How To Win The War Without Firing A Shot

Started by supsalemgr, October 18, 2014, 10:12:20 AM

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supsalemgr

http://finance.yahoo.com/news/6-countries-screwed-oil-prices-110424494.html

Take a look at the countries that would be hurt by the lower gas prices. In the case of the Arab countries it is a double whammy if the US continues to ramp up shale oil retrieval. First the US becomes less of a buyer and the US production also lowers the price and their revenues. The only problem is we have a president who will fight under the guise of "green energy". A GOP president will have a real winner with this tool for the US economy.
"If you can't run with the big dawgs, stay on the porch!"

TboneAgain

Quote from: supsalemgr on October 18, 2014, 10:12:20 AM
http://finance.yahoo.com/news/6-countries-screwed-oil-prices-110424494.html

Take a look at the countries that would be hurt by the lower gas prices. In the case of the Arab countries it is a double whammy if the US continues to ramp up shale oil retrieval. First the US becomes less of a buyer and the US production also lowers the price and their revenues. The only problem is we have a president who will fight under the guise of "green energy". A GOP president will have a real winner with this tool for the US economy.

It's a double-edged sword. Even with oil still trading at $87, US drillers are already reconsidering plans for future shale exploration. OPEC could stop shale-oil development in the US dead in its tracks by flooding the market with $65 oil.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. -- Tenth Amendment to the US Constitution

Government is not reason; it is not eloquent; IT IS FORCE. -- George Washington

supsalemgr

Quote from: TboneAgain on October 18, 2014, 01:18:20 PM
It's a double-edged sword. Even with oil still trading at $87, US drillers are already reconsidering plans for future shale exploration. OPEC could stop shale-oil development in the US dead in its tracks by flooding the market with $65 oil.

You are correct. However, looking at the graph it is obvious they have become addicted to the higher price oil and cannot lower the price. Certainly not lower for an extended period of time.
"If you can't run with the big dawgs, stay on the porch!"

Solar

Quote from: supsalemgr on October 19, 2014, 05:49:43 AM
You are correct. However, looking at the graph it is obvious they have become addicted to the higher price oil and cannot lower the price. Certainly not lower for an extended period of time.
Saudi Arabia has European contracts coming up, and they are willing to cut the price even further to lock in another year, this has Venezuela in near panic mode as they had counted on higher price per barrel to keep their communist agenda alive.
I agree, OPEC, particularly Saudi's, is shitting over the fact that we have more oil than they do, and they no longer have the ability to set global price.
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TboneAgain

Quote from: Solar on October 19, 2014, 05:57:10 AM
Saudi Arabia has European contracts coming up, and they are willing to cut the price even further to lock in another year, this has Venezuela in near panic mode as they had counted on higher price per barrel to keep their communist agenda alive.
I agree, OPEC, particularly Saudi's, is shitting over the fact that we have more oil than they do, and they no longer have the ability to set global price.

Obviously, the only reason OPEC exists is to control the world oil market -- that's what cartels do. And their history has always been a series of production controls and price gouging. Again, that's what cartels do. But suddenly, the US is very much back in the game, after 60 years of slurping at the Arab tit, and it's a new game.

OPEC countries are seeing right now what it is to have very serious competition, and I'd say all of them, not just Venezuela, are shitting their pants about now. Their ability to affect the price of oil is still very strong, but it's no longer the absolute grip it was even five years ago. As an added bonus, I'll bet Mr. Putin gets an attack of indigestion every time he thinks about the situation, too.

The point I was trying to make is that OPEC still has the ability to flood the market with cheap oil, at least for a short time. The folks in Saudi Arabia know exactly what it costs American companies to extract a barrel of oil from North Dakota shale. If they can significantly undercut that price for even a short time, they can stop our shale oil extraction overnight, and cripple exploration for years. When there are tankers tied up at the refinery docks loaded with $65 crude -- no matter where it comes from -- the market for the $75 crude from the upper Midwest will vanish. That's just how fungible a commodity crude oil is.

If the US has a unique advantage over other oil-producing countries, it's the vast diversity of the economy. Specifically, the US doesn't depend in any significant way on oil for its economic health. Most OPEC nations, on the other hand, would likely collapse if the price of oil dropped severely. Tiny oil-rich places like Kuwait and Qatar would quickly cease to exist -- they have nothing else to sell. Larger producers like Saudi Arabia and Venezuela, who have economies based largely on oil, would revert to their states of a century ago. Even Russia would likely slide into economic depression. It would be foolish for us to assume that those folks don't know these things.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people. -- Tenth Amendment to the US Constitution

Government is not reason; it is not eloquent; IT IS FORCE. -- George Washington

Solar

Quote from: TboneAgain on October 19, 2014, 06:48:56 AM
Obviously, the only reason OPEC exists is to control the world oil market -- that's what cartels do. And their history has always been a series of production controls and price gouging. Again, that's what cartels do. But suddenly, the US is very much back in the game, after 60 years of slurping at the Arab tit, and it's a new game.

OPEC countries are seeing right now what it is to have very serious competition, and I'd say all of them, not just Venezuela, are shitting their pants about now. Their ability to affect the price of oil is still very strong, but it's no longer the absolute grip it was even five years ago. As an added bonus, I'll bet Mr. Putin gets an attack of indigestion every time he thinks about the situation, too.

The point I was trying to make is that OPEC still has the ability to flood the market with cheap oil, at least for a short time. The folks in Saudi Arabia know exactly what it costs American companies to extract a barrel of oil from North Dakota shale. If they can significantly undercut that price for even a short time, they can stop our shale oil extraction overnight, and cripple exploration for years. When there are tankers tied up at the refinery docks loaded with $65 crude -- no matter where it comes from -- the market for the $75 crude from the upper Midwest will vanish. That's just how fungible a commodity crude oil is.

If the US has a unique advantage over other oil-producing countries, it's the vast diversity of the economy. Specifically, the US doesn't depend in any significant way on oil for its economic health. Most OPEC nations, on the other hand, would likely collapse if the price of oil dropped severely. Tiny oil-rich places like Kuwait and Qatar would quickly cease to exist -- they have nothing else to sell. Larger producers like Saudi Arabia and Venezuela, who have economies based largely on oil, would revert to their states of a century ago. Even Russia would likely slide into economic depression. It would be foolish for us to assume that those folks don't know these things.
I knew what you were saying, and agree to a point, though My point was, that almost all of OPEC works off annual contracts, so there isn't a lot they can do in the short term.
Sure, they can attempt to puff up their chests and threaten price hikes, but the mkt knows it would be nothing more than a bluff and ignore it.
Yeah, there's still the spot mkt in trading, but that has a minimal effect overall.

One has to ask the question, why all of a sudden the need for contracts, after years of spot trading, do the Saudis know something that no one is talking about?
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supsalemgr

Quote from: Solar on October 19, 2014, 07:06:13 AM
I knew what you were saying, and agree to a point, though My point was, that almost all of OPEC works off annual contracts, so there isn't a lot they can do in the short term.
Sure, they can attempt to puff up their chests and threaten price hikes, but the mkt knows it would be nothing more than a bluff and ignore it.
Yeah, there's still the spot mkt in trading, but that has a minimal effect overall.

One has to ask the question, why all of a sudden the need for contracts, after years of spot trading, do the Saudis know something that no one is talking about?

It is quite interesting to consider the power of a free market system. Applied properly there is nothing in the world as powerful capitalism.
"If you can't run with the big dawgs, stay on the porch!"

Solar

Quote from: supsalemgr on October 19, 2014, 08:22:45 AM
It is quite interesting to consider the power of a free market system. Applied properly there is nothing in the world as powerful capitalism.
Only a guess, but I think the reason the Saudi want this contract so badly, is because they know the price of oil is only going to drop in the near future, and rightly so, considering the mess the world is in, thanks to our very own Marxist.

Yes, Capitalism is the only answer, and it has Obola shitting his pants that he can't stop the private sector fracking. :thumbsup:
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supsalemgr

http://finance.yahoo.com/news/oil-resumes-slide-falling-2-193118076.html

Here is more proof of how the US can win by continuing to produce. The OPEC countries cannot afford to curtail production because they cannot give up revenues. They learned how to overspend from the US government now they have this situation. The next step is to increase the number of refineries to increase output of refined fuel which makes the shotgun a double barrel.
"If you can't run with the big dawgs, stay on the porch!"

supsalemgr

I just checked the oil prices and today oil is down almost $3 and is under $75. The US has strong hand right now, but Obama will not use this leverage to benefit the USA. He won't stop Russia, but $75 oil might.
"If you can't run with the big dawgs, stay on the porch!"

Possum

With the price going down so does all the money opec pays to all the little groups of bad people to keep the peace. Wonder how long it will take to see those results? No worries here, thanks to obama, they all love us now.

Solar

We are setting up for a perfect storm, and have been ever since the Marxist was elected to the WH and even before that.
He did all he could to trash our economy, but he could't kill the free mkt, but didn't see it to be of consequence considering he was killing off the coal industry, something he figured would offset any changes he was instituting through the EPA.

What he or his commie handlers never factored in, was other oil producers in the world. With a weak American economy, (an economy that anchors all trade in the world)
When their economies are effected by a world mkt faltering, they too would feel the effects simply because less oil is being used, and demand is falling.

Now add to that, fracking. Sure, it's not a huge amount, but when the mkt is struggling to eek out a small percentage of profit, just a small amount in increased oil production can push the rest to increase sales at lower prices, in an effort to offset losses.
In other words, OPEC just made itself completely irrelevant over night due to greed, and will take decades to recover, if ever, now that a new player just made the free mkt relevant.

But now look ahead, the nation just made the Marxist irrelevant, the country has made a hard move to the Right, communist nations are suffering heavy losses, eg Russia, Venezuela etc. due to profit loss via oil, their only bargaining chip, and we have an election in less than two years.
As slow as things move on the world stage, the world will move Right, right along with us, simply because they're tired of what communists have done over the last decade.

Certainly there are other variables involved, thousands of pieces making up the globe, but what I just mentioned was the actions of the majority that complete the whole package, and it would take the efforts of a combined minority to shift the momentum that's creating the perfect storm, something virtually impossible considering the minority doesn't share interests.

I know to many, what I just said may be a bit foreign, or hard to visualize, but to those that see the globe as the big picture, the perfect storm is about to hit, despite the Establishments attempts at globalization, the free mkt always seeks equilibrium.

The World will follow our lead.
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daidalos

Quote from: supsalemgr on October 18, 2014, 10:12:20 AM
http://finance.yahoo.com/news/6-countries-screwed-oil-prices-110424494.html

Take a look at the countries that would be hurt by the lower gas prices. In the case of the Arab countries it is a double whammy if the US continues to ramp up shale oil retrieval. First the US becomes less of a buyer and the US production also lowers the price and their revenues. The only problem is we have a president who will fight under the guise of "green energy". A GOP president will have a real winner with this tool for the US economy.
Do that, AND end ALL U.S. agro/Med aid to those nations, and in six month's as their people have nothing to eat but sand they'll be taking steps themselves, to curb these terrorists.

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And no you won't find my "story" there. They don't allow science fiction. :)