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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"
penury on Tue, 2nd Dec 2014 11:03 am
Long on rhetoric and short on information as always.
ghung on Tue, 2nd Dec 2014 11:15 am
So fracking is triggering World War III, and is bringing about an extraordinary economic turnaround in the US. Got it.
Plantagenet on Tue, 2nd Dec 2014 11:29 am
Russia is the main backer of the Shia Assad regime in Syria, and some reports say that Russia is funding the anti-fracking movement in western Europe, so it would be poetic justice if fracking and Sunni KSA take down Russia
Davy on Tue, 2nd Dec 2014 11:40 am
Can you folks smell that smell? Smells like cat piss. Corn porn at its best has a cat piss smell. Wait a few months as thing deteriorate here at home. Let’s see what they say about Saudi American and those landscape changes with the U.S. exporting gas and oil. When that does not happen what will be the new excuse or fantasy development. We are in a time of severe distortions to truth and common sense. That in itself should warn us of an impending descent.
louis wu on Tue, 2nd Dec 2014 12:13 pm
“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.”
So oil prices are falling because of increased gas production?And as for those sanctions, we’ll see how well Europe holds out as the winter progresses.
steve on Tue, 2nd Dec 2014 1:07 pm
Davy, I don’t get you? I one hand you and Greg T are patting yourselves on the back in how you raised upstanding children who know the value of work and have followed good career trends in the meme of BAU….then you condemn cornucopias for talking just like you….it is a bit neurotic don’t you think….what is it collapse or BAU….you can’t have both…that is what I used to tell the people on the oil drum who would brag about being debt free with a government pension rolling in they were going to sit back and watch the show so to speak…they had beat the game once again….but I argue No! They are wrong and no matter who you are this will eventually be at your front door there is no escaping it American or not you will not be free to watch on the sidelines…I tell young kids to stay out of school and go into the trades……
J-Gav on Tue, 2nd Dec 2014 1:37 pm
You’ll get no argument from me Davy, as to the impending descent.
Exactly what forms it will take and how deep it well rend social fabrics remains to be seen but one thing is fairly certain. The working schmucks and unwashed multitudes will be the primary victims. At least initially. Then who knows what hell might break loose?
J-Gav on Tue, 2nd Dec 2014 1:55 pm
As for Russia, I’m not at all sure they’re as isolated as Western media make them out to be.
Yes, they do have some conundrums to deal with in their Far-East, Central Asian, Middle-East and eastern European positioning, but so does the West.
Yes, they are taking, and no doubt will continue to take a hit from lower energy prices for a time, but so are Western energy companies (= reduced federal revenues).
Are they as exposed to the unbelievable quadrillion-dollar derivative market as bubble as the West’s financial geniuses? Not as far as I can ascertain. That would be Deutche Bank and the horrendous over-exposure of U.K., U.S. and a few other EU banks. This is a time-bomb and Russia is not sitting at the center of it.
Which doesn’t exclude that a war of convenience might be chosen in order to bring them into the center of it. Proxy-wise it’s already underway. We wait with bated breath to see if it’s poised to go beyond that.
Davy on Tue, 2nd Dec 2014 2:05 pm
Steve, I think we have a disconnect here on our ideas of what a doomer is and what prepping is.
There is no patting Greg on the back. My point was don’t drag family into the discussion like you know the lad.
As for preaching BAU or collapse there is little difference because it is called life. Do what you need to do now in the moment. We opine here about collapse and prepping for it. If you are a doomer you just don’t decouple from life. A few lucky few can go up to Alaska and disappear into the bush but the majority are here in BAU. Your ideas of skipping college are great. I am myself considering telling my boys to go into a trade. One of my boys I would like to have farm with me. They are both 7 so who knows. The one is a little comedian and likes drama and fantasy so I doubt there will be any farm interest. My daughter is already raised and on her own. You can call me a hypocrite and I may be to an extent that BAU and doom are at odds with each other. I don’t feel neurotic. Don’t know what to tell you Steve. I appreciate your concern and I hope we can work through these issues because we are both dooomers.
Northwest Resident on Tue, 2nd Dec 2014 2:21 pm
Like some CEO said who knows collapse is coming but has to play the daily game anyway: “While the music is playing, you have to dance.”
I don’t see any disconnect between being a parent being very proud of his/her child’s performance in school and other aspects of BAU life, while at the same knowing of and preparing for ultimate economic collapse.
None of us know when that economic meltdown will occur. At times like these, with dramatically falling oil prices, shale revolution exposed as a near-total Ponzi scheme, trillions in debt and growing daily, etc…, we get a strong intuitive feeling that the economic collapse we’ve all been speculating about is on our doorstep. But the Masters Of BAU have pulled a hundred rabbits out of their collective hats since 2008. Who can say what other tricks they might have up their sleeves to drag BAU out for another year, or two, or more. Like Davy says, not many of us are in a position to disconnect from BAU and retreat to our hidden doomer bunkers.
Until economic collapse actually happens, everybody has to just keep playing the game. That is true of regular folks, politicians, oil industry execs, financial analysts/traders — everybody.
Davy on Tue, 2nd Dec 2014 2:34 pm
Gav, I think all sides are going to get a real wakeup call soon on just how interconnected our world is. We are going to see all that counterparty risk pop up in a nice widespread contagion. Russia is taking a big gamble and facing significant damage with her actions but so is the west. The payoff could be large for Russia for example if the system implodes and Russia has change its focus to an Asian centric one that is more beneficial. Yet, would an Asian centric focus be better? It is a big if because what will be left of China when her economy can’t export and food imports dry up. China needs a huge global market to satisfy here industry and the needs of her people. Russia could never supplement the rest of the global system for China.
I don’t think any of these leaders realize the consequences and unintended consequences of a fracturing of our global system. It is uncharted waters for a complex global world to fracture to something less interconnected. I don’t see how it can be done without a disruption that will bring BAU down. These countries can’t have it both ways. You can’t expect their new arrangements to function alongside of BAU or without BAU. When BAU is gone do they really think the pieces can be picked up and constructed into a BAU lite? This is the craziness of what is being talked about by propaganda on both sides.
Who knows these folks have the best intelligence there is so maybe they know what they are doing. Sometimes I wonder if the best intelligence is the right intelligence when you are facing a paradigm change when right is wrong and wrong is right and paradoxes rule.
ghung on Tue, 2nd Dec 2014 3:20 pm
steve: “….what is it collapse or BAU….you can’t have both…”
I hate to break it to you steve, but that’s exactly what we have. Once I figured out (@1974) that the two aren’t mutually exclusive, that BAU is the process of collapse, my goals in life changed entirely, much to the chagrin of those around me who had such high hopes; for me and the future.
This article is from folks who want to sell me a can of chicken (fully cooked!) for $12.99. I’ve been canning meat since I was six years old (helping anyway) and am writing this as 8 quarts of venison undergoes its 80 minutes at 15 PSI (apologies to those litre/bar folks). Sausage is next.
My point is that this is BAU at my home, today, and though I wasn’t aware that civilizational BAU is the other side of the collapse coin until I was in my mid teens, I was living it in some ways. I wouldn’t be doing this if my own parents hadn’t had a strong sense of history and our civilization’s current path through it. It’s possible to raise kids who are much better prepared for whatever they’ll face without making them scared shitless of the future. At least don’t raise them to be droids in denial who believe what they’re told because it’s more comforting,, or loose all sense of reason when it turns out to not be true.
While much of the rest of my society focuses on growth, I focus on avoiding as many of the growth traps as I can. Meanwhile, I’ve participated in BAU pretty successfully when it served my goals. It all comes down to expectations. Believing in the false BAU growth-fraud that is the myth of our times begets equally unrealistic expectations.
Get good at one simple, useful thing, and move on – or get really good at one of the few things that people can’t do without under most any circumstances. Either way, incorporate those things into a lifestyle that isn’t utterly reliant upon what those ‘other folks’ are doing. Keep it simple.
bobinget on Tue, 2nd Dec 2014 3:35 pm
The ‘New’ OPEC
Co-authored by William Witenberg a contemporary artist focused on abstract painting
There is no question that sanctions and the decline in oil is hurting the Russian economy. Oil and gas account for 70% of Russia’s economy. The ruble’s decline has cushioned the effect of the decline in the oil price but Russia is vulnerable to western sanctions and its exposure to the dollar is something Putin is aggressively seeking to diminish.
Interestingly, in three ways the Russian government is trying to delink the ruble and the dollar.
Russia’s projected growth of the economy in 2015 will not surpass 1% by even the most optimistic projections. What does Russian leadership do to mend this sinking boat?
Russia’s Finance Ministry has approved the proposal to increase the volume of ruble settlements on export contracts. In practice, this will mean that all new export, and possibly some revised current, contracts will be concluded with the calculations in rubles. Now settlement mechanism between the EU and Russia is as follows: buyer pays the purchase in euros, bank will convert euros into US dollars, transferred to the account of the exporter, only then local bank will convert dollars into rubles. Soon it will be different: buyer pays in euros, bank converts directly into rubles, bypassing dollar and transfers the amount to the account of the exporter. This new pattern should appeal to many foreign partners in Russia, especially in the EU. There is no need to buy huge amounts of dollars to pay Russia for gas, oil, metals and other commodities. The dollar link is removed.
Russia’s joint plans with China, are even bigger. According to Putin, now the annual Russian-Chinese trade turnover is about $ 90 billion. But by 2020 it is planned to increase to $ 200 billion; but without most the transactions having the dollar as a unit of account. The two countries will buy from each other in rubles and yuan. Or – there are plans – to introduce a new international currency. After extensive talks between the governments of China and Russia Deputy Chairman of the Central Bank of Russia Mikhail Sukhov and Assistant to the Chairman of the People’s Bank of China Jin Qi signed an agreement on currency swaps for settlement in national currencies. Russian and Chinese banks must use the ruble and yuan in mutual settlements to eliminate the monopoly of the dollar. To date, the Bank of China is the fifth largest state-owned banks in China and is the first Chinese commercial bank, which opened an office in Russia. The use of the ruble and yuan in the calculations will not only reduce Russia’s dependence on the fluctuations of the dollar, but will increase the efficiency of conversion operations. In turn, over the past few years, China has done a lot to make yuan global reserve currency. Or at least, to make sure that dollar ceases to being the sole one. Beijing has already managed to create dollar-less currency exchanges with several countries. The list includes Malaysia, Japan, Australia, New Zealand, the United Kingdom, the European Union and now Russia.
This linking of the ruble with other currencies can be seen in with transactions between Iran and Russia. The two countries are moving closer to signing a $ 20 billon commodity deal that will help both countries economies to be independent of the Western countries and recent sanctions. According to this five-year memorandum; Russian equipment, machinery and consumer goods are to be supplied to Iran that is currently deprived of any such goods because of the US sanctions. In response, Russia will be transferred Iranian oil, that is now the focus of a western trade embargo. Russian companies will also gain access to participation in projects for the construction and reconstruction of power generation and networks in Iran.
Such an agreement would mean that the entire Iranian oil (except for Iran’s “share” and China’s share) for the term of the contract will go through Russia. Russia will simply buy all wholesale volumes (in the framework of the agreement on the exchange of technological products or other products covered by US sanctions) and then can sell it to anyone it wants. In huge volumes and at convenient Russia prices. This oil without leaving oil terminals of Iranian port will be shipped directly from there to the traditional customers – but as property held by the contract by Russian Federation.
Davy on Tue, 2nd Dec 2014 6:05 pm
Bob, with or without the dollar the ruble is still down. Eliminating the dollar is not going do magic. Russian trading partners still have the issue of exchange rate risk. China is not going to give Russia a special break on its currency just as it is not going to pay a higher price for oil and gas. Business is business even at the level of nations.
Makati1 on Tue, 2nd Dec 2014 7:03 pm
Davy, if Russia has grain and China needs it, the tree will bend. They may just end up bartering for necessities. Russia has them. China needs them.
You like to count out the East for some reason, but the US is in far deeper shit than any Asian country, barring Japan. If for no other reason that the indoctrination of “exceptionalism” in Americans, who expect more and are getting shafted by their own people.
I think you hope China, Russia and the East will crash first so you can say “I told you so.” At this point, I think the East is way ahead of the West in most things that count. The West is far ahead in the collapse scenario.
Davy on Tue, 2nd Dec 2014 7:13 pm
I just like pissing you off Mak. That all.
TemplarMyst on Tue, 2nd Dec 2014 7:25 pm
Makati,
Not sure the East is really any better off than the West. Sure, we in the West have lots of issues. Lots and lots. The East just has different ones, but they have lots and lots too.
It’s an interconnected world, at least at this point. Someone in Washington sneezes and some poor bloke in Moscow catches a nasty cold. Then the gal in Beijing wonders why her trading partner called in sick.
Makati1 on Tue, 2nd Dec 2014 10:15 pm
Really Templar? I see China sitting on a surplus of $4,000,000,000,000.00. I see the US sitting on a debt of $18,000,000,000,000.00.
I see China with few social promises to their 1.4B citizens that they are indebted for.
I see the US with somewhere over $1,000,000,000,000,000.00 in promises it will not be able to make good to it’s 315 million citizens.
I see a China with north of 12,000 Tons of gold. The US cannot even prove it has any, and likely doesn’t, except MAYBE foreign gold it is holding in ‘safekeeping’ for Europe. MAYBE.
I see an Eastern military that can kick the Empire’s butt, and the Empire knows it. After all, the Empire has not won one since WW2 and would have lost that one if the Russians hadn’t taken over the fight.
But, that is my opinion. You are welcome to yours. We shall see who is correct soon.
Apneaman on Tue, 2nd Dec 2014 10:25 pm
Is Russia an obese, zero moral, corrupt welfare state with a population of greedy individuals who will fucking stampede each other to save $10 on a third flat screen? Does a third of their population need anti depressants/anxiety or Adderall just to make it through the day? Does another third need some combination of alcohol and street drugs, junk food, sports or any other of the never ending distractions from the reality? Does the government exists solely to enrich themselves and their 1% masters at the expense of the citizens? I ask because I have never been to Russia nor do I speak Russian. Somehow I don’t imagine they are the all evil bad guys TPTB are trying to portray them as. It sounds just like what noob thinks about every American who ever lived. A fucking cartoon. Nor do I think they are a bunch of weakling pushovers. Hell they survived communism and collapse. They are not the soft ones. I have lived in North America my whole life including 7 adult years in the U.S. so I know pure bullshit when I hear it. Fuck, Daniel Yergin,Fuck Bloomberg, Fuck all them war mongering think tanks and most importantly Fuck the banks. When all else fails-they take you to war. They are in all the way. You can’t undo a ponzi scheme. If the sheep realized what they have done to all those pension funds they would have already strung them up, or tried. Before that happens they will do anything to deflect blame before it all comes crashing down. I have to admit, I’m surprised they have been able to kick the can this long.
TemplarMyst on Tue, 2nd Dec 2014 11:21 pm
Makati,
I’m trying to point out both points on the compass have issues.
The $4 Trillion China has would be worth how much if they attempted to dump it? Where did they accumulate it from? By selling their wares to the Vietnamese? Where did they get the technology that runs their industrial base? From Brazil?
When they perceived the issues affecting the world in 2008, did they conceive of a uniquely Eastern solution to the problem? Or did they not initiate a stimulus plan, not unlike the West? Did their central bank not also just extend it’s balance sheet, creating yuan out of thin air like we did here in the West?
And with their stimulus, did they not build ghost cities which the labor force could not afford and which stand empty to this day? Not unlike the housing bubble we created and inflated?
And is their military going to launch a Japanese style invasion on Pearl Harbor? With a single, used, Ukrainian aircraft carrier?
Where have the unique Eastern solutions appeared? They’ve run a Mercantilist economy. Again, the West did that – starting a couple of centuries ago. It didn’t work out so well for us, and I suspect it won’t work out any better for them.
I’m not seeing anything uniquely Eastern in any of this. And I’m not trying to be antagonistic. I’m trying to point out we have similar problems and we’ll only get into worse straights if we insist on attacking each other.
Europe was master of the planet. Until WWI. That went so well for them they figured they’d give it another try. That too didn’t work out so well, as I recall.
We’d both be better off trying to figure out how to straighten out the mess rather than both of us just making it worse.
Jimmy on Tue, 2nd Dec 2014 11:33 pm
Personally I think the average Russian is tougher and more tolerant to adversity then the average Yank. Yanks are mostly fat lazy wankers. Russians are hard. Yanks will freeze, starve and fall apart long before a Russian would. Russians are hard as nails. Yanks are soft.
Northwest Resident on Wed, 3rd Dec 2014 1:21 am
Jimmy, I lived in Russia off and on for a total of over one year in St. Petersburg and Moscow, living in my own rented apartment, hanging with Russians, speaking reading and writing Russian, living basically as Russians in those cities live. All my friends were Russian, and I got to know them very well.
There are indeed some very tough Russians and lots of them. But we have a lot of tough guys in America too.
We do have far more significantly overweight individuals in America.
But your average Russian guy is a hardcore vodka drinker. Lots and lots of drunks and alcoholics. There are many pathetic looking individuals walking the streets in Russia. I know two Russian women, both with sons who died from heroin overdose. The folks not living in the big cities and out in the countryside tend to be peasant stock, tough enough, but no match for your toughest top 20% of American.
I think your critique of “Yanks” when compared to Russians is B.S., derived not from fact but from some kind of misplaced animosity toward Yanks, for whatever reason.
Don’t worry, we have enough tough Yanks to stand our ground. And a lot of those fat guys and gals in America will slim down fast enough when the time comes.
theedrich on Wed, 3rd Dec 2014 5:03 am
A primary reason for Germany’s fatal attack on Russia before complete victory in the west was to get at the Soviet oilfields in the Caucasus. While most Americans think the only reason for WW II was Adolf’s desire to kill Jews, the facts are that Germany had been nearly strangled by the utterly unjust Versaille Treaty of WW I and wanted its lands back, along with the oil to supply its economy. (It is usually ignored, by the way, that a then important rabbi or two had declared war on Germany in the name of all Jews — not a particularly wise move in those times.) Thus, besides Lebensraum, oil was a major objective for energy-poor Germany.
Instead of solely obsessing about individuals like error-prone Adolf, it is more instructive to consider geopolitical necessities and imperatives in the history of nations. If Russia is pushed to the wall by economic depression, and it thinks it was all caused by the U.S., the lights really could go out.
bobinget on Wed, 3rd Dec 2014 6:20 am
Ukraine had a nuclear plant accident, prime minister says
CC by: Ralf1969
CC by: Ralf1969
On Wednesday, Ukrainian Prime Minister Arseny Yatseniuk reported an accident at the Zaporizhye nuclear power plant, in southern Ukraine roughly 50 miles north of the Crimean peninsula. Yatseniuk didn’t appear to have much more information, calling on the energy minister to hold his own news conference with an assessment of the situation, and at this point Ukraine seems to be treating the accident as an electricity problem rather than a nuclear fallout crisis. The accident was reportedly in the third of six 1,000 megawatt reactors, and Reuters notes that Ukraine is already suffering through a power shortage. Zaporizhye is the largest nuclear power plant in Europe and provides about a fifth of Ukraine’s electricity. – – Peter Weber
bobinget on Wed, 3rd Dec 2014 6:24 am
This ‘accident’ reminds one of Chernobyl.
We are seeing the same sort of cover-up at the outset.
Makati1 on Wed, 3rd Dec 2014 6:34 am
theedrich. you are correct. So little true history education in the West leads to repeating the same mistakes over and over again. Those who fought in WW2 are mostly gone. Easy to rewrite history when there is no one to contest the lies.
Makati1 on Wed, 3rd Dec 2014 6:38 am
Templar, there is no possibility of straightening out anything at this point. We are on the road to a nuclear war and there is no turning back. The US has already used nukes and probably some nuclear munitions in Iraq. They will not hesitate to use the big ones when the SHTF. Russia may just push the button first if they are forced into a corner where they have nothing to lose. We shall see.
bobinget on Wed, 3rd Dec 2014 6:56 am
New Russian joke:
Oil, Ruble, Putin headed to $67.
(are already there)
There are several factors at work here. One: oil trading today is ruled by computer programs making more trades in one second then the entire NYSE conducted in one entire day in 1980.
IOW’s we are already in the ‘hands’ of AI (artificial
intelligence) for the profit of a few, endangering the entire superstructure.
Keep in mind this entire brew ha ha (oil’s 40% drop
is all over an ‘extra’ 50 minutes of supply for the US
alone, 700,000 Bpd.
traders know for instance; That EIA report is delayed till Thursday due to Black Friday Shopping Holiday.
However, API, Platt’s, report up to a six million barrel deficit for last week.. Meaning.. lots of gasoline got moved to vehicles where it was burned getting to Wal-Mart and Target for new 48″ TVs.
It also nearly wipes out the so called ‘glut’.
Headlines simply report the reverse, that there is another ‘surplus’ of 6 million barrels.
I’m guessing we topped 20 million barrels per day
consumption. If so, this will be the highest number
for the year. I say that because 92% of US refineries
are working full tilt.
The official numbers are out 11:00 EDT at
http://www.eia.gov/petroleum/supply/weekly/
read that final paragraph carefully. It’s most important.
There are at the very least two possibly four governments that will fall if oil stays below $80.
Stay tuned.
bobinget on Wed, 3rd Dec 2014 7:01 am
MARKETS More: Oil Nigeria
Oil Has Been The ‘Glue’ That Has Held Nigeria Together, And Now It’s Failing
SHANE FERRO
DEC. 2, 2014, 11:19 AM 1,550
red oil barrels
flickr/ezioman
When OPEC decided not to cut production last week, the move was widely seen as Saudi Arabia declaring war on American shale producers.
But there’s likely to be a lot of collateral damage. Venezuela is going to get slammed by dropping prices. Libya was getting killed even when prices were over $100 a barrel.
Now, RBC Capital Markets’s Helima Croft is warning that Nigeria might actually be the country most at risk for civil unrest related to oil price declines.
“In a country plagued by deep regional and religious divisions, oil revenue is literally the glue that binds the fractious elites together,” Croft writes.
There are two major sources of violence in Nigeria: In the north, Boko Haram and Ansaru (influenced by ISIS of late). In the south, there are the Christian militias, which reached a tentative peace agreement with the government a few years ago. That agreement expires next year.
Nigerial Oil
Emad Mostaque
Further, writes strategist Emad Mostaque in a note, “Nigeria has been meaningfully below its faceplate production capacity for a number of years. The primary reasons for this are local instability (particularly in 2008 with MEND), decaying infrastructure and graft.”
In a separate email to Business Insider, Mostaque noted that “Nigeria is a… porous country with billions going missing each month between NNPC [Nigerian National Petroleum Corporation] invoices and receipts alone…”
The country’s budget is based on an oil price of $77 per barrel. Any revenue above that goes into the excess crude account (ECA). The money in that account is depleting rapidly: an allAfrica post from earlier this year said there was $2.1 billion in it in February, down from $11 billion in December 2012. Oil has been far above $77 a barrel during that period. A more recent post from this month puts the total in the coffer at $4.1 billion.
Public violence Nigeria
RBC Capital Markets
Public violence has been increasing in the last year in the country, and the threat for more civil unrest as the February 2015 national elections approach is high. Sectarian tensions between Christians and Muslims are running high.
Low oil prices will only make the situation worse. According to RBC’s Croft, “elites have also turned to crude theft as a way to help finance elections … with less oil money around to grease the election machinery, crude theft and production outages could easily exceed levels seen in prior polls.”
Makati1 on Wed, 3rd Dec 2014 7:01 am
NWR, the US military is not going to win anything. They could not beat a bunch of 3rd worlders, with no real military, in 13 years and a few trillion dollars wasted. Russia/China would kick their fat butts in a heartbeat and the Pentagon knows it.
Why do you think drones are being pushed instead of living pilots in jets? And missiles instead of boots on the ground? Because America cannot field a real military now and never will again. Lots of expensive toys, but neither the manpower nor the mental ability is available.
No, those fat butts will NOT get fit in an instant. The war would be over before they could shape up. Many would die from heart attacks in basic training. Many others would never meet the physical requirements to even get a chance at basic. Been there, done that. I know from experience. Wars are not won by obese men, anywhere.
Men 15-24 = 12.7% obese
Men 25-34 = 22.2% obese
Men 35-44 = 29.9% obese
Those are 2007 US stats so today they are even higher.
America is a has-been that still thinks it has the mojo…lol. I guess we may get a chance to find out. But, I hope not for my grand kids sake.
bobinget on Wed, 3rd Dec 2014 7:05 am
Lets look at Chinese oil imports: (October)
BEIJING, Nov. 10 (UPI) — Chinese government data show crude oil imports were up 18 percent in October year-on-year, though down from the month prior by more than 10 percent.
Chinese average imports for October were 5.7 million barrels per day, up from the average 4.8 million bpd reported in October 2013. Levels last year represented a 14-month low, analysis from the Platts energy service found.
Though treading water, analysis from Platts last month found Chinese apparent oil demand, a reflection of how much oil goes into domestic refineries combined with net oil product imports, averaged 10.35 barrels per day in September, up 7.4 percent year-on-year.
The Organization of Petroleum Exporting Countries said in its October report the global economy should grow by 0.6 percent next year to 3.6 percent. The Chinese and Indian economies should remain flat, while Europe continues to falter.
Read more: http://www.upi.com/Business_News/Energy-Resources/2014/11/10/Chinese-oil-imports-up-18-percent/9101415626495/#ixzz3Kq7L70l9
Davy on Wed, 3rd Dec 2014 7:12 am
Appnea, Russia has its own set of problems. It is a mafia state in social decline from alcohol, drugs, and a multitude of other typical industrial man ills. The oligarchs sport around Moscow and St Petersburg like anywhere else rich with decadence and wastefulness. Moscow has one of the highest cost of living globally. That should tell you Russia has social ills right there. I challenge you to come up with any major state that is not suffering the effects of the entropic decay of being a modern human top to bottom.
Your description of North America fits part of the crowd but it does not fit my neighbors who are farmers and live simple lives. Are you telling me Appnea they don’t matter? I am with you on the criticism of 1%ers in the US. They are the most visible because of the wealth and power but by no means exclusive. That is for sure but don’t forget big money knows no borders. We are talking global flows of capital that matter now. These folks are invested globally. That is what you call hedging and diversified portfolios. We are talking more than investments we are talking a global lifestyle of the Plutocrats. So Appnea having prejudices is fine but be fair and acknowledge the problem is global.
bobinget on Wed, 3rd Dec 2014 7:14 am
Makati,
If truck and cab drivers soon become redundant,
why not nuclear weapons, aircraft carriers and massive armies?
1940’s Germany could never build an atomic bomb rejecting “Jewish Science”.
Islam, at least radical Islam, rejects gender equality.
It will be years before Radical Islam catches up in robotic warfare.In the mean time ‘we’ can beat the crap out of them for the last of their cheap oil lunch money.
Makati1 on Wed, 3rd Dec 2014 7:20 am
Templar, the Chinese are “dumping” billions of USD every day or don’t you read news outside the MSM Iron Curtain of the USSA? They know they are holding a freighter full of poor quality Charmin called USDs. The value of which could drop to zero any day now. $50B invested here, $100B invested there. It all adds up. Meanwhile they are getting resources and trading ties all over the world. I would not call the Chinese stupid, and until time proves them wrong or right, all we can do is wait and see.
Those empty cities may one day hold overflow from Japan, if Fukushima keeps spreading, or maybe they will just sit there and fade away. Isn’t that better then building military systems to kill 3rd world women and children? That’s how America wastes their resources. War. I’ll take empty cities any day.
Davy on Wed, 3rd Dec 2014 7:31 am
Temp, Mak is lost in his Sci-Fi Asian fantasy. China and Asia by extension is a dead man walking. Over consumption combined with over population sitting on carrying capacity overshoot at least 4 times is a death march. Ask Mak the 25 Trillion question he can never seem to acknowledge. China has debt, industry overcapacity, and a ghost infrastructure that will never bring a return. It is in effect the greatest entropic waste in human history. Google China’s cement consumption in the last 10 years to get a clue. That title used to go to the US suburban build out but now it is China’s honor.
What about China’s foreign reserves. Who cares about paper wealth? What good is paper of any kind when the global system imploded? What counts is carrying capacity. Gold will be of no use if you can’t feed you people at the magnitude of China’s overshoot. You can’t eat gold when there is little food around. China is an export driven economy in overshoot. Its growth rate will bitch slap it with issues when this growth goes completely negative.
China and India have the highest mega population centers that will have little hope of support. The soil, water, and air have been destroyed by years of overdevelopment. That is going to make a wonderful back to the land movement. How about those red rivers and cancer towns. Yea, China actually has towns that are labeled cancer towns. We surely know all the US ills but at least we have a smaller population with a breadbasket and plenty of water. These things will matter not the amount of gold or paper wealth that Mak loves to boast about.
bobinget on Wed, 3rd Dec 2014 7:39 am
It’s being reported IRAN has joined six other nations
bombing IS positions in Syria and Iraq;
http://www.telegraph.co.uk/news/worldnews/islamic-state/11269353/Iranian-jets-join-allies-in-the-fight-against-Islamic-State-in-Iraq.html
ISIL positions itself in Libya opening up yet another
front in oil wars.
http://english.alarabiya.net/en/News/africa/2014/10/06/Video-Libya-s-Islamist-militants-parade-with-ISIS-flags.html
http://www.reddit.com/r/worldnews/comments/2mvsb8/isis_now_controls_territory_in_libya/
Nigeria: President tells men in NE to take up arms against Boko Haram. Army useful for intimidating unarmed civilians and collecting ‘taxes’.
IOW’s Boko Haram has succeeded in undermining
government.
http://www.bbc.com/news/world-africa-30291040
bobinget on Wed, 3rd Dec 2014 7:44 am
According to the UN Libya is now a failed state.
Libya has moved from a dictatorship to a non-state, U.N. special envoy to Libya Bernardino Leon told the European Parliament’s foreign committee on Tuesday, Al Arabiya News Channel reported.
Leon, who is leading reconciliation efforts between the country’s rivals, noted the danger posed by extremists who are training in Libya to the country’s neighbors and to the EU.
He said terror groups are receiving training in Derna, Benghazi, Sabratha and the south of the country.
He criticized a military campaign led by renegade General Khalifa Haftar against the Tripoli-based Islamist authorities, saying terrorism must be fought with democratic measures.
He further noted that neither Tobruk-based authorities, which are backed by Haftar, nor the Tripoli-based Islamist authorities can claim legitimacy.
Meanwhile, Omar al-Hassi, head of the Tripoli-based government has resigned on Tuesday, Al Arabiya reported, citing sources.
Al Arabiya correspondent in Brussels said an international meeting on Libya will be held at the NATO headquarters on Wednesday.
Davy on Wed, 3rd Dec 2014 7:53 am
Like them or not the US military is the only proven military on earth with actual war fighting experience and effectiveness. Experience of your fighting machine is paramount. You can say what you like about Iraq and Afghanistan but it was a place to test men, equipment, and strategies.
China and Russia have little to brag about and much smaller forces in relation. There is no time for them to build out world class militaries. If Russia was such a great force why are they acting so scared about this Ukrainian conflict? Why is Russia doing routine military probes of the western forces? It is because they are a scared dog that feels backed into the corner. IMA the worst kind of beast. Russia is the type of country that could easily start WWIII by a mistake or desperation.
China will never have the time to develop into a world class military because the resources and time needed are just not there. The US military will soon be in decline and withdrawing from the world stage. So don’t think I am being an ideologue not mentioning what awaiting the US military. What you have is what you will work with at this point. Growth is over for all countries. We know Russia will have a hard time justifying an enlarged military with its economy in recession. China’s growth is faltering and will be close behind.
bobinget on Wed, 3rd Dec 2014 8:14 am
Saved worst news for last;
http://www.huffingtonpost.com/2014/12/03/israel-early-election-date_n_6260588.html
Bibi prepares for war. Sheds last of ‘moderates’
from cabinet.. No more Mr Nice Guy. It’s all or nothing, from here on out.
Iran must now decide. Wait to be attacked or take ‘preemptive’ action. Iran is between Iraq and a hard place.
My guess, Iran, along with Russia and Iraq and Venezuela and Syria and Algeria and Ecuador
will form a union. Russia will offer a ‘nuclear umbrella’, what ever that indicates.
Davy on Wed, 3rd Dec 2014 8:32 am
Bob, you are making fun right? Sounds like the blind leading the blind.
“My guess, Iran, along with Russia and Iraq and Venezuela and Syria and Algeria and Ecuador
will form a union. Russia will offer a ‘nuclear umbrella’, what ever that indicates.”
Northwest Resident on Wed, 3rd Dec 2014 11:04 am
Makati1 — Your confident predictions about America getting their fat butts kicked “in a heartbeat” in a war with Russia/China is laughable.
Why do I think drones are being pushed instead of living pilots in jets?
Much less expensive to operate? No chance of loss of (American) life? Millions of dollars not wasted on pilot training? Overall, much more efficient for certain types of missions? What do you think?
“America cannot field a real military now and never will again.”
That statement is false and demonstrates just how warped your perceptions are. Sorry, but it’s true.
Your phrase “nor the mental ability is available” would more aptly apply to you, Mak.
I’m sorry Mak, but I find your analysis pathetic beyond description.
“Roughly 500,000 Russians die annually from alcoholic-related accidents, crimes, and illnesses. – Alcohol poisoning kills more than 23,000 Russians each year. According to Weitz, 20 percent of Russian male deaths are attributed to alcoholism.”
Russian men who down large amounts of vodka have an “extraordinarily” high risk of an early death, a new study says.
Researchers tracked about 151,000 adult men in the Russian cities of Barnaul, Byisk and Tomsk from 1999 to 2010. They interviewed them about their drinking habits and, when about 8,000 later died, followed up to monitor their causes of death.
The risk of dying before age 55 for those who said they drank three or more half-litre bottles of vodka a week was a shocking 35%.
Overall, a quarter of Russian men die before reaching 55, compared with 7% of men in the UK and about 10% in the United States. The life expectancy for men in Russia is 64 years, placing it among the lowest 50 countries in the world in that category.
Your loathing of America warps your perceptions, Makati1. That is a fact.
andya on Wed, 3rd Dec 2014 1:18 pm
“Russia, the world’s largest producer,”
WTF? I thought the US was the worlds largest producer? Funny article.
Feemer on Wed, 3rd Dec 2014 1:42 pm
Russia is an oligarchy for sure, but the US is a de facto oligarchy that is incredibly slow and inefficient. Putin has autocratic control and can better react and institute policies that have to happen, whereas in the US politicians don’t do shit, and shut down the government. The US would find it hard to fight a global powers war when we still import so much oil. In a real war, Russia and Iran would block off the persian gulf and royally fuck the West. Russia and BRICS all have lots of resources, the west has few. All of our (fake) money means nothing. Id take natural resource reserves over paper money any day. The west needs more renewable energy, that’s the only real resource we have left.
Feemer on Wed, 3rd Dec 2014 1:45 pm
Water is also an undervalued resource that no one has mentioned. You need it for industry, energy production, farming, etc. Water will be used as a weapon in the future, not just oil and gas.
Speculawyer on Wed, 3rd Dec 2014 1:56 pm
WW III because of low oil prices? Who thinks up this garbage?
Davy on Wed, 3rd Dec 2014 2:03 pm
Feemer the Brics are a hodge podge of broken countries with no hope of being any kind of force to vanquish the west. You are very wrong about resource distribution. China and India are dead men walking facing dangerous overshoot. The only bright star on your Bric list is Brazil and they are in a world of hurt with commodities tanking.
The west is a mess but don’t blow smoke up my ass about how great the brick little giants will be. They have demonstrated nothing to indicate they have a future. More likely we will all sink together. That is realism my friend.
turningpoint on Wed, 3rd Dec 2014 2:20 pm
I can’t believe there are people on this thread who think one side or the other can win a hypothetical WWIII. I assumed everyone on this thread was educated. They don’t call it Mutual Assured Destruction for nothing.
Despite there being 1/4 as many ICBMs as there were during the height of the Cold War, there are still more than enough to get the job done.
I’m sure I don’t have to go in to detail, the difference between an atomic and a thermonuclear device is, or the differences in yield. I assume I don’t have to go into MIRVs or decoys or why ABM systems will not work against, at least, 1600 incoming missiles.
I don’t care who you are or what kind of degree you have, if you think a war with Russia is winnable, then you must not be quite as smart as you think you are.
FYI, I’m an American and I consider it the height of stupidity to play economic war with Russia and try to back them in a corner. A dangerous cornered animal sometimes attacks.
ghung on Wed, 3rd Dec 2014 2:43 pm
turningpoint – I don’t participate in these discussions much any more; day after day of shit-slinging between the same few people accomplishing nothing but to make the signal-to-noise ratio intolerable. This level of discussion seems epidemic everywhere online these days. Maybe it’ll take a few nukes to straighten that out, eh?
Was it Leanan, over at TOD, that insisted that we had passed peak-internet-discussion-usefulness some time back? BTW: I got an email from OFM yesterday. Seems he’s still kickin’. Emailing him back if anyone wants to say hi.
Northwest Resident on Wed, 3rd Dec 2014 3:13 pm
ghung — May I ask your advice.
Like you, I dislike the “shit-slinging” between the same few people on this forum.
But, fact is, this is an un-moderated forum where the worst of trolls are welcome to post their name-calling, their false accusations, basically whatever rude and inappropriate crap they want to post. And they do. This site, because it is an un-moderated forum, actually attracts those trolls because they know that they can post whatever they want on this forum without getting banned. My guess is that an international terrorist could come to this forum and post detailed specifications on how to make IEDs, how to build a small nuke, how to infiltrate secure institutions — anything goes on this forum. No behavior is worthy of getting banned.
On a regular basis, I enjoy reading the articles that get posted here, and I enjoy reading (most) comments, and I enjoy the discussion of topics presented on this forum.
Then enter the trolls with the name calling, the accusations, the insults and the hate and anger filled rants.
So, what should be the response? Ignore them? Let them say whatever they want, unchallenged? Let some of them post false and ignorant “information” disguised as truth without challenging that false information? In other words, because it might lead to unpleasant exchanges, the best response to the list of trolls who frequent this site is to just ignore them? Is that your advice?
Does anybody else care to comment?
Davy on Wed, 3rd Dec 2014 3:47 pm
NR, possible there could be a box to check for inappropriate material, exchanges, and vulgarity. If enough people check the box the dude is shit canned. We would need a code of conduct. Maybe even limit post, coming from a high volume poster, myself as an example. Is shit exceptable or should I say poop? Anyway I am open to moderation for sure. I am also open to a code of conduct that may change my comments. Sounds like a worthy idea. I have no idea who is I charge of this site. How do you even get in touch with the site God? I tried to become a member but that didn’t work so I am at a loss on who to correspond with.