Saudi bets the farm................

[GRG55]

Re: Saudi bets the farm................

sounds like US is trying to break the china-Russia-Iran alliance, turn them against each other. china and Iran may not take the bait though.

What alliance? I am not aware of any formal alliance that involves just these three nations.

The formal alliance of the Shanghai Cooperation Organization includes the Central Asia States that were part of the Soviet Union, and may one day include Iran, India, Pakistan and Mongolia, all of which have been invited in the past as observers to SCO meetings.

I'll make the observation that for the existing members the primary driving force for the military aspect of the SCO is weighted to internal security concerns. Every current SCO member is aware that the threat posed by the USA directly or via NATO pales in comparison to the internal threat from political terrorism and tribal separatist movements. Although the "war games" attract the most international media attention (especially the "outmaneuvered America in decline" shtick), it is the sharing of counter-terrorism and other security intelligence that most interests the authoritarian "Presidents for Life" that preside over all of the FSU countries, including Russia. The "enemy within" is always far more dangerous than the global hegemon; that is why every one of these countries are quasi police states. Quite naturally China has the most to gain by promoting military peace, political stability and economic trade in the region. Not only is it after the considerable raw material and energy inputs of the region, but China also needs to reduce its over-dependence on US consumers and add new markets for its prodigious output if it hopes to maintain/restore a high growth economy.

I was based in and working out of Almaty, Kazakhstan during most of 2012. Almaty is Kazakhstan's largest city, its commercial center and not far from the Chinese border on the route from Urumqi. Outside the city of Almaty, away from the Tien Shan, are some of the most extensive and lush grasslands anywhere. Anywhere else there would be huge farms and ranches (and organic beef and lamb being exported at premium prices to the luxury hotels and restaurants in Europe). In Kazakhstan there's only widely scattered dirt-poor traditional subsistence herders, and most of the land is emptier than Wyoming. Meanwhile at the closest border point, which can take all day to cross, there is an enormous flow of Chinese agricultural products headed west. Many of these are officially illegal to import into Kazakhstan (legislation to protect the domestic farmers), but the poorly paid Kazakh border guards are easily bribed, no duties are collected, and the Chinese continue to put their bureaucracy and corruption burdened higher cost Kazakh competitors out of business. And the officials in the Ministries in remote Astana don't much seem to care as it makes no difference whatsoever in their lives. Its an interesting dynamic, and illustrative of why and how China will continue to hold the upper hand over all the others in this relationship, especially now that the FSU member primary income source, mineral & energy commodities, has collapsed.

[Mega]

Re: Saudi bets the farm................

Never Forget WHO IS in Charge!

[GRG55]

Re: Saudi bets the farm................

Never Forget WHO IS in Charge!

...

Soros? ;-)

[lektrode]

Re: Saudi bets the farm................

Soros? ;-)

'gettin by... gonna try... with a little help from my friends....' (w apologies to john, paul, ringo & joe c)

">


...Warns Investors to Avoid Oil-By-Rail, While Investing in Oil-By-Rail ?

hmmmm.... somehow... this sounds kinda familiar...

[meofio]

Re: Saudi bets the farm................

What alliance? I am not aware of any formal alliance that involves just these three nations.

The formal alliance of the Shanghai Cooperation Organization includes the Central Asia States that were part of the Soviet Union, and may one day include Iran, India, Pakistan and Mongolia, all of which have been invited in the past as observers to SCO meetings.

I'll make the observation that for the existing members the primary driving force for the military aspect of the SCO is weighted to internal security concerns. Every current SCO member is aware that the threat posed by the USA directly or via NATO pales in comparison to the internal threat from political terrorism and tribal separatist movements. Although the "war games" attract the most international media attention (especially the "outmaneuvered America in decline" shtick), it is the sharing of counter-terrorism and other security intelligence that most interests the authoritarian "Presidents for Life" that preside over all of the FSU countries, including Russia. The "enemy within" is always far more dangerous than the global hegemon; that is why every one of these countries are quasi police states. Quite naturally China has the most to gain by promoting military peace, political stability and economic trade in the region. Not only is it after the considerable raw material and energy inputs of the region, but China also needs to reduce its over-dependence on US consumers and add new markets for its prodigious output if it hopes to maintain/restore a high growth economy.

I was based in and working out of Almaty, Kazakhstan during most of 2012. Almaty is Kazakhstan's largest city, its commercial center and not far from the Chinese border on the route from Urumqi. Outside the city of Almaty, away from the Tien Shan, are some of the most extensive and lush grasslands anywhere. Anywhere else there would be huge farms and ranches (and organic beef and lamb being exported at premium prices to the luxury hotels and restaurants in Europe). In Kazakhstan there's only widely scattered dirt-poor traditional subsistence herders, and most of the land is emptier than Wyoming. Meanwhile at the closest border point, which can take all day to cross, there is an enormous flow of Chinese agricultural products headed west. Many of these are officially illegal to import into Kazakhstan (legislation to protect the domestic farmers), but the poorly paid Kazakh border guards are easily bribed, no duties are collected, and the Chinese continue to put their bureaucracy and corruption burdened higher cost Kazakh competitors out of business. And the officials in the Ministries in remote Astana don't much seem to care as it makes no difference whatsoever in their lives. Its an interesting dynamic, and illustrative of why and how China will continue to hold the upper hand over all the others in this relationship, especially now that the FSU member primary income source, mineral & energy commodities, has collapsed.

an informal alliance http://sputniknews.com/columnists/20...016436434.html
US is supporting EU against Russia, Turkey against Iran, and Japan against china.

[lektrode]

summers will take that bet and raise em?

This Could Be America's Next Economic Booster

apparently he's never heard of or read art berman...

• Michael Flaherty and Tim McLaughlin, Reuters

• Jan. 3, 2015, 3:48 pm

REUTERS/Hyungwon Kang


BOSTON (Reuters) - As the Fed winds down its economic stimulus, former U.S. Treasury Secretary Lawrence Summers says the country’s next economic booster could be exporting its fossil fuels around the globe, a move that could make America the next Saudi Arabia.

“The United States has the chance to be to the energy economy of the next decade what Saudi Arabia has been for the last two to three decades," Summers said on Saturday.

"The effect of allowing oil exports ... would reduce rather than increase American gasoline prices.”

[altho this sounds like another example of how 'men are better at math/science than women' ?]

Summers, known for his outspoken views about what he describes as a disappointing U.S. economic recovery, made his remarks at the annual American Economics Association conference.

Meanwhile, at the same conference, Boston Federal Reserve President Eric Rosengren said low inflation rates across the world and only small amounts of wage and price pressure in the United States should force the Federal Reserve to move slowly as it pulls back on its accommodative monetary policy.

Rosengren repeated his call for the U.S. central bank to take its time in establishing more normal policy after years of stimulus to boost the economy.

"I believe the continued very low core inflation and wage growth numbers provide ample justification for patience," Rosengren said. "A patient approach to policy is prudent until we can more confidently expect that inflation will return to the Fed's 2 percent target over the next several years."

Summers, a Harvard economics professor, reiterated how he is unsatisfied with the progress of the U.S. economy.

“The United States is now about 10 percent below potential, as it was estimated in 2007,” Summers said. “In so far as the output gap has closed, it is not because we have gotten closer to what we thought potential was. It is because we have revised downwards our assessment of the economy’s potential. That 10 percent potential represents about $20,000 per American family."

[not that The Rest of US will ever see any of that 20grand...]

The comments of Rosengren and Summers come as Fed chair Janet Yellen lays the groundwork for the Fed's first interest rate hike in nearly a decade. The Fed changed its interest rate guidance last month at its policy setting meeting, adding language in its statement that the central bank is moving closer to raising rates.

While the Fed is widely expected to begin its lift-off sometime in the middle of this year, officials like Rosengren have advocated for a slow and steady process. That approach goes counter to other Fed officials who are arguing that the central bank has waited too long in keeping rates near zero, where they have been since December 2008.

Summers advocates that the United States spend about 1 percent of GDP on public infrastructure improvements. He said current net public investment in infrastructure is now less than 1 percent GDP.

[and betting that the money will come from exporting oil... how, when the prices launch back up??]

"It is less than half what it averaged in the post World War II period,” Summers said.
Rosengren said in his remarks that the last time the Federal Open Market Committee (FOMC) raised rates after a recession in June of 2004, the unemployment rate was at 5.6 percent, below the current 5.8 percent, and inflation was at 2.8 percent – well above its current reading of 1.2 percent.

"Some worry that patience will mean deferring the first rate increase until well past the arrival of economic conditions that historically result in tightening," Rosengren said. "But I would point out that we have some way to go before reaching those conditions, and so have not been unusually patient as yet."

uh huh... and as the patient remains horizontal - the inflation hawks are about to fly the coop?

but while gas prices only 'feel cheap' ?
(kinda like the 51.8% felt the morning after that big date in '08)

Recent Price Plunge Looks Good After Years of High Costs, but Fill-Ups Were Less Expensive From 1986-2003


By Jo Craven McGinty
Jan. 2, 2015 11:55 a.m. ET 140 COMMENTS

U.S. gasoline prices are the lowest they’ve been in five years. And they feel even cheaper because they come on the heels of the highest gas prices consumers have paid in three decades.

In 2012, the national annual average for a gallon of regular unleaded gas—the yardstick for gauging prices—hit a high of $3.77, capping a series of years in which the average exceeded $3 a gallon. Before that, the last time the average was so high was in the early 1980s, when, adjusted for inflation, it topped $3.60.

That’s why today’s prices feel so affordable. On New Year’s Day, the national daily average was $2.23 a gallon, according to Gas Buddy, a website that publishes real-time prices, and in many places the cost was substantially lower. Nearly 30% of the 130,000 vendors tracked by Gas Buddy across the country, or about 38,200 stations, were selling gas for less than $2 a gallon.

But the lowest prices today don’t match the bottom-of-the-barrel prices of the past 40 years, and it isn’t likely the current prices will stay low as long.

The U.S. experienced its best gas prices in a generation from 1986 to 2003. That 17-year stretch was the longest sustained period of cheap gas since the oil shocks of the 1970s.

Prices never exceeded a national annual average of $2.06 a gallon, adjusted for inflation, and in 1998, they tanked to an average of $1.51.

Now, that’s cheap.

however - have a report of 1.89, street price - from NC
and scored 1.88 at a costco on friday (with the local spread from them to the street at .40 to .50 even, which suggests that either the street guys are gougin, or costco didnt have as good a Q4 as some expected, so are goosin their numbers by lowballin the gas price margins?

[Mega]

Re: Saudi bets the farm................

Petrol (Gas) £1.08 a litre in UK.

"My only hope for Salvation is the Fed "

[lektrode]

Re: Saudi bets the farm................

..."My only hope for Salvation is the Fed "

"....if your drink enough of it, you begin to like it..."

just like the fed... er.... ??

[santafe2]

Re: Saudi bets the farm................

During the past dozen years Saudi Arabia has spent tens of billions of Dollars executing some of the largest and most complex crude oil development and processing projects on the planet with the specific, publicly stated aim of restoring surplus crude oil production capability that it allowed to erode during the low price cycle in the 1990s. Anybody who thought Saudi Arabia, the only country in the world with a material oil production capacity surplus, wouldn't again use this to its advantage when needed hasn't been paying attention.

We should not underestimate Saudi Arabia's understanding that a rapid and deep price decline serves their purposes much better than a shallower and more prolonged affair. Nothing is ever said accidentally by Saudi officials, so talk of $40, $30, $20 oil by HE Ali al-Naimi is quite deliberate.

Contrary to the idiot "analysts" that insist the target is US domestic shale drilling, and low oil prices are now somehow a negative for the US economy (how can they possibly be taken seriously?), Saudi and its natural allies, the USA and China, are collectively going to be the ultimate winners of this high stakes geopolitical Great Game poker match.

Thanks for all the background information GRG. The Saudi’s al-Naimi made the comment that the Russians ‘don’t deserve market share’. As you noted, Saudi Arabia has spent billions. From what I've read, the Russians have old infrastructure and could not cut back production if they wanted to. Add to that the inability/unwillingness of some OPEC members to cut back, then heap on the slowing world economy and the Saudis apparently came to the conclusion that if oil prices are going to be low for some time, it may be a good time to show everyone who’s the big dog and break as many competitors as possible.

The idea that this may somehow be bad for the US is completely idiotic. While shale exploration will be curtailed and maybe stopped if low pricing persists throughout 2015, every other part of the US economy will benefit as will the economies of Europe, Japan and China. Iran may even be forced to negotiate regarding its nuclear program. I would not be surprised to find out that super-cheap-peak oil had something to do with Cuba looking for a new friend.

But what about Canadian tar sands? Even with a US Republican Congress, $40-$50 oil will very likely kill the Keystone XL pipeline just when TransCanada needs it most. Obama needs to throw a bone to the left and with a "glut" of oil on the market, this may be the bone he throws.

Linked is a long term chart for the price of WTC for anyone interested in reviewing occasionally.

http://www.macrotrends.net/1369/crud...-history-chart

[Mega]

Re: Saudi bets the farm................

That pipeline WILL be built!

[Ghent12]

Re: Saudi bets the farm................

Petrol (Gas) £1.08 a litre in UK.

"My only hope for Salvation is the Fed "

That is an amazing post. Thank you Mega.

[santafe2]

Re: Saudi bets the farm................

That pipeline WILL be built!

It will take a Republican President or peak-not-so-cheap oil. Until then it's a "pipe dream"...

[GRG55]

Re: summers will take that bet and raise em?

...however - have a report of 1.89, street price - from NC
and scored 1.88 at a costco on friday (with the local spread from them to the street at .40 to .50 even, which suggests that either the street guys are gougin, or costco didnt have as good a Q4 as some expected, so are goosin their numbers by lowballin the gas price margins?

$1.88 per US gallon in Honolulu???
Wow!


Good thing Obama is allowing "exports" of oil to your Polynesian colony
[It was -17 F here this morning, so I am envious]

[GRG55]

Re: Saudi bets the farm................

It will take a Republican President or peak-not-so-cheap oil. Until then it's a "pipe dream"...

It will get resurrected at some point in the future when the US Gulf Coast refining complex needs a secure supply of heavy crude. At the moment heavy (e.g. Mexican Mayan and existing Canadian heavy) and diluted very heavy crude (Venezuelan Orinoco) is not in short supply or in any serious danger of disruption. However, as an example of what can cause a potential disruption, OPEC member Venezuela is short light, sweet crude for diluent as its own oil production has declined and in late 2014 was purchasing and importing light oil from Algeria and Russia (purchased through the Chinese).

These types of projects have a habit of being recycled once or twice before their time eventually comes.

[GRG55]

Re: Saudi bets the farm................

Thanks for all the background information GRG. The Saudi’s al-Naimi made the comment that the Russians ‘don’t deserve market share’. As you noted, Saudi Arabia has spent billions. From what I've read, the Russians have old infrastructure and could not cut back production if they wanted to. Add to that the inability/unwillingness of some OPEC members to cut back, then heap on the slowing world economy and the Saudis apparently came to the conclusion that if oil prices are going to be low for some time, it may be a good time to show everyone who’s the big dog and break as many competitors as possible.

The idea that this may somehow be bad for the US is completely idiotic. While shale exploration will be curtailed and maybe stopped if low pricing persists throughout 2015, every other part of the US economy will benefit as will the economies of Europe, Japan and China. Iran may even be forced to negotiate regarding its nuclear program. I would not be surprised to find out that super-cheap-peak oil had something to do with Cuba looking for a new friend.

But what about Canadian tar sands? Even with a US Republican Congress, $40-$50 oil will very likely kill the Keystone XL pipeline just when TransCanada needs it most. Obama needs to throw a bone to the left and with a "glut" of oil on the market, this may be the bone he throws.

Linked is a long term chart for the price of WTC for anyone interested in reviewing occasionally.

http://www.macrotrends.net/1369/crud...-history-chart

It will be good for the US domestic oil industry too. It will strip out bloated costs for services and labour. There was never enough talented management in the domestic oil industry to intelligently spend the gobs of capital that were thrown at it this past half-decade. To paraphrase HE al-Naimi, some shale drillers don't deserve market share. Having said that, some people are going to be surprised at the production statistics, and at how resilient and adaptive the US oil industry actually is as it is increasingly concentrated in the hands of the most talented & industrious.