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The entire US geo-political strategy is predicated on the petro-dollar.
In a real cool video game that some like to sit around and fantasize about. Video games are more fun than reality for many people, since you don't actually have to learn very much in order to play a video game.
In a real cool video game that some like to sit around and fantasize about. Video games are more fun than reality for many people, since you don't actually have to learn very much in order to play a video game.
Or maybe you can read about it in one of Chalmers Johnsons books highlighted by the CIA in "the intelligence officers bookshelf"
Blowback: the costs and consequences of American empire
The sorrows of empire: militarism, secrecy, and the end of the republic
Nemesis: the last days of the American republic
Dismantling the empire: americas last best hope
Last edited by Thatsright19; 06-27-2017 at 12:20 PM..
Tight oil producers are under pressure to produce as much as possible to cover their interest payments on their debt.
If oil-reserves are overestimated anyway, and drilling is endemically unprofitable, why not just sell off assets, and pay off the loans now, while interest rates are low?
Quote:
Originally Posted by Jobster
The broad price of oil is highly inversely correlated to USD.
Maybe, but in recent months, both the price of oil (in dollars per barrel) and the value of the USD as currency, have been declining.
Quote:
Originally Posted by Jobster
... the Russians pay their debt in rubles, effectively lowering the cost of business, but sell their oil in USD.
But no Russians of any affluence hold their money in Rubles. They immediately convert their assets into Dollars or Euros. Meanwhile, a weak Ruble means high consumer-inflation in Russia, since so many of their consumer staples are imported. A repressive dictator will be tolerated by the public, only so long as society remains relatively prosperous.[/quote]
It is a cartel, but one whose effectiveness has waxed and waned over the decades.
Quote:
Originally Posted by Pub-911
Good Lord. A cartel that has no effect is not a cartel under any definition.
And by the way, since all major currencies are freely exchangeable for each other at pravailing rates set in large global markets, it doesn't actually matter which currency oil producers ultimately ask to be paid in.
OPEC does have effects.
Quote:
Originally Posted by ohio_peasant
If oil-reserves are overestimated anyway, and drilling is endemically unprofitable, why not just sell off assets, and pay off the loans now, while interest rates are low?
Maybe, but in recent months, both the price of oil (in dollars per barrel) and the value of the USD as currency, have been declining.
But no Russians of any affluence hold their money in Rubles. They immediately convert their assets into Dollars or Euros. Meanwhile, a weak Ruble means high consumer-inflation in Russia, since so many of their consumer staples are imported. A repressive dictator will be tolerated by the public, only so long as society remains relatively prosperous.
[/quote]
I think the price of oil is the result of the foresight of the Saudis, who have been the main force keeping OPEC from cutting production. Thus we have a supply glut & lower prices, but lower prices--especially sustained lower prices--put a much greater squeeze on Saudi competitors than they do on Saudi oil. The Saudis even went so far as to issue bonds for budget support to ride out the low oil prices (a strategy I discussed in another thread a couple of years ago).
It is a cartel, but one whose effectiveness has waxed and waned over the decades.
OPEC waned upon coming face to face with the inflation that Carter had refused to give in to, thereby setting up 50% declines in the value of petro-dollar holdings every five years. The cartel fell apart at that point and has not even attempted to function as one since.
Quote:
Originally Posted by TheCityTheBridge
I think the price of oil is the result of the foresight of the Saudis, who have been the main force keeping OPEC from cutting production.
The Saudis are not a cartel. They are still a major, but as always, a single producer, one that has been seeking to preserve market share by propping up production as a means of punishing Russia and North Dakota. So far, so good, from that perspective. Targets have been significantly damaged.
OPEC waned upon coming face to face with the inflation that Carter had refused to give in to, thereby setting up 50% declines in the value of petro-dollar holdings every five years. The cartel fell apart at that point and has not even attempted to function as one since.
The Saudis are not a cartel. They are still a major, but as always, a single producer, one that has been seeking to preserve market share by propping up production as a means of punishing Russia and North Dakota. So far, so good, from that perspective. Targets have been significantly damaged.
The Saudis are the cartel enforcer. Every cartel needs one. They also, by the same virtues that make them a viable enforcer, are the cartel's leader. The damage is precisely the goal.
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