60% GDP growth this year, or will Russia’s GDP contract by eight hundred billion or so, an amount greater than the GDP of Saudi Arabia, Netherlands, Indonesia or Turkey?

    Yes, well done. Question avoided.

    I did use a percentage, whereas what I recalled was asking if “Russia’s GDP would contract by eight hundred billion or so,” which indeed I did ask, and which you still won’t answer because obviously you cannot because when Craig said:

    ” I am willing to wager that we will find that in 2014 the total GDP of Russia fell below that of Spain”

    he was talking his usual complete bollocks about the Russian economy (see here also), for which you thanked him.

  • Habbabkuk (la vita è bella)

    Canspeccy

    “I did use a percentage…”
    ___________________

    Indeed you did.

    So why bother to deny it in a previous post? Are you suffering from occasional short-term memory loss?

    When I see you with a percentage – any percentage – I put on my old gas mask and get under the table – your assertions about the percentages of non-British ethnics in major UK cities refer.

  • Richard

    I can’t see that lower oil prices will harm Scotland that much either within or without the Union. After all prices can’t stay down forever and it isn’t that long – a few years – since the stuff was about $35 a barrel. The same goes for Russia, they’ll survive more or less whatever fate chucks at them. Nobody can predict the future, but if I were a betting man I’d put a tenner on The Bear outlasting both Britain (as a state) and the U.S.A.

  • CanSpeccy

    @HabbaSquirmingEscapeArtist

    “I did use a percentage…”
    ___________________

    Indeed you did.

    So why bother to deny it in a previous post?

    Jesus wept, Habba, don’t pretend to be so fucking stupid.

    When I said “I did use a percentage” I clearly acknowledged that my previous statement was in error. Now you slimy slithering toad, why not answer the question that will explain your fulsome gratitude for Craig Murray’s claim that Spain’s GDP will in 2014 exceed Russia’s:

    “Will Spain with a youth unemployment rate currently over 50%, experience a 60% GDP growth this year, or will Russia’s GDP contract by eight hundred billion or so, an amount greater than the GDP of Saudi Arabia, Netherlands, Indonesia or Turkey?

  • Mary

    One million no TTIP signatures and counting

    09 December 2014

    Press release, Stop TTIP, Thursday 04/12/2014

    Self-organised European Citizens’ Initiative against US and Canada trade deals tops a million signatures in record time

    Media alert ***Photo stunt, Brussels*** Jean-Claude Juncker to receive a special birthday present for his 60th.

    More than a million people across Europe have signed a self-organised European Citizens’ Initiative in the last two months opposing trade deals between the European Union and North America. The campaign, run by the Stop TTIP coalition, is supported by more than 320 civil society organisations, trade unions and consumer watchdogs from 24 EU Member States.

    Campaigners say that the controversial trade deals, known as TTIP and CETA, would give unprecedented power to international corporations and thus threaten to overrule democracy, the rule of law as well as environmental and consumer protection. The treaties would allow governments to be sued by corporations before private arbitration boards if their laws or policies damage the company’s profits.

    John Hilary, a member of Stop TTIP’s Citizens’ Committee commented: “Stop TTIP has collected more than a million signatures in record time. This is especially embarrassing for the European Commission as it has tried repeatedly to block any citizens’ involvement in the way these treaties are being negotiated and what the outcome should be. Jean Claude Juncker should listen to the growing opposition and stop both treaties immediately.”

    /..
    http://waronwant.org/news/press-releases/18249-one-million-no-ttip-signatures-and-counting

  • writeon

    Craig, lovely to hear you so animated and passionate again. It must be something to do with having such a young wife, can’t be the politics, surely? Hope that isn’t too personal or even ‘misogynist’ as it’s defined today. Anyway looking away from lust, the stuff you wrote about Russia and it’s economy was intetesting, the need to build a post-colonial economy and diversify, funnily I’ve been watching a bit of Russian television lately, because of the ghastly events in Ukraine, and many of the Russian experts agree with you wholeheartedly about the necessary reforms. So there is a strong and passionate debate inside Russia. The consensus seems to be that the reasons for the lack of development are many and complex, but a lot of people in power and in the government don’t want the reforms carried through because they are doing very nicely the way things are. Putin is thought to favour deep structural reforms but he hasn’t got a majority inside the ruling elite behind him, at least that’s what the Russians on the telly were saying. Everybody seem painfully aware of the problems only implementing the solutions or other policies in an economy like Russia’s, which is a bit ‘perculiar’ in many ways is a mammoth task, whilst importing tons of stuff from Germany and other places is so easy, all one has to do is pay and whatever one wants is delivered to one’s door! One guy, a pretty serious looking fellow, was terribly ironic about the West’s idea that Putin was a dictator like Stalin. He wished that Putin did have Stalin’s powers, then we’d really see reforms pushed through.

  • ------------·´`·.¸¸.¸¸.··.¸¸Node

    “What did you did in the war, daddy?” James Elmer Mitchell and Bruce Jessen got very rich designing and fine-tuning torture techniques for the CIA.

    WASHINGTON — Two psychologists were paid $81 million by the CIA to advise on and help implement its brutal interrogation program targeting detainees in the war on terror, according to the Senate torture report summary released Tuesday.

    [….]

    For six years, starting in 2002, the two psychologists operated what amounted to a feedback loop of torture, coming up with new ways to inflict pain on detainees and then convincing CIA brass that the harsh tactics had worked.

    [….]

    After initially helping to devise the “enhanced interrogation” efforts, they were designated as the only two contractors allowed to oversee these interrogations at sites around the world. In 2005, they formed a company to receive contracts from the CIA. According to the Senate report, the base value of their contract in 2006 was in excess of $180 million.

    [….]

    By the time the CIA terminated their contract in 2009, the consulting firm founded by the two men had collected $81 million in taxpayer money.

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