Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on December 2, 2014
Falling Oil Prices Could Cripple ‘Vulnerable’ Russia, Trigger World War III
The Cold War 2.0 is going hot, and while it may someday be fought with planes, tanks, guns and bombs, the first front is being fought with oil and shale gas.
The U.S. and European sanctions against Russia will become more severe and crippling in the face of drastically falling oil prices – prices which are falling drastically because of the unprecedented boom of shale gas fracking both domestically in the U.S. and abroad in Ukraine and other locales. The oil & gas giants like Chevron and Exxon Mobil have created revolutionary conditions with now direct consequences on U.S. foreign policy and global war for dominance. Via Bloomberg:
Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union.
Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population. Nigeria, fighting an Islamic insurgency, and Venezuela, crippled by failing political and economic policies, also rank among the biggest losers from the decision by the Organization of Petroleum Exporting Countries last week to let the force of the market determine what some experts say will be the first free-fall in decades.
“This is a big shock in Caracas, it’s a shock in Tehran, it’s a shock in Abuja,” said Daniel Yergin…
The destabilization in Ukraine and numerous spots in the Middle East – including the ISIS-threatened Iraq and Syria – have been mere preludes to what is coming.
The OPEC countries, led by Saudi Arabia, are allowing oil prices to fall drastically, in clear coordination with its Anglo masters, and in response to the sudden rise of shale gas production obtained through fracking. These Arab states will not lose power with the falling oil prices, while many other regimes will face pressure in all sectors.
Targeted at the center of this web of intrigue is, of course, Russia. Natural gas is at the center of the Ukrainian conflict – with Russia’s Gazprom supplying some 25% of Europe’s natural gas.
U.S. operatives are working overtime to undermine that by cutting off Russian gas and supplying Europe, instead, with booming shale gas from fracking in and around Ukraine and its rich mineral holdings.
Between rising U.S. domestic production, falling OPEC oil prices and U.S.-led production and exploration in Ukraine, gas could prove a trump card against Russia, though Putin has downplayed these consequences:
“Russia in particular seems vulnerable,” said Allan von Mehren, chief analyst at Danske Banke A/S in Copenhagen. “A big decline in the oil price in 1997-98 was one factor causing pressure that eventually led to Russian default in August 1998.”
VTB Group, Russia’s second-largest bank, OAO Gazprombank, its third-largest lender, and Russian Agricultural Bank are already seeking government aid to replenish capital after sanctions cut them off from international financial markets. Now with sputtering economic growth, they also face a rise in bad loans.
Oil and gas provide 68 percent of Russia’s exports and 50 percent of its federal budget. Russia has already lost almost $90 billion of its currency reserves this year, equal to 4.5 percent of its economy, as it tried to prevent the ruble from tumbling after Western countries imposed sanctions to punish Russian meddling in Ukraine. The ruble is down 35 percent against the dollar since June.
At the same time, Russia has just given up its bid to build a South Stream pipeline to bypass Ukraine and has been accused of covertly funding anti-fracking protests in Romania, Ukraine and other areas in the hotzone of the Eastern Europe proxy war over natural gas.
An important secondary consequence of falling oil prices will come in the form of disruptions to social services in countries that have been supporting citizens with money from high oil prices – including Russia, Iran, Venezuela, Nigeria and others.
Falling oil revenue will mean less money for subsidies and handouts. For the geopolitical orchestrators in the Anglo-elite network, this is part of the strategy.
Coddled by years of $100 crude, governments instead spent that windfall subsidizing everything from 5 cents-per-gallon gasoline to cheap housing that kept a growing population of underemployed citizens content.
The Council on Foreign Relations heralded this fracking boom as a means of reasserting North American-based U.S. power around the world and ‘transforming the global energy landscape.’
Now, a spokesperson from its secretive sister organization the Royal Institute of International Affairs, based at Chatham House, has fingered it as a political weapon to spark upheavals and internal revolutions:
“If the governments aren’t able to spend to keep the kids off the streets they will go back to the streets, and we could start to see political disruption and upheaval,” said Paul Stevens, distinguished fellow for energy, environment and resources at Chatham House in London, a U.K. policy group. “The majority of members of OPEC need well over $100 a barrel to balance their budgets. If they start cutting expenditure, this is likely to cause problems.”
For a U.S. that many have said lost its credibility in the world, and has seen a decline in its position as the foremost global superpower and a certain, but slow decline of the petrodollar’s status as world reserve currency, the move in shale gas is a power move to level the global playing field.
The “sudden rise” of shale natural gas has been a planned, coordinated and highly strategic move. Plummeting oil prices are indeed an economic weapon against Russia, as many analysts have shown, and act to call the bluff of the other players at the table as well. It poses serious challenges to tensions with Russia, and will have immediate consequences for many other economies based on oil. Bloomberg explains the positions:
To be sure, not all oil producers are suffering. The International Monetary Fund in October assessed the oil price different governments needed to balance their budgets. At one end were Kuwait, Qatar and the United Arab Emirates, which can break even with oil at about $70 a barrel. At the other extreme: Iran needs $136, and Venezuela and Nigeria $120. Russia can manage at $101 a barrel, the IMF said.
“Saudi Arabia, U.A.E. and Qatar can live with relatively lower oil prices for a while, but this isn’t the case for Iran, Iraq, Nigeria, Venezuela, Algeria and Angola,” said Marie-Claire Aoun, director of the energy center at the French Institute for International Relations in Paris. “Strong demographic pressure is feeding their energy and budgetary requirements. The price of crude is paramount for their economies because they have failed to diversify.”
To be sure, there are no good guys at the table of global power. All are corrupt.
But the powers-that-be in the elite Anglo-financial world are betting that it will be enough to hold U.S. power across the world, boost the U.S. economy and hold its competitors in the ongoing game of global chess at bay. Current economic forecast show the possibility and perhaps likelihood that they have put down another dominating hand that will shape global trends for decades to come.
Through fracking, the U.S. trade deficit in oil is expected to balance out and to transform America into a profitable net exporting region in petroleum and gas within just a few short years:
There is no question that the US has entirely changed the global energy landscape and poses an existential threat to Opec. America has cut its net oil imports by 8.7m bpd since 2006, equal to the combined oil exports of Saudi Arabia and Nigeria.
The country had a trade deficit of $354bn in oil and gas as recently as 2011. Citigroup said this will return to balance by 2018, one of the most extraordinary turnarounds in modern economic history.
It may, of course, also carry enormous environmental consequences for Americans who face the possibility of tainted groundwater supplies, water shortages, increased earthquakes (as seen in Oklahoma) and other forms of pollution related to the use of countless chemicals shot into the earth during the hydraulic fracturing process.
In the Godfather, Michael Corleone took care of “all family business” in one fell swoop during his baptism as The Don following his father’s death, targeting the heads of the five gang families at war with his family’s cartel, along with several other vendettas, both persona and “just business”…
58 Comments on "Falling Oil Prices Could Cripple ‘Vulnerable’ Russia, Trigger World War III"
ghung on Wed, 3rd Dec 2014 4:33 pm
NR – If anyone here wants to play whack-a-mole with anyone else who’ll bite, there’s not much we can do. Challenging facts and having the same arguments over and over aren’t the same thing. Best to ignore that sort of thing from folks whose agenda doesn’t involve constructive dialogue. Nothing to be gained; wasted bandwidth.
Davy: Click on the “About” button on the home page. Tanada (your site administrator) can be contacted any time. That said, this site has never been actively moderated much and there’s something to be said for that. Too bad there are folks who take advantage of that to demonstrate whatever it is that prevents them from having a civil discourse. Misery loves company, and, IMO, peoples’ true character comes out when they think they’re anonymous.
Northwest Resident on Wed, 3rd Dec 2014 4:38 pm
Davy — It seems like the “site God” for this forum is much like the God of the universe. Which means, we just have to deal with it — no help from above, that’s for sure. I joined the member’s area and sometimes I go there to comment and read comments. Problem is, a lot of the more interesting posters on this forum are not members. And, the steady flow of articles that I enjoy commenting on does not make it into the member’s area. But even in the member’s area, you find some of the same exact trolls posting as post on here on the non-member’s area, but they are much better behaved. The “site God” will not ban a troll or even give a troll a “time out” in the member’s area, but it is possible to enter a troll’s handle/name into a “I don’t want to see this troll’s B.S.” widget, and from that point forward the troll’s posts do not show up, even though other commenters referring to the troll’s posts do still show up. I get the impression that this site needs the traffic/clicks, and that is more important than providing a civil forum for debate and information sharing. (sigh)
Apneaman on Wed, 3rd Dec 2014 5:38 pm
Davy. I said they survived collapse and communism, which is about as bad as it gets for social ills. They are only into their first generation of materialism and still have millions who have stood in bread lines. Their Alcoholism is nothing new; it’s a long running issue. It does not matter if there are a minority of people who are not lost souls and/or degenerates in N America if the majority are some combination of sheep, idiots, war mongers, corns, deniers, cheerleaders, exploiters and worst of all apathetic. They are going to try and take us to war and we have no moral ground for it. Looking in the mirror is never pretty when you are a sick, fat, old, broke, tired society. I hear the same type of language and strategy that was used in the the 1930s, by the same type of people, on behalf of the elite. Fascism was funded and promoted by the elite then and it’s happening all over again. It’s even some of the same elite families. Dehumanize and blame the other guy for problems of our own making. Those who do not know history are doomed to repeat it and those that do are doomed to watch it unfold.
Putin is EVIL he is not even human!
He is no Angel, but none of ours are either.
It’s called the Lucifer Effect and they know how to exploit it. Bullet bags and cannon fodder are what the common man is to the elite.
http://www.lucifereffect.com/dehumanization.htm
http://www.thenation.com/article/178344/distorting-russia
https://artifactsjournal.missouri.edu/2012/03/wwii-propaganda-the-influence-of-racism/
http://madefromhistory.com/world-war-two/racist-usa-propaganda/
Davy on Wed, 3rd Dec 2014 6:26 pm
Appnea, I have no problem with criticizing the US culture and government. There is much that has descended into the gutter. There is much that is globally wrong with US policy. Not only are people ugly but our landscape has become ugly. I could go on and on in examples of US filth.
The problem I have is the promotion of other countries and cultures as superior to the US. Mak, constantly does this with Asia. I am competent other countries and cultures because it has been a lifelong interest of mine. I have traveled and lived in other countries and cultures. There are none out there that impress me as anything special to be placed on a pedestal to look down on others.
What I am seeing is a general convergence of the global population into the same ugliness. I get tired of hearing the Russians are stronger than the Americans which is BS. There is absolutely no evidence of this nor was there ever evidence. Just because Russia was a traumatized population does not make them tougher. If anything it gave them less emotional depth from being desensitized.
I am as tired as you of the US MSM and elites paining a lie but these folks represent a small fraction of the total population. Your ideas are sound but making comparisons to belittle America in relation to other cultures is off key IMO. People can call me a flag waver but I call myself no nonsense.
I wish there was a special culture to emulate a culture for the world to look to for hope. Capitalism, technology, and artificial comforts has ruined humans across the globe. Even in the poorest of poor have a desire to have these BAU items. We are an ugly species all of us. There is nothing to be proud of. We have destroyed a beautiful world for what? Landfill material.
synapsid on Wed, 3rd Dec 2014 7:07 pm
ghung,
OFM posts all the time at peakoilbarrel, Ron Patterson’s site.
theedrich on Wed, 3rd Dec 2014 10:26 pm
Apart from the many, many problems of America (starting with the current POTUS), the only real difficulty our military has is that it is hamstrung by all sorts of political correctness. Our over-lawyerly government seems to think that war is really little more than a large police problem.  Etymologically, the word “war” (as also French guerre, Spanish guerra, along with German “wirr-warr” “chaos, confusion”) comes from an ancient Germanic word, war, meaning “chaos”. So-called “rules of engagement” are observed only by us, not by the foe, and have resulted in many deaths and other casualties on our side. We pay for being “good guys” with our blood. Playing Mr. Nice Guy by our presidents — not our military — has led to our defeats and futile operations in Korea, Vietnam and Libya, and now Iraq, soon to be followed by Afghanistan. In the last hours of our Libyan ambassador, Barry effectively said, “Let him die; I have to be re-elected and don’t want to appear aggressive, so don’t send in any rescuers.” The problem, in other words, is not the inefficiency, incompetence or impotence of our military; it is the arrogant egocentrism of our politicians. As in every other sphere, their attitude is “Après nous, le deluge.”
Apneaman on Thu, 4th Dec 2014 12:28 am
Davy, it’s not just the U.S., but the entire west. Unfortunately, all the cultures that have followed our materialistic lifestyle are suffering a moral collapse too, except they got there in a couple of decades not centuries. The reason America gets the brunt of the criticism is because of decades of very load boasting and bragging when on top combined with some very nasty foreign policy decisions that have and still are causing a lot of pain. No rational person disputes this or tries to defend it. Third worlder’s who are suffering because of it do not distinguish between the powerless average American and the elites who orchestrate and profit from their oppression. None of these people forget and their anger gets passed down through generations. Same for everyone. A lot of people want to see the U.S. go down in flames and going by the comments I read, many of them are Americans. It seem for an every growing number, foreign policy has come home to roost. Of course people who have never suffered for the most basic of necessities on a daily basis do not have a fucking clue what they wish for. It can still get a whole lot worse for most people in N America.
Stay Frosty
Davy on Thu, 4th Dec 2014 6:03 am
Yea, Appnea, we agree.
The US elites and their moral hipocracy is sickening. The worst thing to me about the US is when the US tries to show moral exceptionalism. The last thing the US should be doing now is trying to preach human rights. The whole world knows this is a farce. This is not only a criticism it is advice to the US elites. I am saying in a condescending way to these elites you are idiots. No one believes what the US is doing today is for human rights. What the US policy is for is self-advancement. The human rights preaching is a cover for power maintenance. Now that the entire world is not being fooled it is a waste of treasure. The world would respect the US more if it would admit it is a gangster and does gangster deeds.
I know I get defensive about US criticism. I am OK with the criticism if it is acknowledge there is no alternative and the rest of the world is embracing the same fundamental mistakes that is destroying the US. I laugh at the board propagandists that talk up Asia and Russia in the pursuit of belittling the US. Both Russia and China are dead men walking just as the US is. Most all the other powers have blood and stink on their hands. I do admire China for remaining true to self-interest. China admits they are a gangster. China is not a hypocrite in this respect. I would also caution those who are enamored by Czar Putt. He is the preeminent world statesman but he is a blue eyed devil that will strike out opportunistically and take as needed. His speeches are wonderful but so were Hitlers. Putin is the type of leader that is the most dangerous because he is a good leader in the modern sense.