Breitbart – by Wynton HallWith fracking and shale oil production putting increasing pressure on OPEC, Saudi Oil Minister Ali al-Naimi issued bold and startling remarks to the Middle East Economic Survey, announcing OPEC is prepared to let oil prices fall to $20 a barrel.
“It is not in the interest of OPEC producers to cut their production, whatever the price is,” said Naimi. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.”
As Financial Times notes, Naimi is regarded as the “most influential figure in the energy industry.” According to FT, “He said the world may never see $100 a barrel oil again.”
OPEC’s decision not to cut supply and drive up oil prices is part of a new strategic shift designed to ward off pressure from the fracking and shale oil revolution. The strategy: drive oil prices lower to make more expensive shale oil production costs unsustainable and unprofitable.
However, as James S. Robbins points out in USA Today, the price pressure from fracking is likely to break OPEC’s stranglehold on oil prices moving forward:
OPEC’s gamble is America’s gain, and not just in the short term. The problem with Saudi minister al-Naimi’s strategy is that he does not have a viable endgame. Even if OPEC can hold prices down long enough for American energy companies to feel the pinch, the oil-revenue-dependent states can’t keep prices depressed forever.
When oil bottoms out and begins to rise again, fracking will once more become profitable and the cycle will repeat. And as shale oil extraction technology improves and becomes more efficient, the break-even point will decline further, making it that much harder for OPEC to wage economic war.
Naimi conceded that if OPEC cuts production, “the price will go up and the Russians, the Brazilians, US shale oil producers will take my share.”
As FT concludes, “Oil has slumped by nearly 50 per cent since mid-June amid a massive supply glut fueled by surging US shale output, combined with weakening demand for crude in Europe and Asia.”
Don’t believe this for one moment – this is all being manipulated for several reasons – pressure on Russia #1, but also this is to move the carbon tax forward by slapping a big $1 -2$ per gallon tax on gas and Americans won’t be too outraged if gas is at $1.50 gallon, once they have their carbon tax you can bet the price will soar once again………..they couldn’t get away with it if gas was $3.75 per gallon……..everything is a sham..just like the stockmarket – all controlled by the market makers – setting the gullible goyim up for the next big take….
Hmm…you do have a point there. Didn’t think about that carbon tax thing possibly coming into play. Wouldn’t surprise me. I’ve been thinking it meant the economy was going to officially tank and WWIII would be knocking at our door, but your scenario seems more plausible.
Or all 3…..
Dalton, no offense, but do you really have to repeat your comments three times in a row? 🙄 We get your point.
Only posted once but it was duplicated 2 more times – probably NSA screwing with my computer 🙂
those bastards! 😀
The Saudi oil minister should have pointed out that the petro dollar is going down faster than the price of crude and no western military interference is going to be allowed, short of nuclear war, to change that economic reality. Fracking at under $70 – $80 a barrel is unprofitable and due to the nature of the process with quickly diminishing yields needs frequent infusions of new capital to sustain it. Another bubble ready to pop. Better to fear the government than terrorists since the latter would not exist without the former.