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Can The Saudi Economy Resist "Much Lower For Much Longer"?
Submitted by Dalan McEndree via OilPrice.com,
We must all hang together, or assuredly we shall all hang separately.
- Benjamin Franklin, at the signing of the U.S. Declaration of Independence-
The previous article in this series on Saudi oil policies asked what the Saudis planned to do as their encore in 2016 after sacrificing approximately $100 billion in crude oil export revenue in 2015 in pursuit of market share.
This article provides the author’s answer: the Saudis must alter course, seek a consensus on prices and volumes with their fellow OPEC members, coordinate with Russia, and reduce output from 2015’s average (approx. 10.5 mmbbl/d) to signal their commitment.
Why? Crude prices staying lower for longer will rapidly devastate the Saudi economy.
Goldman’s $20 scenario could turn out to be optimistic
In recent days, it seems the slogan “lower for longer” for crude prices has become “much lower for much longer.” September 11, Goldman Sachs revised downward its projection for average WTI and Brent per barrel prices in 2016 from $57 to $45 and $62 to $49.50 “on the expectation that OPEC production growth, resilient supply from outside the group and slowing demand expansion will prolong the glut.” Goldman also said prices could reach $20, albeit probably not for an extended period. At a recent conference in Alberta, Jeff Currie, Goldman’s head of commodity research, said low crude prices could persist for fifteen years and that Goldman’s long-term forecast is for $50 crude.
Goldman’s projections both in terms of average 2016 prices and $20 as a possibility could prove optimistic. In a situation of oversupply, which prevails currently, when oil-dependent economies must earn dollars to pay for imports and the interest and principal on US$ loans, the price elasticity of supply is sharply negative. As excess crude oil production threatens to exceed crude storage capacity the price of each incremental barrel of crude presumably could approach $1 for US$ hungry producers.
This is the kind of environment a September 14 Bloomberg article describes: intense competition between major oil exporting nations as Saudi Arabia fights to maintain its place as China’s chief crude supplier, and Iran, Russia, and Angola gird to compete fiercely for second place in this critical export market.
The Devastating Impact of Crude Prices below $50 on the Saudi Economy
What happens to the Saudi economy if crude prices remain below $50 or drop to $20 or lower (say $15)? In the following discussion, it is important to keep in mind that Saudi oil export revenues, which include crude and refined products, fund 90 percent of the Saudi government budget and constitute some 80 percent of Saudi exports, which generate the US$ needed to pay for imports (including vital defense equipment and services).
Thus each US$ lost in oil export revenues reduces the Saudi government budget by one dollar, unless replaced from another source (e.g., Saudi government currency reserves or borrowing).
The following table draws key data from Table 2 (Saudi Arabia: Budgetary Central Government Operations, 2011-2019) and Table 4 (Saudi Arabia: Balance of Payments 2011-2019) in the IMF’s 2014 IMF Article IV Consultation Staff Report on Saudi Arabia.
Column 2 shows the IMF staff’s preliminary estimates for actual 2013 results, while columns 3 and 4 show the IMF staff’s projections for 2014 and 2015, when the staff expected crude prices to remain above $100/barrel. Column 5 provides data from the 2015 approved government budget, published after Oil Minister Al-Naimi’s announcement of the shift to a market share strategy at the November 27 OPEC meeting.
As the table shows, Saudi budget planners anticipated a sharp drop in revenues, total spending, and the budget deficit. The increase in spending wages, salaries, and benefits anticipated the bonuses for Saudi government workers King Salman ordered after he ascended to the throne in January 2015.
(According to the IMF, Saudi budgets traditionally have been conservative in terms both of revenues and spending and both revenues and spending have regularly exceeded budgeted amounts. Since average crude prices fell far more than Saudi planners anticipated when they prepared the 2015 budget, it is possible actual 2015 spending may overshoot budgeted amounts, while actual revenues undershoot).
(Click to enlarge)
Tables 2 and 4 make it possible to model and assess the impact of crude oil prices below $50 on the Saudi economy. With oil exports (crude and refined products) at 8.3 mmbbl/d and assuming $5 production cost, net oil export revenue would be as follows at $50 and at $5 decrements below $50:
(Click to enlarge)
As the following table shows, with oil prices at $50 and below, the Saudi government, absent other sources of revenue/increased revenue, cannot long sustain actual total spending, even at 2015’s reduced levels of $229 billion; even just 2015 approved wages, salaries, and benefits spending at prices below $40; even just the IMF’s projected 2015 budgeted capital expenditures (in general, government financed-infrastructure projects) below $40; combined total approved spending and IMF projected 2015 budgeted capital spending; and the trade balance (exports minus imports and services imports).
Further, decreases of such magnitudes in oil export revenue and government spending will lead to:
- A substantial contraction in GDP (the actual size of the contraction depending on the fiscal multiplier for Saudi government spending).
- Decreases in headcount in Saudi national and local government bodies and employee compensation (according to the IMF, in 2013 71 percent of Saudis were employed in government-related institutions), as well as cuts in social spending. This could lead to and/or intensify social tensions, which the Saudi government has tried to dampen with government spending.
- Sharp deterioration in the trade and services balances, which will reduce Saudi ability to finance the imports on which the Saudi population and government—think defense equipment among other necessities—depend.
(Click to enlarge)
Absent other sources of funding is a key assumption. IMF Tables 2 and 4 make it possible to model the impact of oil prices at and below $50 on Saudi currency reserves—assuming no borrowing and no substantial increase in “other revenues” in the Saudi budget—at 2015 approved total spending levels, the IMF’s projected 2015 budgeted investment expenditure, and the estimated trade and services balances.
The picture presented in the following table isn’t pretty—foreign currency reserves rapidly deplete. Rapid depletion would bring pressure to bear on the Saudi Riyal’s peg to the US$ (3.75/US$) and ultimately could force the Saudis to break the peg (unleashing such unpleasant repercussions as increasing the cost of imports).
(Click to enlarge)
In short, it seems the Saudis will find it difficult to sustain their currency market share policy for more than a year or two at prices below $50, much less the fifteen years Goldman Sachs projects. The Saudis could borrow from local sources - S&P estimates Saudi banks could lend up to $100 billion - and seek foreigners willing to lend, but these sources cannot make up for the lost oil export revenue in the medium- and long-term, perhaps not even in the short-term (one-to-two years).
Progress toward a Balanced Crude Market
Can Saudi Arabia hope Goldman’s projections of much lower for much longer crude prices are wrong and wait for market forces on their own to balance supply and demand and drive crude prices higher?
Probably not. Yes, supply and demand seem to be trending in the right direction. Authoritative institutions have been raising their forecasts for demand and lowering their estimates for supply. In its September Oil Market Report, the IEA raised its estimate of demand growth in 2015 to 1.7 mmbbl/d from 1.6 mmbbl/d and raised its estimate for 2016 to 1.4 mmbbl/day. On the supply side, the IEA’s recently published 2015 Medium-Term Market Report reduced the IEA estimate for crude supply from non-OPEC countries in 2016 to 53.10 mmbbl/day from the 53.80 mmbbl/day it estimated in its 2014 Medium-Term Market Report.
Yes, several trends suggest possible threats to supply in 2016. Iraq, one of the three major contributors to 2015’s surplus production (Saudi Arabia and the U.S. are the other two), may find it difficult to maintain output at levels it achieved in 2015 (approx. 4 mmbbl/d), much less increase output, given that low crude prices, the ISIS insurgency, and budgetary pressures have forced the Iraqi government to cut funding for current and future petroleum industry projects. Brazil’s political instability, its deteriorating economic conditions and Petrobras’s overwhelming debt burden and ongoing corruption scandal, and Venezuela’s economic and political turmoil, could negatively impact these countries’ ability to maintain current production and increase future production. Conflict and instability in Libya and Nigeria could constrain their crude output.
However, relying on these trends would not be prudent. Positive supply surprises, which could negate any supply disruptions, could come from Iran and the U.S. Iran claims it can increase output by 1 mmbbl/day within three to six months after sanctions end, while U.S. production could prove to be more resilient in the low price environment than the IEA and the EIA currently anticipate, as U.S. producers use technology to increase efficiency and output.
In addition, in the absence of a signal from the Saudis that they intend to back away from their aggressive increase in output in 2015 to approx. 10.5 mmbbl/d (from approx. 9.5 mmbbl/day in 2014), the market may assume continued substantial oversupply and drive prices lower.
There is another important consideration. Currently, most observers seem to believe (or maybe hope) Saudi currency reserves are sufficient to weather the low price environment and thereby give the Saudi government sufficient breathing room. When—as this author believes—not if, this perception changes, Saudi authority and negotiating leverage rapidly will dissipate.
Two Steps
Instead of waiting for the crude market to balance itself, the Saudis should use this breathing room to accelerate the balancing. They could, to lay the groundwork for a longer-term solution, take the following two steps. First, they roll back their output of crude from levels achieved in 2015 toward levels they averaged in 2014 and previous years (approx. 9.5 mmbbl/d).
Second, they could use the next few months to persuade fellow OPEC members that OPEC must become a cartel in more than name only, that is, for example, that binding production quotas must be set, that on-site inspection and monitoring must be permitted, and that there must be penalties for disobeying quotas and the penalties must be effective.
Absent pro-active steps, the Saudis will create the conditions for an interesting trade:
Long crude oil, short the Saudi Riyal
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They get the $ for nothing and small boys for free
Why would the House of Saud give a fuck about the Saudi economy?
Resist?
“But resist, we MUCH – we must and we will much about that be committed.” - The "Reverend" Al Sharpton - Democrat - genius representative of his peoples.
They've gotta pay for those solid gold Rolls-Royces somehow.
What could also devastate the Saudi Economy would be 1,000,000 Houthi/Yemen's invading Saudi Arabia.
Is this likely, No. But it is possible that 100,000 just might go for it. It is well known in the ME that the Saudis do not fight, but use foreigners to man their army.
http://www.pakpassion.net/ppforum/showthread.php?230888-One-million-Yeme...
You will know it went a bit too long when prince heads start being scattered around in gutters over there.
What goes around, comes around.
The Saudi's have caught the disease of massive welfare and shooting at people they don't like, after all, it's working great for America......
Because, if the economy tanks, they will be lynched.
No they won't that is just silly.
They don't give a shit about the people and they never have. They cut off peoples heads in public man get a grip!
Now they do care that Obama is negotiating with Iran.
Shit , they'll have to trade in their Ferrari's for Lambo's what a bitch ...
Heads will roll .... in the parking lots ?
Couldn't happen to a nicer bunch of Muslims.
Eventually they will run out of oil, and these filthy, lazy, depraved Muslim savages will revert back to what they were: camel jockeys.
"Goldman’s $20 scenario could turn out to be optimistic"
Did I mention that I drive a Toyota Prius stretch limo with a Cummins turbo-diesel under the hood?
I don't know why everyone says these Priuses are "practical" cars with good fuel economy. I haven't found that to be the case with mine. $20 oil would be a big help, though.
I suspect the Saudis know who GS represent (and IMF), and what their strategic investment, budgeting and production advice's value really is, so will do whatever, accordingly.
It does not have to be consistent with someone else's logic, so I don't expect cerebral compliance to GS's prodding.
___________________
This also popped up recently:
Israel Eyes Exclusive Dibs on F-35
By Barbara Opall-Rome 10:46 a.m. EDT September 16, 2015
Israel is clearly not directing that at Turkey, as Turkey already ordered two F-35s, and will be buying about 100 of them. So Israel can only be directing this desire for exclusive operator status at making sure Saudi Arabia and GCC and Egypt never get F-35.
Plus they may prefer Saudi-GCC economies weakened to ensure they can't afford the extravagances, and begin to suffer insoluable debt growth issues.
They want this arrangement made permanent because they actually know the F-35A is much better than all other tactical fighters coming into the region, namely the EuroTyphoon and French Rafale. The other major thing is the F-35A can carry 2 x GBU-28 5,000 lb bunker buster weapons, on its two inner-most external weapon pylons and 2 x 428 US Gal drop tanks on its middle external pylons, simultaneously.
i.e. it will have huge hitting power, that goes far beyond any other tactical fighter in the region today and it will be combined with outstanding fuel capcity of 24,215 lb in that configuration. For comparison an F-16C with fuel fuel and 2 x 600 US Gal drop tanks carrries only 14,877 lb of fuel. So the F-35A strike range even without tanker support will be genuinely outstanding, as will be its hit.
Btw, the F-35A already flew for 5.7 hours on internal fuel, including take off and landing at different bases, during flight tests. That vastly exceeded any prior tactical strike fighter's time aloft of such a test. So even if it cruised at only 400 kt for about 5.7 hours, it would cover close to 2,280 nm in that time frame.
Now the 2 x 426 US Gal drop tanks add another 31% more fuel to that internal fuel range potential. So the F-35A range with the 2xGBU-28, plus 2 426 US gal drop tanks, will approach around 2,700 nm total achievable cruising range. Staggering! And a huge attack hit, per jet, at the end of it.
Previously it took an F-15I to carry just one of those GBU-28 bombs on its centerline station, to achieve similar range radius, but only deliver half the punch an F-35A can deliver. So this is the thing most people still have not figured out about the F-35A, its weapon payload is already ~330% greater than an F-16C, and will grow to about 400% higher in the early to mid-2020s, and a Block-4 F-35A will begin to significantly exceed the strike payload and weapon numbers of even the very heavy-hitting F-15E/I.
Hence Israel have now begun to think like this.
But they're approved to buy these now as well:
So anything Goldman Sachs says about Saudi oil and budgets, I view within a regional strategic superiority context, of the ME. They want Saudi and GCC much weaker economically, and also militarily degraded, and technically unable to effectively detect and stop them over-flying Saudi Arabia in time to sneak in a heavy attack on Iran, and get back again to Israel (fully LO, not bombs, not pulon no drop tanks, but with 6 x internal air to air missiles to get back home).
Because with the F-35A and KC-135s and GBU-28s, Israel will in fact finally be able to pound Iran's bunker complexes, and probably be able to pull it off without losses.
They can not currently do this.
O Great Wise One
That clearly reads like a theory based on internet links...
No, it's a serious of what are called observations regarding technical facts, which have strategic implications.
No theory whatsoever was offered, just a discusson of the implications of it.
You don't need theories when you have EVIDENCE and DATA.
You don't even need to speculate if you have those are the implications are sufficent.
So I pointed out these emerging realities for others to examine.
Things that they (and definitely you) did not know.
Do you get how this works now? ... oh super-moron?
series
Maybe try using smaller words that make sense.
How about you get a vocabulary and dictionary, or just read stuff written for simpletons? Maybe a good picture book? Can you follow all this?
you fucked up with discusson too
not so wise maybe? Full of shit more like it.
You never have anything whatsoever to contribute constructively to any discussion. You whine and bloviate like a dopey little bitch and endlessly mumble useless crap and make unsubstantiated accusations about 'govt trolls' and 'zionists' etc., and other useless childish drivel, because its all you've got. You don't know what else to do. You just retreat into being a petty bitter little twerp who yaps at the heels of those who take the time to inform, and it reveals how fucking dumb you are, and you are irked by this and resent it, so feel compelled to snipe and snivel like a petty twat at them. That about sum it up? ;-)
Now you're displaying your intelligence.
Feel free to address the topic of my original comment any time you wish, if you think you have the capacity, otherwise get lost moron.
"I suspect"
If you suspect something then you must have a theory otherwise you would not suspect.
Yesterday you wrote "I don't 'believe' in making theories" but here you are making theories.
Yesterday you wrote "Internet links are not evidence. I know very poorly educated and rather moronic people imagine they are, but unfortunately evidence is entirely unlike a mere internet page." but there you go linking internet pages in your comments.
You're a hypocrite whose only solution to a disagreement with your comments is argumentum ad hominem. That sort of argument betrays your intelligence.
So please tell why you suspect.
I suspect you're an agent of the same master "who GS represent (and IMF)"?
"I suspect" means a suspicion, but I do not wish to speculate. Simple as that. A suspicion does not imply the existence of a theory, at all, as you so stupidly assert.
It is equivalent to a hunch, a sense that there may be something more to a situation.If I suspect something that means I have no evidence, and no data, so I'll leave it at that. But I may enquirer further, to see if there is any evidence or data.
But if I wish to actually speculate for the sake of an argument, I may do so to tease it out, but I rarely do that, as I dislike it, I distrust it implicitly, and see it as a low-grade desperate attempt to examine things that you can't clarify with sufficient evidence or data. So I avoid it.
But I don't theorize, I see theories as a domain for idiots and morons. I suspect you theorize quite a lot.
The only thing I detest more than theories, is theories stacked up on other theories, but most of all I detest dopey fucking idiots who think these things up, and spread them bout like mental pox, and do not even grasp what retards they are for constantly indulging in that and think from it they 'know' something. The utter stupidity of that crap always makes me feel like I was born on the wrong planet.
It this really all too hard for a trenchant moron like you to follow? I mean, I would have thought it was pretty clear, self-evidence, basically goes without saying. But not for Roger?
Well little one, you have not produced any evidence of hypocrisy you see, you just made a false claim based on your unfounded assertion and mere assumption that suspicion = theorizing
But it doesn't dumb-dumb. You are just too retarded to grasp that a suspicion and theorizing are not synonymous or equivalent.
But you are in fact a moron.
Now telling the self-evident truth like that is not actually casting ad-hominem, it is however an accurate observation of Roger displaying his spectacular super-dumbness capacity, at full-tilt. lol :D
Isn't this fun?! :D
Well I guess you wouldn't be a paranoid dishonest petty little utter fuckwit, falsely-accusing me, if you didn't take my comments completely out of context, so here's what I actually said before that, verbatim, you dishonest shit-for-brains twat:
Isn't it interesting how you managed to deliberately edit that out of your quote, eh, dishonest dipshit? Because a page is not enough, it actually has to contain information that leads to verifiable testable evidence or data.
I even preceded it with;
"... I assess there's an extremely high probability that anything you ever cite will be more morons talking about imaginary blather, with no actual testable verifiable evidence ever offered. Prove me wrong, I'd be delighted."
I mean, how much more clear do I have to be for utter idiots like you? You even read it, and still you deliberately cut it out specifically so your could merely troll and deliberately misrepresent that I have a issue with web page links, rather that an issue with webpages with zero, and I quote,"actual testable verifiable evidence", in them.
I mean, even the bit that you did quote in you comment plainly also indicates I was interested in the evidence on internet pages, not just a list of internet pages, with people talking crap.
Look, here's you comment (immediately above) quoting me:
i.e a mere internet page link, does not suffice, it actually has to also contain honest to goodness verifiable evidence on it. So this is really not that hard to follow wittle woger, surely? Don't try to over think it to deeply mate. Are you perhaps an unemployed turnip farmer who fell off a ladder, on to your head?
And what was I writing a reply to (what you were quoting there)? Well it was to this comment, that contained three links of utter bullshit, and no verifiable evidence at all.
So right there I'm simply asking for and insisting on actual evidence be provided for wild-arsed claims to be supported by material verifiable facts if there are any at all, and you know this, you slimy dishonest little piece of dogshit! You know perfectly well that's what I was doing!
And yet you are attacking me for daring to demand evidence, of excessively wild-arsed mere theoretical claims, to be supported by verifiable material facts.
And you know what? No one could provide any! Imagine that!
And here you are wittle-woger, defending the total absence of evidence for a theory which is utter fucking bullshit.
And I have the 'problem'? That's what you're claiming?
It's all a load of made-up horseshit from beginning to end kid.
OMG!!! ... !!! ... who ya gonna call???!!! ...if ya sees somefing ya gotts ta say somefing maaaate!!!
Alternatively, now Rogey, note that this is a speculative sentence, you could be a paranoid utter fuckwit sitting in mummy's basement with crusty y-front underwear and teeth that have not been brushed properly for a few days. I don't know, I'm just speculating here, it seems a reasonable proposition to account for the bad attitude dope who continues to accost me over petty-minded nothings. :D
If I openly admit to any accusations you care to fabricate, would it help you move on with your life? Grow up and improve your attitude some, and get some fresh underwear and learn to love me less? lol :D
______________
Look,
As I can see that you are clearly a troll, and nothing else at all, otherwise you would actually have substance to your comments, but you never do, and you would address the topic of a comment's substance, but never do, and not just try to distract with lies and deliberate fabrications to misrepresent, which you increasingly do, or to make false baseless accusations with great monotony which you ALWAYS do, I will keep this little comment handy as a link, yes, a link, as evidence which will illustrate to any others interested what a dreary useless feeble little cock-sucking troll idiot you are, the next time you try this on again.
mmmkay? :D
You stupid pitiful little prick. :D
The terms of endearment you use are flattering.
Perhaps you should look up the definition of theory http://www.merriam-webster.com/dictionary/theory
and check out a couple synonyms of suspect http://www.thesaurus.com/browse/suspect
See how the synonyms of suspect are in the definition of theory? Funny how that works.
As for the rest of your post it confirms my suspicion that you are full of shit and that you are a shill of zion.
You keep your evidence and proof handy there because you're gonna need it to prove how much of a stupid little prick I am.
I really don't think there will be any problem showing you to be a dickwad, let's see:
--
Here the forst thing the search engine came up with on "define suspect"
http://dictionary.reference.com/browse/suspect
suspect
[v. suh-spekt; n. suhs-pekt; adj. suhs-pekt, suh-spekt]
Synonyms
Examples
Word Origin
verb (used with object)
1.
to believe to be guilty, false, counterfeit, undesirable, defective, bad, etc., with little or no proof:
to suspect a person of murder.
2.
to doubt or mistrust:
I suspect his motives.
3.
to believe to be the case or to be likely or probable; surmise:
I suspect his knowledge did not amount to much.
4.
to have some hint or foreknowledge of:
I think she suspected the surprise.
verb (used without object)
5.
to believe something, especially something evil or wrong, to be the case; have suspicion.
noun
6.
a person who is suspected, especially one suspected of a crime, offense, or the like.
adjective
7.
suspected; open to or under suspicion.
_________________________________________________
Nope, nothing suggesting having a suspicion is equivalent to or suggestive of 'theorizing'.
So let's try the Thesaurus:
http://www.thesaurus.com/browse/suspect
Synonyms for Suspect
adj doubtful
suspected
thick
pseudo
thin
open
dubious
fishy
incredible
problematic
questionable
ridiculous
shaky
suspicious
unbelievable
uncertain
unclear
unlikely
unsure
doubtable
Synonyms
verb distrust; guess
speculate
consider
assume
doubt
presume
believe
think
wonder
conjecture
conclude
reckon
conceive
gather
mistrust
feel
disbelieve
suppose
expect
imagine
understand
hold
surmise
be afraid
harbor suspicion
have a hunch
have doubt
have sneaking suspicion
hazard a guess
smell a rat
think probable
---
That's the complete list of synonyms - both the adjectives and verb forms. I see the words I used in there, but nope, not a damned thing about making a theory.
So it looks like you have lied, pretended and misrepresented yet again.
Well there's the evidence right there, it's quite conclusive.
Rock-on-Roger is an ignorant troll little dickwad, making shit up.
But why am I not surprised?
Well let's try this for the knit-picking tedious little fuckstick troll moron, I'll do the same for the word 'theory', and see if it has the same meaning as suspect:
---
http://dictionary.reference.com/browse/theory
theory
[thee-uh-ree, theer-ee]
Examples
Word Origin
noun, plural theories.
1.
a coherent group of tested general propositions, commonly regarded as correct, that can be used as principles of explanation and prediction for a class of phenomena:
Einstein's theory of relativity.
Synonyms: principle, law, doctrine.
2.
a proposed explanation whose status is still conjectural and subject to experimentation, in contrast to well-established propositions that are regarded as reporting matters of actual fact.
Synonyms: idea, notion hypothesis, postulate.
Antonyms: practice, verification, corroboration, substantiation.
3.
Mathematics. a body of principles, theorems, or the like, belonging to one subject:
number theory.
4.
the branch of a science or art that deals with its principles or methods, as distinguished from its practice:
music theory.
5.
a particular conception or view of something to be done or of the method of doing it; a system of rules or principles:
conflicting theories of how children best learn to read.
6.
contemplation or speculation:
the theory that there is life on other planets.
7.
guess or conjecture:
My theory is that he never stops to think words have consequences.
____________________________________________
No, very different meaning. Much more complex, elaborate, completely different emphasis.
Now for the thesaurus:
---
http://www.thesaurus.com/browse/theory
Synonyms for theory
noun hypothesis, belief
code
doctrine
argument
concept
thesis
system
assumption
suspicion
proposal
scheme
approach
method
premise
philosophy
idea
plan
rationale
understanding
provision
ideology
position
speculation
impression
outlook
shot
hunch
foundation
supposition
surmise
presumption
guess
basis
theorem
postulate
conditions
conjecture
dogma
base
stab
presentiment
guesswork
feeling
grounds
suppose
systemization
codification
supposal
formularization
---
No, very different orientation again, very systematized suggestive of elaborate active conceptualizing. But I already knew that, and that's why I used the words, "I suspect", and not the words, "I theorize". Because only an idiot would try to insist that to merely suspect something was equivalent to developing a whole theory, or synonymous with theorizing at all.
I'm a scientist, so I know perfectly well what a theory and theorizing is, and testing them, and what is wrong with the whole apparatus of theorizing, and why theory indulgence is typically the domain of delusional fools and true believers in the purely imaginary, being the real.
It's neurotic.
There's no question whatsoever that a mere passing suspicion of something equals formal theorizing. It doesn't.
I think it's fair to conclude at this point that I've comprehensively demonstrated beyond dispute that 'Rock-on-Roger' is obviously an ultra petty completely paranoid racist super-fuckwit moron troll.
whew these israelis are some paranoid vaginas eh?
would be a lot cheaper if they just started sucking Iranian cock again, like back in the 70's.
"Because with the F-35A and KC-135s and GBU-28s, Israel will in fact finally be able to pound Iran's bunker complexes, and probably be able to pull it off without losses"
Netanyahu's dream come true
Pretty much. It provides a regional reach they have never had, combined with a serious sub fleet in parallel. Not to forget, it's also already been certified to carry the B-61 nuke internally in US service. And Israel, Australia, Japan and UK have all been provided coding access labs in their own countries for F-35 weapons integration code modules, so they can each integrate any 'special' weapons they wish on the F-35, independently of the US, or the manufacturer.
KSA would not object to Israel over-flying to hit Iran, although they would probably feign outrage in public.
Yeah, that or the IDF could just forward position a K-135 pretending to be a maritime patrol flight in the Arabian Sea, and the F-35 go south over Elat down Gulf of Aqaba to Red Sea and Arabian Sea, refuel over Indian ocean, attack Iran from south into interior at night. Then when the wings are clean after the strike they can refuel again to the south and go back the way they came. Unlikely, as it risks the tankers, unless they have a 4-ship escort. Or they can just super-cruise it back over Saudi Arabia and Jordan at Mach 1.2, well above the Jet stream, much too fast and low-observable to do much about anyway. But lets face it, the Saudis would be OK with Iran losing its key bunkers.
I swear I just saw a bloomberg article with OPEC calling for $80/bbl by 2020.
Looks like more crucifixions will be needed....
http://mic.com/articles/125468/saudi-teenager-ali-mohammed-al-nimr-has-been-sentenced-to-dead-by-crucifixion
sa is spending money like no tommorrow. when the US$ reaches between 70 and 80, everything changes for sa.
The Saudi royal family will be fine: Allah cares not for the peasants.
They will decamp to Switzerland at some point, and that will be that.
Nations that practice 'oil export socialism' by means of a general 'mercantilism' monetary policy, are going to get crushed.
Socialism doesn't work because for one person to get 'SOMETHING-FOR-NOTHING' another must be 'NOTHING-FOR-SOMETHING', and if the person who got 'NOTHING-FOR-SOMETHING' wasn't a volunteer, then he will cut back on his unproductive-production.
Using a natural resource like oil to fund this process does not change its nature or dynamics, because nature provides nothing in a ready-to-use state. Someone is still going to not get what they deserve...and if they didn't voluntarily give up a portion of their just deserts they will cut back on doing the things that resulted in them being robbed.
Mercantilism doesn't work because eventually your trade partners can't pay you. Using credit to delay the date of non-payment, delays the date of non-payment, but does not change the fact of non-payment. It is a waste of time.
Most prefer illusion to despair.
China will buy it.
China selling products to Russia, their new trading partner.
US in isolation with its cheap oil.
Somebody call the police. Saudi Arabia attacked the WTCs.
The three biggest oil producers are the US, Russia, and Saudi Arabia.
The US is by far the biggest consumer, produces at a deficit to consumption, and cannot export oil at all.
Of the three only the US has expanded its production significantly.
Shortening its deficit meant the rest of the oil-producing world had less market, but the same production.
They have since been struggling amongst themselves to make the other guy lose market share rather than themselves.
The great irony, which can be laid at the feet of their cultures, is that the one way they have NOT been struggling, is struggling to make their operation more efficient, such that they can produce at lower cost and out-compete at market.
The Saudi's have been subsidizing islamists for the purpose of acquiring pipeline routes so they can acquire expanded contracts in Europe, who wants to diversify. They've also been hip-deep in financialist banker stunts to keep their oil-socialism going on.
Russia has been using the Russian Army to seize key territory under one pretext or another...that just COINCIDENTALLY HAPPENS to lie on one or another of those pipeline routes. And they've been making military expansionist pacts, and currency swaps at rates advantageous to Russia with China (who knows how long that can go on?).
And the US, has stuck their fingers into both of the other two's conflicts to prolong and exacerbate them, under the theory that what's bad for the competition is good for them.
What a group of losers.
no longer biggest consumer
As zerohedge pointed out in an article last week, Saudi has 7 years and 11 months just in reserves to burn through.
Did I mention they collectively own 10% of the US stock market?
I've read in another analysis of this that they have enough reserves to carry on with this for years and it won't take years to kill North American shale oil, fracking, and tar sands efforts. When they then raise prices in a world economy that will be worse then that it is now, watch what happens...
Saudis probably made a mistake getting into this, but I assume they are being backed by the US Fed in some way, shape, or form. I have no idea where it's going or when it will end. May well depend on how the battles go with Yemen, Iran, whatever.
Chinese must be happy about it.
So let me get this straight ... your solution to the "problem" of declining oil prices and revenues (Saudi or anyone else's) is to shore up a cartel (read that as "monopoly") that fixes quotas and prices? Do you have a single brain cell in that head of yours? How about a solution that involves price discovery based on consumer demand and supplier output with short and long-term development oriented towards a sustainable market? You know, something that comes even remotely close to a free market. You OilPrice guys are really low brow thinkers and definitely follow the herd with your ideas.
I guess now is the time to remind people that oil is up 30% from the bottom.