Saudi Arabia’s Oil Strategy Is About More Than Destroying The US Shale Business

44 Comments on "Saudi Arabia’s Oil Strategy Is About More Than Destroying The US Shale Business"

Makati1 on Wed, 17th Dec 2014 7:06 pm 



BI should be titled BS!

The Saudis may just be trying to eliminate their competition, but they are also trying to keep their heads, literally. All this Russia bashing is getting boring. Russia was not in the spotlight until they stopped the empire from another war in Syria and then accepted the Crimea when they decided to leave the US sponsored Nazi coup of the Ukraine.

I read a lot about Russia that does NOT originate behind the MSM Iron Curtain. The Russian economy is hurting, but nothing fatal. They have China to back them financially if necessary. Like in every other attempt the empire has made to gain more power and resources, this one will fail and boomerang on the US. Wait and see.

Davy on Wed, 17th Dec 2014 7:12 pm 



Oh, Mak, what a change in your tone these last weeks. It is amazing what reality does to you.

Makati1 on Wed, 17th Dec 2014 7:12 pm 



Davy, “DUCK and COVER!” LMAO

paulo1 on Wed, 17th Dec 2014 7:43 pm 



Russia being in bed with the Chinese reminds me of a few blind dates in my past. As long as you don’t wake up married to them, you’re still okay.

All I’m saying is not too many years ago these guys were fighting on their borders. Now, they are mutual saviors. When it’s all said and done the Chinese will own Russia and then Russia will destroy them just like they destroyed the WW2 Germans. If they think this new alliance is a solution, well, good luck.

Tom on Wed, 17th Dec 2014 8:02 pm 



Is it possible that the Saudis won’t cut production because (1) they will have to work over too many wells after their having been shut in, that this will slow these wells return to full production and thus reveal a near-peak-production condition for their oil fields, and (2) maybe they need all the revenues they can get under this low oil price condition to keep their people mollified? Feedback?

Davy on Wed, 17th Dec 2014 8:10 pm 



Paulo, simple minds on this board think it is a match made in heaven. The truth within history has a way of alluding the simple, naïve, and fiction lovers.

GregT on Wed, 17th Dec 2014 8:51 pm 



“All this Russia bashing is getting boring. Russia was not in the spotlight until they stopped the empire from another war in Syria and then accepted the Crimea when they decided to leave the US sponsored Nazi coup of the Ukraine.”

Absolutely correct.

As Canadians, we have seen our dollar be pulled back ~15% in comparison with the USD in the last year. This means absolutely zip to the average Canadian, unless they travel and/ or shop stateside. If anything it has strengthened our export markets.

The MSM is spewing propaganda to keep the illusion of a strong economy alive, and to maintain confidence in a currency that is already living on borrowed time / mountains of debt.

The Russians are looking inwards, and to their neighbours to the East. Globalization is hanging from a thread. The US would be better served doing the same, instead of waging more warfare in far away places that she can no longer afford.

The time to make preparations at home is now, at all levels.

Northwest Resident on Wed, 17th Dec 2014 9:27 pm 



With the developing situation in Russia, importing food from European and other countries is going to be a LOT more expensive. I don’t know how much it has changed since the 15 years or so ago when I was last in Russia for an extended time, but the food shops and kiosks there were packed with foreign food goods. Out on the street, I imagine the potatoes and vegetables were home grown, but in the Russian crowds I hung out with, foreign made food and liquors were all they wanted. Against all odds and conventional wisdom, and despite numerous memes that argue otherwise, I continue to believe that the entire Russian/American/European conflict is a staged event meant to FORCE Russia and Europe and China along with them to more intensely focus on developing their own damned food production, their own security and trade arrangements, their own regional economy to a much higher degree. Creating a situation that forces Russia to concentrate on producing much more of their own food is a GOOD thing, but it is painful because so many Russian businesses including ones that I used to know are based on — you got it, food import. Those guys would be hating Putin if Putin were to announce “no more food imports” — they go straight out of business. Lots and lots of local mafias lose their revenue stream. It really shakes things up. But with Russian under fire from America with sanctions and possibility of armed conflict, the patriotic swell in Russia is great cover for Putin to get things done that need to be done. Forcing these changes on Russia and Europe was never going to be easy. My guess is that this staged conflict over Crimea and Ukraine is the cover Vlad The Impaler (yuk, yuk) needs to do what needs to be done. We all know collapse is headed our way. They really need to get things sorted out over there in Ukraine, Russia and Europe before collapse really sets in. This “conflict” is providing the needed pressure to get shit done, and THAT is how “they” decided to do it. Who knows? Maybe it was the only way.

Northwest Resident on Wed, 17th Dec 2014 9:34 pm 



Tom — I have read in a number of places, where the source is someone I believe really knows what he is talking about, that we really just don’t know how much oil SA has left. I have often thought along the same lines as you. It could even be that SA is approaching a moment in time where one or more of their fields go into rapid decline — but they don’t want to let anybody know, for obvious reasons. I don’t know what’s going on and I doubt that many other people do either, but it wouldn’t surprise me to learn that SA is on the brink of severe decline. If that were true, engineering a situation where they could cut production without raising any red flags would suit their purpose, and that of TPTB at the same time. Not saying that’s what this rapid oil price decline or related developments are all about — but hey, you guys know me — I think there are concentrated sources of power out there controlling world events to a lesser or greater extent. I don’t think that’s what the price decline is all about, but just saying, it wouldn’t surprise me at all to find out that is the case.

Davy on Thu, 18th Dec 2014 5:50 am 



Greg I have to disagree with you on Russia. She is not turning inward. Putin has embarked on a great Russian renaissance and expansion. He has sought military expansion and adventurism. He has repaired Russia from a nearly failed state into a powerful country. Russia deserves to be a powerful country in every sense of that status.

Putt’s gamble on an Asian pivot is still not assured nor failed but it is a big gamble. Putt’s gamble with decoupling from the Western dominated financial system is not assured nor failed but looks in danger. Russia biggest problem is its soft spot and weakness as a banana style resource driven country. It prevented Russia from diversifying its economy and makes its reliance on the volatile energy market too great. Socially Russia is in a soft decline. Its leadership is a corrupt mafia of Oligarchs with Putin the leader of the cabal.

Russia is and was in an expansionary phase that came mainly from good leadership under Putt and oil dollars. Putt may have reached the peak of this expansion. It is still uncertain whether he can consolidate his gains. Ukraine will be a festering sore. Oil’s economic value depletion may make his golden egg less golden. I doubt Putt is going to have the treasure to pursue all his projects to a Russian dominated sphere of influence. Russia is not big enough economically and socially. Russia’s physical space too large. I imagine a pivot to Asia is dangerous with a China as large as it is and a China in the need of resources and space. Putt’s Russia may get swallowed up by China.

In the short term Putt is still a force to be reckoned with. The west is in descent with incompetent, corrupt, and poor leadership. In this situation Putt’s competition is in the same boat. Putt’s real competition is with the end of BAU itself and how Russia can adjust to that. Russia has many comparative advantages in this respect. I would never write off Russia.

The American bashers here are just as bad as the Russian bashers. It is not about one winning and the other failing. The question is who is going to land and reboot at the better position. Both east and west are free falling. Asia is toast because of carrying capacity breach. Russian and the west have a chance.

westexas on Thu, 18th Dec 2014 6:21 am 



A continuing reminder that Saudi net oil exports have been below their 2005 annual rate of 9.1 mbpd (total petroleum liquids + other liquids, EIA) for eight straight years, through 2013 (a pattern which presumably continued in 2014), even as annual Brent crude oil prices rose from $55 in 2005 to the $110 range for 2011 to 2013 inclusive.

In contrast, Saudi net exports rose from 7.1 mbpd in 2002 to 9.1 mbpd in 2005, as annual Brent crude oil prices rose from $25 in 2002 to $55 in 2005.

However, I assume that Saudi domestic demand is lower during the fourth and first quarters, which would free up more oil for export during the seasonal lows for Saudi domestic demand, and the Saudis can certainly unilaterally cut their asking prices for oil.

rockman on Thu, 18th Dec 2014 6:24 am 



OK let’s follow the “logic” path: the KSA holds their production relatively flat in recent years. The US shale players during that time have increased production from virtually zero to about 5 mmbopd. So logic would seem to lead to a different title for this piece:

The US Shale Strategy Is About More Than Destroying
Saudi Arabia’s Oil Business

That title does seem to fit the facts rather well IMHO.

Rodster on Thu, 18th Dec 2014 7:39 am 



Davy “The American bashers here are just as bad as the Russian bashers. It is not about one winning and the other failing. The question is who is going to land and reboot at the better position. Both east and west are free falling. Asia is toast because of carrying capacity breach. Russian and the west have a chance.”

My take on this is that humanity as a whole is f##ked, plain and simple. The East is no better than the West. We have created a BAU system that depends on “infinite and exponential compounded growth” in a finite world.

If the West were to hand the keys over to the East, they’d do EXACTLY the same as the West. Build..build..build, consume..consume..consume at every faster rates while increasing the population.

Eventually the Earth pushes back and says enough, like it did to the Mayan’s and other civilizations in the past. The cheap oil generation have set sail on that course along time ago.

This time is different because for the first time in recorded history, the ENTIRE planet is doing BAU in the form of FIAT funny money and have created a closed loop economic system that forces the population at large to depend on that complex intertwined mess to keep it alive. It’s been going on for a long long time from the US to London, to Moscow, to Beijing China and all parts in between.

Davy on Thu, 18th Dec 2014 7:50 am 



Roadster, I am in complete agreement with your comment. It is no longer about proving things are deteriorating it is about figuring out how to live with that reality and what is next.

Notice how the corns are eerily quiet. No Marm-a-NOo preaching all is well. Just an occasional peep from the NOo claiming Rock is misstating facts. We all know Rock has a handle on the oil industry so NOo is just cherry picking. Who here can’t be cherry picked? Who period cannot be cherry picked? I believe reality can’t and I feel we are seeing a reality of descent unfold. Corn Porn is going to be hard to find and if found will be short lived.

Rodster on Thu, 18th Dec 2014 8:01 am 



Davy, “It is no longer about proving things are deteriorating it is about figuring out how to live with that reality and what is next.”

Global collapse with humanity in it’s cross hairs”. It’s happened to every major advanced civilization throughout history, from the Egyptians to the Mayans.

This time is different because we are all too interconnected and there is no buffer between civilizations. Man is too arrogant and stupid to realize that you can’t continue to pillage the Earth without repercussions. They think they can easily learn from their mistakes and they have no intentions to switching from a high tech world to a world that looks like “Little House on the Prairie”.

The best case scenario is for another Dark Age and maybe just maybe mankind will get it if they go back and read their history.

Dredd on Thu, 18th Dec 2014 8:16 am 



What the Saudi oil minister said at the OPEC meeting is more to the point than speculating presstitutes are: “Saudi Arabia’s oil minister told fellow OPEC members they must combat the U.S. shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers.” (Another Sign of Another Layer in the Oil Wars? – 2).

Kenz300 on Thu, 18th Dec 2014 8:46 am 



The cost of production has not declined…….

Enjoy the drop in oil prices while they last…….

Production at a loss will not last……..

marmico on Thu, 18th Dec 2014 9:38 am 



A continuing reminder that Saudi net oil exports have been above their 2002 annual rate of 7.1 mbpd (total petroleum liquids + other liquids, EIA) for twelve straight years, through 2014 (a pattern which presumably will continue in 2015), even as annual Brent crude oil prices rose from $25 in 2002 to the $95 range for 2014.

Westexas is a cherry picker.

Davy on Thu, 18th Dec 2014 10:01 am 



Thank God Marm. I was worried the sky was falling. You were nowhere to be found. Welcome back. Try to keep the party spirit going and maybe all this is just a bad dream.

shortonoil on Thu, 18th Dec 2014 10:17 am 



It is interesting that although Saudi Arabia has done “nothing” that the MSM can spin it into Saudi Arabia has done “something”. They even go so far to say that this doing “nothing” was the really the smart thing to do. So they conclude that the price of oil is going down because Saudi Arabia didn’t do anything; therefore making it their fault. For the average brain dead viewer who has been conditioned into believing that up is down, and right is left this probably makes perfect sense. At the Hill’s Group (a bunch who apparently all had deprived childhoods) this latest MSM delivered oxymoron is less than satisfying, although slightly amusing.

We have come to a slightly less entertaining conclusion; the price of oil is going down because the value of oil is going down. To the up – down, right – left conditioned crowd this may be hard to understand. It may be too much of the up is up, and right is right kind of logic to readily sink in. But we persist – and even went so far as to create a graph, and web page to explain why up is up, and right is right:

http://www.thehillsgroup.org/depletion2_022.htm

Of course our objective, straight forward approach is not as crowd pleasing as Washington hates Moscow, Riyadh hates Tehran, and everyone hates the Jews. So, we don’t expect it to make the front page of the New York Times anytime soon. In our modern, and advancing up – down, right – left culture not being part of the ochlocracy can leave one a little isolated. We prefer to be a little eclectic.

http://www.thehillsgroup.org/

GregT on Thu, 18th Dec 2014 10:30 am 



Davy,

Russia is positioning herself for the collapse of the western dominated GFS. The US is not. Mexico is not of Russia’s making, the Ukraine is a result of western meddling. Russia is doing what she should, to maintain security within her own border states, the US is ignoring hers, and continues to wage conflicts on the other side of the world, including in states on Russia’s borders.

As BAU winds down, so does globalization. The world is about to become a much bigger place once again. Military adventurism and imperialism will do the US absolutely no good, if she cannot even secure her own borders, or contain the multitude of problems brewing at home.

You are looking at the world through stars and striped glasses. I am not. I understand that as the US goes down, Canada goes down with her. Just as you are planning for a more localized future, both of our governments should be doing the same, but they are not. The system is going down Davy, it is only a matter of time. Those countries that focus on local trade, and look within for more self sustainability, will weather the coming storm much better than those that continue to wage conflicts in far away places, for the benefit of a few, at the costs of the many.

The West is going down Davy. Yours and my countries included. There is nothing that can be done to save our Ponzi-schemed financial systems. Putin may not be the Christ-Child, but his plan is more likely to succeed for Russia, than our oligarchs’ plans will for us. At least Russia has a plan. We do not.

westexas on Thu, 18th Dec 2014 11:13 am 



I suppose that one could go back and compare 1953 Saudi net oil exports to 2013, but I what I think is relevant is the Saudi net export response to the 2002 to 2005 doubling in annual Brent crude oil prices–versus the 2005 to 2013 Saudi net export response to the 2005 to 2011/2013 doubling in annual Brent crude oil prices.

Davy on Thu, 18th Dec 2014 11:20 am 



Greg, can’t argue much with you we are mostly on same page from different angles. I will agree I support the U.S. from unfair and unbalanced criticism. I am a flag waiver with an inverted flag. Yet Greg, why is it so hard for you to obviously admits you are openly pro Russian? It is obvious and plain to see. Yet, for some reason you are embarrassed about it.

Russia is a great country. I am not going to shed tears over them because they walk around with tirds in their pants like the rest of the bunch. Putt was pathetic in his brilliance with his speech on how bad the west is to Russia. Time will tell who is right and wrong. I see neither in the right so it is not important to me.

Apneaman on Thu, 18th Dec 2014 11:41 am 



short

Nothing is Something

WAR IS PEACE, FREEDOM IS SLAVERY, and IGNORANCE IS STRENGTH

Apneaman on Thu, 18th Dec 2014 11:53 am 



This one is well written. It’s 5 years old, but worth the read.

The Decline and Fall of the American Empire
Four Scenarios for the End of the American Century by 2025

“The money-wasting is staggering. [U.S.] Aid payments are never followed, never audited, never evaluated. The impression is of the world’s superpower roaming helpless in a world in which nobody behaves as bidden. Iran, Russia, Pakistan, Afghanistan, Yemen, the United Nations, are all perpetually off script. Washington reacts like a wounded bear, its instincts imperial but its power projection unproductive.”

http://www.tomdispatch.com/blog/175327/tomgram:_alfred_mccoy,_taking_down_america

antaris on Thu, 18th Dec 2014 11:55 am 



Short
I look for your posts but am still trying to work what you say out in my head.
Could you paint a possible scenario for us of how the price of oil might drop so much more in the next 5 years.

bobinget on Thu, 18th Dec 2014 12:05 pm 



I read every comment. Not a word about Saudi support for Syrian Rebels.

Saudis financed Pakistan’s Islamic Bomb.

The Saudis are busy buying US “aid” weaponry
from Pakistan to aid Taliban’s fighting is Syria and now Libya.

“The map of international relations is changing; the Russians and Iranians, Assad’s two chief backers, are getting impoverished by the day, and the US and Saudi Arabia seem to have the initiative. The dictator is engaged in a no-win situation, as he is losing strongholds, main roads, entire areas to the Sunni Opposition. Actually, his biggest loss are young Alawites, and if the figure of 120,000 dead Alawites in the last three and a half years” ……

All this begs the question. Who or what will replace
Assad and what force keeps Sunnis from killing every Alawite left standing?

The Saudis will have more to answer for in a year or two as the four year Syrian proxy war winds down.

rockman on Thu, 18th Dec 2014 12:44 pm 



Antaris – Here’s half your answer. I’ll let you or anyone else explain how that scenario developed and judge if the same potential exists today.

Average yearly oil price adjusted for inflation:

1980 – $107.37
1981 – $92.98
1982 – $77.95
1983 – $68.97
1984 – $65.37
1985 – $59.10
1986 – $31.10

2008 – $100.01
2009 – $53.48
2010 – $77.11
2011 – $91.39
2012 – $88.95
2013 – $92.41
2014 Q1-2 – $104
2014 Q3 – $100
2014 Q – $76
2014 18 Dec – $60.40

And we’ll let everyone fill the in the blanks:

2015 Q1: ?
2015 Q2: ?
2015 Q3-4: ?
2016 – ?
2017 – ?
2018 – ?
2019 – ?
2020 -?

GregT on Thu, 18th Dec 2014 12:55 pm 



Bob,

If you believe in the official conspiracy theory, the Saudis supposedly financed the terrorist attacks of 9/11. The real questions then should be; Why is the US backing Saudi militarism in Syria? Why did the US invade Iraq and Afghanstan? And why does the US administration continue to back the House of Saud, given it’s long track record of human rights abuses and continued involvement in issues in contradiction of international law?

antaris on Thu, 18th Dec 2014 1:32 pm 



Rock, Short must have some thought on how it is going to play out. I know most people have crystal ball’s that came defective but it would be nice for some of the artists to put some colour on the line sketches.Short says the numbers are going to happen, I just would like to see his fuller picture if possible.

GregT on Thu, 18th Dec 2014 3:07 pm 



Davy,

“Yet Greg, why is it so hard for you to obviously admits you are openly pro Russian? It is obvious and plain to see. Yet, for some reason you are embarrassed about it.”

Once again Davy, I have no horse in this race. ALL of them could rot in hell for all I care. I am only interested in the truth. Nothing more, nothing less.

Russia is not the instigator here.

J-Gav on Thu, 18th Dec 2014 3:18 pm 



GregT – I’m quite sure that there is no “official conspiracy theory” concerning 911 as I’ve plowed through pretty much all of it for over a dozen years. Loads of weird stuff and some fairly convincing evidence that any ‘official story’ is full of shit. It’s clear the Saudis had something to do with it (and not only financially) and that certain individuals in the U.S. had much more prior knowledge than they cared to share with the public. Then there’s Israel. Beyond that (and a couple hundred strange ‘coincidences’), nobody can say how things actually transpired.

GregT on Thu, 18th Dec 2014 3:34 pm 



J-Gav,

I am referring to the 9/11 commission. The report of the official ‘conspiracy theory’.

From Wiki,

“The commission also concluded 15 of the 19 hijackers who carried out the attacks were from Saudi Arabia, but found no evidence the government of Saudi Arabia conspired in the attacks, or that it funded the attackers even though the “report identifies Saudi Arabia as the primary source of al-Qaeda funding””

http://en.wikipedia.org/wiki/9/11_Commission_Report

So if Saudi Arabia has been identified as the primary source of Al-Qaeda funding, then why have the Saudis not been investigated, or bombed back into the stone age? Yet Saddam Hussein was originally charged with housing the terrorists responsible for the 9/11 attacks? Ya, OK.

Sorry, I don’t buy into the propaganda. DC has been in bed with the Saudis for a very long time. The 9/11 commission was an obstruction of justice. The invasions that followed were pre-planned, and had nothing to do with 9/11.

Davy on Thu, 18th Dec 2014 4:12 pm 



Greg said – You are looking at the world through stars and striped glasses. I am not
&
I have no horse in this race. ALL of them could rot in hell for all I care. I am only interested in the truth. Nothing more, nothing less.
Russia is not the instigator here.

Greg, I like you and value your insight on many topics. I do not deny I see things from American point of view but I am not connecting on your thinking of your total objectivity here. Somehow I am not objective but you are I don’t see it that way. Maybe you are telling yourself this but when someone else looks at you they see some subjectivity. I try to be as objective and fair as I can but there is only so far one can divorce himself from his circumstances. You have a Russian wife and I see you in a similar situation as my stars and stripe glasses for this reason. I see no reason to not have some skin in the game. If I were you I would be proud of Russia and your reasons to take Russia’s side.

shortonoil on Thu, 18th Dec 2014 4:17 pm 



Even if Saudi Arabia cut its production it would not save the US shale industry. The shale industry can not produce product that the economy can afford. The 3.25 mb/d it is now producing has come at the cost of a $trillion in debt. That is $843/ barrel per year. The Saudis aren’t fools, they are not going to sacrifice revenue, or put effort into killing an industry that is already a dead man walking.

All of this political jousting is just once great powers playing the end game. The demise of petroleum is the end for all of them! There will be no winners, or losers. The rhetoric is just to keep the proles occupied while they attempt to solidify their positions into the future as best as possible. The Saudis know that their fields are on life support, Russia has admitted as much, and the American’s who think that a $trillion that can’t be paid back is irrelevant are delusional.

Short says the numbers are going to happen, I just would like to see his fuller picture if possible.

The calculations are complex, that is why we publish a 57 page report to explain them detail. But the logic is straight forward. Simply put, the amount of energy in a unit of oil (gallon, barrel, and etc) is fixed by the molecular structure of the petroleum. It can be determined from the combustion equations for any specific hydrocarbon. The procedure can be found in any engineering thermodynamics text. In thermodynamics that energy is called “exergy”, or “available energy”. The result of those calculations are show in this graph.

http://www.thehillsgroup.org/depletion2_011.htm

As time progresses it takes more, and more energy to produce the oil, and its products. That results from entropy production in the system which we see as increasing water cut, increasing well depth, and declining quality of the crude. The energy to produce petroleum and its products is increasing, while the amount available from a unit is fixed. The amount remaining for use by the end user must therefore be declining.

Energy has an economic value; we can assign a dollar value to it, just like anything else. Thanks to the EIA, and the World Bank we have a very good idea of what that is:

http://www.thehillsgroup.org/depletion2_008.htm

In conclusion the end consumer (the economy) can not pay anymore for the oil than the energy it provides is worth.

There is a discussion group in the forums at:
http://peakoil.com/forums/the-etp-model-q-a-t70563.html
or you can ask us questions at our web site under the Comments Section:
http://www.thehillsgroup.org/

Nony on Thu, 18th Dec 2014 4:24 pm 



The “economy” can afford expensive oil just fine. Remember demand is Inelastic. that means very small drop in volume given a price increase. And heck, we just spent 4 years (!) at 100+.

Then again, you all are a bunch of peaker nutters. Dead enders. TOD is dead, dead, dead!!!!!!

J-Gav on Thu, 18th Dec 2014 4:37 pm 



GregT – Why? Because they (KSA) have a lot of fossil fuels and a cosy relationship with the U.S. since FDR, then Kissinger, then the Bushies …

Yeah, 15 out of the (supposedly identified) 19 hijackers were Saudis, so it made great sense to invade … Afghanistan! I think we agree on that as well as on the commission report. Three of whose top members have since written books describing the “intimidation,” “obstruction,” and “lies” they regularly met with in their relations with the Bush administration. Trying to save their asses for posterity no doubt. I’m not one to buy into propaganda either.

Davy on Thu, 18th Dec 2014 4:47 pm 



NOo, I am on shorts side here over your worn out econ 101 textbook analysis. Short uses a science not a pseudo-science. Your econ 101 textbook analysis is no longer valid as you have come to understand it. The game has changed in regards to oil. You are so far in orbit it is hilarious with your denial of the problems in the economy and the depletion of the economic value of oil.

shortonoil on Thu, 18th Dec 2014 5:03 pm 



Average yearly oil price adjusted for inflation:
1980 – $107.37

Since 1980 the government has changed the way it calculates inflation 7 times. Anyway, energy (food, etc) is not included in the inflation calculations so it has no bearing on our determinations. An inflation adjusted price for oil has no place in an analysis unless you belief hedonics: that chicken is a substitute for beef, and that a computer that runs twice as fast as the one you have now only cost you one half as much to buy. Inflation adjusted numbers are a toy for economist, and a tool for government budgetary people. The rest of us are forced to live in the real world.

The “economy” can afford expensive oil just fine.

As soon as you start exchanging $20 bills for $5s let me know. If you want to sell me $50 worth of oil for $100, take a hike.

GregT on Thu, 18th Dec 2014 5:39 pm 



“Then again, you all are a bunch of peaker nutters. Dead enders. TOD is dead, dead, dead!!!!!!”

Typical trollish behaviour once again Nony. If you don’t have anything constructive to add to the conversation, why not go over and post on Our-Infinite-Planet.com or I-Never-Got-Past-Econ101.com.

I’m sure you can still find plenty of people that haven’t evolved yet.

GregT on Thu, 18th Dec 2014 5:53 pm 



Davy,

I lived with a Russian gal 12 years ago. I am very well versed in why she defected. That has nothing to do with my perspective on current geopolitics.

Apneaman on Thu, 18th Dec 2014 8:17 pm 



TOD is dead

Yes but their contributors have their own blogs now and more than ever are being read read read!!!!!!

farmlad on Thu, 18th Dec 2014 11:02 pm 



Short,

A lot of what you have to say makes a lot of sense, but just because the US$ has been quite steady up till now, does not convince me that it will remain that way. There is a lot about money that I don’t understand but having lived next door to Brazil during the 80’s I’ve witnessed just how unrelated money can be to real value. more than once they crossed off the last three zero’s from their money. Whether that was either one of their Cruzeiros, or their cruzados I don’t remember.
Inflation was so bad at times that workers were reported to demanded their pay at the end of each day so that they could quick go buy something before their money became next to worthless.

Makati1 on Fri, 19th Dec 2014 2:28 am 



farmlad, you are correct. The dollar is growing because some of the world still believe the lies. China and many countries see the truth and are building a system without dollars. I think one more collapse like 2008 and the USD will become the used Charmin. The rats will leave the sinking dollar ship faster than you can imagine. I keep none of my savings in USDs.

Yes, some of my income is in dollars, but they become Philippine Pesos the day I receive them. The exchange is P44.9 to $1 today. They have varied from 41.5 to 44.9 in 6 1/2 years.

BTW: Haircuts here are P49.99 ($1.11) and doctor visits to specialists are P600 (13.36). Less than my co-pay in the US, and better service.