Increasing production when demand has cratered also neans SA oil prices will drop. What is their long term goal? What can the rest of the world do about it?
As far as I'm concerned it's an act of war. Give them 72 hours or in come the air strikes on their fields. It's time we put Saudi Arabia where they belong; our enemy. Radical? Maybe... or else we get f*cked.
It sounds like they're trying to undercut Russian oil to regain market share. What can the rest of the world do? Enjoy being able to but oil-based products like gasoline for cheap.
This hurts production here too. Domino affect in oil producing states have long lasting consequences much more than cheap gas being nice
I'm not saying there are no downsides. If you're in the oil business (as many Texans are), it stinks, because they're undercutting you as well as the Russians. However, that's global economics. If you were in the auto business in the '70s, it sucked when Japanese automakers started exporting cheap cars to the United States. If you want to be a free economy, you deal with it. If you don't, then you can impose tariffs on Saudi oil.
In a multi-national world I don't think these types of shocks should be tolerated because it's government action and not regular supply demand stuff (if the news I'm reading is accurate). Jimmy Carter once said that access to ME oil was a national security issue for the United States. This deliberate action by the royals will destroy local industry and cause tremendous problems with many Americans due to the stocks of otherwise viable companies tanking all of a sudden. To me, it's on. Give them a warning and then a retaliation they'll never forget or we just sit here on our thumbs. Maybe the tariffs (immediately) are the way to go. We've done it to China. Why not the royals? As far as I'm concerned, tariffs were designed for exactly this type of situation. So are rockets.
Maybe you've not been paying attention over the last few years but Saudi Arabia has made us their *****. They renditioned and murdered an American journalist with our knowledge (and possibly our consent). And then we assisted in their efforts to cover it up. They had a Saudi gunman twist off at a US air base and it quietly went away. Minimal commentary by your President. The royal family is "sorry". Can you imagine if a Mexican had done that? They're paying us for our military support according to small hands. So, good luck getting any action taken.
I've noticed it. Things like that are unfortunate but we can't react to everything. But the time is now. This is a huge act on top of the virus concerns. They know exactly what the impact will be and they know the virus is a pill we're currently swallowing. They are f*cking us and it's time to do something.
Wow. Talking about war for oil. This is some crazy stuff. OPEC can produce how much oil they want. They should be free to do so. Either they will reduce prices or they will waste money drilling and holding inventory. But let's bomb them so they do what we want? That is evil empire type stuff. Lower oil prices are benefit to consumers, transportation, goods manufacturers etc. Even as a Texan from the oilfield, I say let the price float. Lower prices will help more people than they will hurt.
It is war. Look at what is happening and the timing. This is a government using their power against us. If they think they can just do it then they are mistaken. It's not a pretty world. Maybe I'm knee-jerking. I'd like to see a full tariff. Nobody was complaining about the price at the pump. This is a bigger issue.
Two reasons: 1. Punish those in OPEC and Russia who are not falling in line. Note Saudi wanted OPEC and Russia to reduce output to maintain pricing. 2. Economic stimulus for the world.
Bubba, this is some prime distortion. Did you see how we knocked the Saudis out of the flying programs? Have you been paying attention to what Mexico has done to us? Their drugs, their foreign nationals killing us while leftists make excuses for it. Before Trump they openly dumped their poverty onto us. This is way more than what anything the Saudis have done to us.
Are we really going there? It's an act of war to produce more oil? * Bombing Pearl Harbor * Invading [Poland, South Korea, Kuwait, etc] * Selling more oil than you did before
Economic nationalism is what started WW2. Let's not forget. Hitler didn't start it just because he was a racist. He started it so he could get all "Germans" in under one State and then control natural resources and industry within those borders to have an autarkic economy. Trade was looked on with suspicion. All interests were the national interest.
They are driving out the shale players that have stolen market share from OPEC / Russia. Shale has a higher break even point than OPEC conventional.
1) The market is always right 2) When in doubt, see rule #1 I agree it is *crazy* to be talking about starting a war over what is, at it's core, a provider exercising their free market rights to sell a product. I suppose we could call it "predatory pricing" at worst, but our rules about that do not apply to foreign companies. I hardly see this as a reason to bomb them. Calling for tariffs on Saudi oil, which I also would not agree with, would be much more reasonable if the US government is going to do anything at all.
Ok. Call me Alexander Haig. My feeling on the matter is they did this at the worst possible time and using economic power have declared war on us. It doesn't have to be bombs to create a mortal enemy. If the economy is torpedoed enough then what is the name for it? I personally consider it to be very grave because they knew EXACTLY that this would be the worst moment as our stock market was already sinking. Add more "the sky is falling" news in a Presidential election year and we're being much more than led around by the nose. It's on... very much so.
The (mostly) free market is a tool that is often used to improve the human condition. It has increased in popularity worldwide* over the decades because it (mostly) works. But bear in mind, it is a means to an end, not the end itself. If you get real ‘fundamentalist’ and dogmatic about a pure, unregulated free market for all places and all times, you must ask yourself whether the thing (the market) has become your god. *exceptions to the increasing popularity of a market economy are found in mostly failed states like Venezuela, North Korea, and the tropical workers paradise of Cuba.
Been saying it for a while, the Saudis are not our friends. Neither are the Russians. International affairs is still largely every man/nation for himself, with alliances made when mutually beneficial and broken when no longer so. Churchill was onto something when he said England has no permanent allies, only permanent interests. Don’t think for a moment that those SOBs in Arabia won’t swing towards China and against us if they think it would benefit them.
The end of the market is to coordinate the activities of the world to distribute capital and labor to produce in ordinal order the most valuable items first and in the right quantity to human beings. When you add tariffs and war, you disrupt the market and move the course off the most efficient path. If Saudi Arabia can produce oil most efficiently then their production will cause other areas with oil to do other things. It isn't a bad thing.
So you agree with Trump? I'm now lined up against you, Trump and every economist out there not to mention everyone on West Mall. I'm having a helluva day!
Why the US shouldn’t cheer the crash in oil prices like Trump just did “You’ve got to remember, what Saudi Arabia and Russia are doing is trying to put the shale producers out of business in the U.S. because they are the ones who are increasing the world’s supply,” noted B. Riley Wealth Management Chief Investment Strategist Paul Dietrich. Lower oil prices combined with U.S. producers’ relatively higher costs of production raise the likelihood of a drop in shale investment. Further, since the U.S. oil production industry has grown so large, Morgan Stanley posits that the pain of lower oil prices is likely to outstrip whatever positive boost cheaper gas prices might provide to U.S. consumers, especially if coronavirus fears keep people from spending whatever savings are accrued at the pump. “Putting it all together, we believe the cumulative decline in oil prices since the beginning of the year, if sustained, is enough to reduce real GDP growth by about 15 to 35bp in the near term,” Morgan Stanley’s research team wrote in a new note, adding that coronavirus fears dampen how Americans might look to spend any additional gas savings.
Saudi Arabia is attempting to capture the oil market . They're out to drive their competitors out of business because their cost per barrel is way lower than anybody else's, including American's shale oil. They won't succeed, but it'll teach the other players who the boss is.
At the moment it appears they are. So they cut the price right when American's might not want to spend money on gas because they might be holing up at home instead. A real hit. Very ruthless. A wake-up call if there ever was one.
