A tipping point in Saudi Arabia

Leanan · News Editor Joined: May 20, 2004 Posts: 4451

From CSM:

Schneider

Roccland · Light Sweet Crude Joined: Jun 16, 2007 Posts: 1362

DarthBruder · Coal Joined: Aug 14, 2007 Posts: 6

Wow.

In related news:

BREAKING
NEWS Oil prices up more than $1 a barrel on weak inventories, storm concerns. Details soon.

dinopello

Did he mean that princes must limit themselves to one Rolls Royce and one lear jet and only one trip per season to Monte Carlo ?

It's quite a remarkable statement and one that I would love to hear an economist comment on. Record high oil prices, and the oil boom is over ? Hmmm, how can that be.... unless...we got none to sell! Shocked

Leanan · News Editor Joined: May 20, 2004 Posts: 4451

Roccland · Light Sweet Crude Joined: Jun 16, 2007 Posts: 1362

MonteQuest

BigTex

Perhaps they mean that as long as they are only accepting U.S. dollars for their oil they will be able to buy fewer and fewer Rolls Royces because of the dollar's devaluation.

Really, if the royal family wanted to make a LOT of money they could just call a press conference and announce that they have peaked, will no longer be a swing producer and anticipate steep declines in production soon. That would send the price of oil through the roof and keep it there (SA could stoke the fire by having periodic doom update press conferences).

I don't know what they are thinking. As long as they are selling their oil that costs them $5 a barrel to produce and competing against some guy out in the middle of the ocean drilling a well thousands of feet underwater at a cost of $40 a barrel, they are going to do great.

SA is going to be like the generator salesman in a hurricane. Their boom is just starting.

As for getting used to a different lifestyle, I wonder who exactly he was talking to.

Roccland · Light Sweet Crude Joined: Jun 16, 2007 Posts: 1362

alecifel

bigtex wrote:

Really, if the royal family wanted to make a LOT of money they could just call a press conference and announce that they have peaked, will no longer be a swing producer and anticipate steep declines in production soon. That would send the price of oil through the roof and keep it there (SA could stoke the fire by having periodic doom update press conferences).

The day KSA announces peak oil is their undoing. The regime has been propped up by the US and Britain as a swing oil producer. If they can't do that job then we will no longer have an interest there, and the royal palace in Riyahd will be overrun by a lot of poor, pissed off repressed people.

King Abdullah will be seen in public with a Cuban Sandwich in his left hand dancing to Michael Jackson tunes before he makes a statement like that.
_________________
Nick J. Allen
Hilton, Oklahoma

"The Chinese have many hells. This one is the hell of valueless currency." -- J. Albertson

BigTex

alecifel

True. But once they admit to PO they've lost a lot of political power. It is in their best interests to say, "Nah, we've got everything under control" and pass off their declines as 'cutbacks to keep the market stable'.

Iraq actually is a defacto swing producer and arguably the only one still left, because of the lack of proper development in their oil fields. (That's why we went.) It's the only known place where we know where oil is and also know it isn't being extracted like it could be. Iraq makes about 2mbd, but can probably be made to produce 5mbd, once all its citizens are fattened off of corn syrup and Burger King, numbed by a Playstation and holding hands and singing in the streets... (of course, that's only a few weeks away right? LOL )

So, yes KSA is still a power broker and will be as long as they have oil, but the royal regime will lose its utility if they can't control the price. That's their function.. to keep the oil supply cheap by using practical slave labor to extract it. It they can't keep control of the price then we have no incentive to prop up their dictatorship, and will be more inclined to allow 'nature to take its course' in the Arabian Peninsula since we'll be paying through the nostril for the stuff anyway. If I want $100 oil I can get it from anyone. How nice of the King to give us a $4 discount. If that' the best he can do, then his utility is waning and he knows it.

Besides, the fear that such an announcement (Ladies and Gentlemen, Saudi Arabia has peaked!) would create in the world markets would be a big incentive for conservation and development of alternative energy, and Riyahd wants to extract every dime we have for as long as they can. They have a vested interest in keeping the world running on Ghawar's oil as long as possible.
_________________
Nick J. Allen
Hilton, Oklahoma

"The Chinese have many hells. This one is the hell of valueless currency." -- J. Albertson

BigTex

Concerned · Light Sweet Crude Joined: Sep 23, 2004 Posts: 1497