Just for a moment, I am going to reduce the complicated issue of U.S/European relations with Russia down to the basest and most analytically juvenile level possible: measuring peckers with a ruler.
Putin thought he came in with a huge measurement when he annexed Crimea and started making trouble in Eastern Ukraine.
Obama shrugged, and then this happened:
The ruble plummeted into a freefall, losing as much as 19 percent as panic swept across Russian financial markets after a surprise interest-rate increase failed to stem the run on the currency.
The ruble sank beyond 80 per dollar, a record low, before rebounding to 68 after Economy Minister Alexei Ulyukayev denied speculation that the government would turn to currency restrictions next to stop Russians from converting their money into dollars. Bonds and stocks also tumbled, with the RTS equity gauge dropping the most in six years.
“I am speechless,” Jean-David Haddad, an emerging-market strategist at OTCex Group in Paris, said in a message. “What a failure for the central bank. Russia would need to announce capital controls today. That is the last solution.”
Of course, what precipitated this was the gigantic drop in the cost of oil. This is hurting pretty much everyone in the world that you don’t (or shouldn’t) like.
There are downsides to everything, but something that kills Putin, bankrupts Iran’s mullahs, wipes out low-level fracking businesses, rips into the energy corporations’ stock values, divides OPEC, and gives a huge stimulus to average American consumers has so much upside that I’ll gladly take it.
The main downside beyond economic and political turmoil is that cheap oil makes it harder for alternative energies to compete.
But we can’t have everything, can we?
In any case, Putin’s pecker is looking awfully small.
Are our Authoritarian followers going to take down their posters of Vlad, shirtless?
Or is he still their dreamy dream-boat?
And will the gas prices be two months after an NED grad in Moscow signs a deal with Chevron?
Question is how long Russians will put up with this. Putin’s approval ratings have been plummeting and ordinary people are hurting big time. The big question since the fall of communism has been whether Russia will fall into what seems its natural state, autocracy, and Putin has basically gotten it back there – but not for very long. With the internet, the pull of the West, modernization of China, etc, traditional russian-style autocracy seems to have more headwind then it used to.
I give him 5 years, tops, followed by a coup that will probably usher in a more western-style oligarchic-democratic mashup.
Which is what the people who brought you Afghanistan, Iraq, Iran, Syria and Libya want.
It would extend the American Empire a little longer, but if you look at the streets of America, you might notice that the Empire is a little ragged and they’re shooting people in the streets.
It still is better than a Chinese or Russian Empire even if not by as much.
The capacity of the Russian people to suffer is almost endless. I say “almost” solely because of 1917 and a lot of that revolution was engineered by Germany.
The Russian Revolution was “engineered by Germany?” That’s so off the deep end that I question whether you have much if any grasp of 20th century history.
He’s probably referring to February 1917:
and progressives, conservatives, and the media were all in lockstep gushing about what a genius putin is and how weak Obama is.
lulz such morons, all.
No. It’s simply about power. And Obama has no say about this. He doesn’t run our foreign policy, or haven’t you noticed?
And Jamie Dimon seems to be running our economic policy. BCBS and Pharma runs healthcare. It seems that Obama only runs immigration policy. And that may be under orders from Goldman Sachs as well.
I see a lot of Cold War propaganda getting regurgitated here.
Putin has been acting appropriately for the leader of a country being attacked by the West.
These circumstances, the banking problems and the Ukrainian coup and its consequences are all attacks from the US to gain control of the Russian gas and oil.
Crimea was a goal for the US, to project NATO power into Central Asia while reducing Russia’s power on its southern flank. If you want to argue about the sanctity of Ukraine’s borders, created by the old Soviet Union with added pieces of Russia in order to pacify the fascists in the northwest of Ukraine (by adding enough pro-Russians to the mix), then first explain the dissection of Yugoslavia.
Russia is trying to survive the economic and military actions of the US. Expect more killing in Chechnya and Dagestan.
The falling oil prices have been staged, a loss leader, just like the oil shortage was staged to overthrow Carter and give us Reagan-Bush. You didn’t think that the House of Saud wants Americans to have two dollar a gallon gas, did you?
Putin is being attacked by the West because he’s been acting inappropriately.
Looney Tunes
Bob looks like you have moved on from the zombieland of the MSM. Kudos to you
Why bother worrying about global climate change when cheap oil can shrink Putin’s pecker? And make big-ass SUVs affordable again.
Who knew that resetting the Cold War would be as easy to sell to USians as it was the first time around? This shit is now approaching the hundred year anniversary and it continues to fill the hearts and minds of Americans with a combination of irrational fear and loathing and delusions of exceptionalism.
Yes, it’s a sad day when Vlad’s pecs fail to suffice.
One effective tactic of propaganda is to make your enemy a human figure. Instead of saying that Chevron et al want to control the oil and gas in Central Asia, you make a joke about Vlad’s pecs. Or demonize him, like we demonized and joked about Osama, Saddam, Khadafy, Assad, Lumumba, Allende, Castro, et al.
It’s a great tool. Just watch Jimmy Fallon and repeat the joke the next day.
so, rather than easy dick jokes, how about some analysis of what the Saudis are trying to achieve and how long it’s likely to last?
the gigantic drop in the cost of oil isn’t natural and will last only as long as Saudi Arabia wants it to, to disadvantage rival producers and alternative energy producers/users. Bankrupting Iran might well be part of the goal; bankrupting electric car companies is definitely also an intention.
IMO, the Saudis are trying to do two things simultaneously.
They know that they can’t sustain these oil prices, and they also know that they can’t move prices the way they used to. For now, the policy at least works to screw Iran and Russia, and the rest is basically a Hail Mary pass.
Yes, that sounds right. Russia is already hurting. But the oil industry here is also feeling the pain. I read over on Yves place that much of the industry is supported by junk bonds. So if the oil becomes less profitable there could be some defaults. In fact some seem to think the Cromnibus gift to Citibank was a cushion for the derivatives on those junk bonds. If so, we could be headed to another mini bust on Wall Street and the oil industry. Anyway, before today, the market was worried about something, and still may be.
Yes, TARP III or IV will bail out those junk bonds.
Technically, the Saudis did nothing. As of six months ago, the world supply of crude oil exceeded demand, and therefore, in accordance with Econ 101, the price of oil began to decline. KSA had to choose between lower revenues or lower production and loss of market share. A few years ago there was anger that KSA didn’t increase production in response to shortages and high prices and today there’s anger that KSA doesn’t drop production to keep higher cost producers in the game.
EIA crude oil production cost chart.
Yes, and they just recently declined to limit production. So we may get to see how low it goes and who it drives out of business. ( I think it was up today.)
Yup.
http://www.calculatedriskblog.com/2014/12/a-comment-on-oil-prices.html
The Demand Curve is steep for oil.
Saudi Arabia learned that they can’t keep the price up if the fundamentals say the price should fall quickly.
Cheers,
Scott.
Thanks for saying this; I was thinking to respond along the same lines. My understanding is that it’s interesting that everyone blames (or credits) the Saudis for the low oil prices, but the fact is Iran, Venezuela, and Russia expect Saudi Arabia to “do the right thing” and cut output while the rest of OPEC keeps pumping full throttle. Everyone wants high oil prices and being able to sell as much oil as they can pump. The Saudis said “we’re willing to cut output, but only if everyone else does too”, and the Iranians, Russians, and Venezuelans said “no”. So Saudi Arabia said “ok”. And here we are. I think the geopolitics works nicely for the Saudis, but I also sense a simple impatience with all these non-Saudi countries wanting to be part of OPEC but basically expecting Saudi Arabia to make the sacrifices for the results they want.
This is one of the few times I find myself sympathizing with the Saudis (even though, generally speaking, I think we’d be better off in the long run with oil prices higher).
Let’s not go so far as to have empathy for the Saudi monarchy. Beastly regime that has created much havoc in their part of the world and consigns the women in their country to profoundly inferior status.
Beyond OPEC, have US and Canadian crude oil producers volunteered to cut production? Ha-ha.
Technically the Saudis can maintain prices; their oil is relatively cheap to produce. The downside is a derivatives implosion among the risky bets on energy that again destabilises the global economy.
The conflict of the West with Putin is a bit like our Democrats and Republicans; whom collapses last wins.
Mad Max Lives!
It’s not primarily the Saudis. What’s happening is yet another big swing in oil prices, which is inevitable given the nature of the market. Both supply and demand are highly inelastic – changing demand requires changing where people live, shop, and work, while changing supply requires huge pricey projects with lead times over a decade. Big price swings once or twice a decade have been the norm for oil for 40 years now.
Basically the high prices of the last 8 years (except a brief period at the height of the crash) have caused substantial demand destruction with people reducing commutes and substantial supply increase from tight oil, oil sands, and the like. Now there’s too much oil for the price – but people are not going to increase their commutes much for years, and the drilling rigs are built and may as well drill. So, we’ve got an oversupply until a year or two after a) the oil shale folks go out of business or b) the exurbia boom resumes.
Important as the Saudis are, even they can’t control the oil market on a long-term basis. They got smacked hard in the 80’s for trying, and they’re not going to try again.
The gigantic drop in the cost of oil is due to the ramping up of American oil production.
The Saudi price drop is nothing but a response to that.
“U.S. Seen as Biggest Oil Producer After Overtaking Saudi Arabia ” (Bloomberg, July 4 of this year)
https:/www.google.com#q=united+states+now+leading+producer+oil
This is just so chock full of schadenfreude that I just keep reading it over and over. Thanks, BooMan.
Dicks or no dicks (peckers, oh really!) Putin will live to fight another day.
Actually, cheap oil does not compete with alternative energy (renewable energy, biomass, etc) because oil is not used for electricity anywhere in the world (exception of small islands, a few isolated countries/territories with no other options, and some Gulf states.)
Cheap oil may however pose difficulties for electric and hybrid vehicles.
However, fracking does generate natural gas (as do many oilfields) so the by products of being able to extract oil at any price meant that gas was also cheaper.
I knew there was a reason for all those mailings urging me to enter a long term contract for natural gas supply.
Whenever a for profit business says they want to do you a favor, always look a gift horse in the mouth.
Cheap oil killed off electrified trams.
Cheap oil built our car dependent infrastructure and culture and it’s why even after offshoring significant portions of US manufacturing, we’re still pumping the highest per capita amounts of CO2.
Another possibility. As oil revenue goes down Russia cuts back investing in energy infrastructure. That’s a victory for the West. Meanwhile, the US has been building LNG terminals along both coasts. If the US energy companies have been planning to ship that fracked natural gas overseas then we all win, right? The energy companies get even wealthier, and as has been demonstrated over the last thirty years some of it will trickle down to the peons.
And the risk of pushing Russia to nuclear war is minimal.
For profits!!!!
Actually, we all lose. Naural gas is about 75% methane which is a far more potent greenhouse gas than CO2. And gas always leaks somewhat.
Even before the drop in oil prices there was serious doubt in some corners about whether Putin could cash his check on Ukraine. To support the east with no help from Kiev (who apparently still pay the civil servants and teachers)would be very costly and the war has torn a hole in the infrastructure and manufacturing capability. They would need to rebuild the economy. So some figured Putin would have to withdraw. Personally. I think he would just “stubborn” the thing out since his dick is so large.
Now the fall in oil is making the Russian economy itself troubled. Whoever came up with this 17% central bank rate needs a serious head exam or maybe he is just giving away money to the oligarchs, so they don’t take their money and run. He better have a super large something or other to make this work.
Creditors have an unusual influence in Russia. Russia is the only major modern country ever to default on debt in its own currency – which makes no sense for anybody, except holders of ruble-denominated debt.
A ruble crash is generally good for the Russian government. This horrific intervention – 17% interest rates are an express train to depression – is, like the default, the Russian government put the interest of Russian creditors over itself and the Russian people.
People come up with nutty schemes all the time and if you are a dictator or close to it, you write the rules. But this time around I think the Russians have debt in other currencies and to that extent tanking the ruble is not on the smart side of the bench. So I would hazard the guess the 17% was intended to both raise the ruble and encourage the oligarchs to leave money in Russia. Next up, capital controls.
Ukraine cut off payments to pensioners in Donbas, just like US corporations will be able to do so with Americans’ pensions.
Ukraine is on the verge of economic collapse. Or is collapsing or has collapsed, depending on how you measure such things. But creating misery is part of the process for corporate US to make profits. The misery usually involves killing and destroying, but, hell, this is war.
Not sure what you consider to be “cashing a check” but I’m sure that Putin knew that this was a war waged by the international banking system and western energy corporations long before we peons in the West figured it out. Some still haven’t figured it out. Russia has huge natural resources and nothing would make the banks and energy corporations happier than having a straw in that milkshake.
The question is how much mischief can the fascists in Kiev manage with Russia before the next coup sends Poroshenko et al packing. As with Chechnya and Dagestan, the CIA has targeted the Muslim population in Crimea with radical Muslim operators to destabilize it. It eventually failed in Chechnya, but at a price.
I should say I don’t know how strong Russia’s economy is and he may have this all figured out long ago. But if not he faces some problems. The fact he raised the interest rate so high suggests to me not all is well.
Inciting insurgency sounds like a dangerous game. But our CIA likes to play in those waters. Would you expect Russia will take even more aggressive actions in face of that? There appears to be nothing stopping him from overrunning the east.
ROTFLMAO at the fantasy world you live in.
Here is another possible strategy for Russia. If the EU can’t get out from under the US’ economic warfare against Russia, expect Russia to allow the natural gas flowing through Ukraine to be shut off. That would definitely force the next worldwide depression.
They are a little less passive in Europe, so expect the next depression to break the EU.
The Russians survived WWII, so I suspect that it’s going to take a lot of collateral damage for the US to crush an independent Russia.
Easy to overlook/forget what it cost the USSR to repel and defeat Nazi Germany. Wonder how many Americans under the age of sixty even know that and how many believe that the USSR was the enemy of the US in WWII.
And did the US help out our major WWII partner? That would be no. Rebuilding the economies of our enemies was our priority.
Sometimes I get the impression you think Putin is the head of the USSR.
Present-day Russia is a country run by gangster capitalism. Even more than we are.
The “system” there is so corrupt that it’s hard to imagine, even if Putin somehow gets the boot, how it could be any different. Putin is simply the leader of a loyal coalition of oligarchs and gangsters, and the only way he would be replaced is if another coalition would form around some other strongman.
Now, Russia is far from unique in this regard. But it may well be the most corrupt country of its size and level of development (which is a lot lower than the USSR, however).
To a much greater extent than you seem willing to accept, they brought this on themselves. Yes, it goes back to Yeltsin. Putin was a product of Yeltsin.
You sure get a lot of wrong impressions from my comments. I’m extremely careful to use “USSR” and not Russia when the former is historically accurate and Russia and not “USSR” after it collapsed.
Do hope you appreciate how it was that oligarchs and gangsters came to power in Russia. (Naomi Klein has a good rundown of the in The Shock Doctrine.) On the advice of western business leaders and economists, they quickly did what those same people have been slowly implementing in this country. Granted slow is more stable and less destructive. US life expectancy won’t dramatically plummet as it did in Russia (only slowly increasing since Yeltsin’s days), but it is now declining for lower income Americans as well.
What is wrong with having a degree of empathy for the people and the country of Russia? They’ve had enormous challenges for centuries. A hundred years ago, they had a feudal economy run by a Czar and a small wealthy elite. Not all that different from the pockets of extreme poverty in the US at that time. And they’ve been repeatedly pounded by industrialized/more economically developed countries ever since then. They’ve no historical reference for decent government and leaders which is always fertile ground for dictators/oligarchs/monarchies. The mystery isn’t that Russians long for a strong man to run their country but why Americans long for that so much that the senile Reagan won in a landslide and the dimwit Bush was given another four years.
I certainly do have empathy for the people of Russia. My comments are premised on that.
I didn’t mean that you literally don’t know the difference between USSR and Russia. But you talk about Putin in the same tone as we used to talk about the USSR as described by the insane right-wing. Putin is
not a victim of the shock doctrine but of one of the biggest beneficiaries of it.
I’m sure you realize that the party apparatchiks, commissars and managers grabbed everything they could as soon as they could. Even American oil sharks couldn’t negotiate that kind of corruption, try as they might.
I don’t disagree with what you say here. But I sure don’t feel sorry for Putin and his cronies. He is not part of the solution but part of the problem.
Have no idea what tone you hear when I mention Putin. Perhaps it’s that I don’t express hatred for him or view him as a singularly ruthless leader. FWIW, and IMHO, he’s about middle-of-the-road on that criteria compared with other leaders today. He is smarter than most and comparably nationalistic, but more provincial than many that are better, equal, and worse to him.
Chinese leaders in the past few decades are no less authoritarian and have been creating their own oligarchs, but not having the US waging a continuous Cold War against them and being a happy dumping ground for all their crappy products has worked out better for a large percentage of their population.
I reserve the right to revise my opinion of Putin when I see him dump $5 billion into a US satellite (see Chalmers Johnson’s trilogy for the definition of that) to foment a coup as we did in Ukraine.
I find it frustrating when the main point of reference in talking about Russia and Ukraine always seems to be the United States. Not that the US hasn’t meddled, but as if that’s the beginning and the end of what’s wrong with Russia and outweighs everything else.
The United States meddles in everything, we already know that. But the United States is not the only country that meddles. Tell me about the CIA, but also about Putin’s KGB or whatever it is they call themselves these days. Tell me something about Germany. Tell me about fascists in Ukraine, but also about the far larger and more influential fascist movement in Russia.
China has many similarities, but somehow it has become a far more interesting, diverse, complex country.
What obligation did the US have to help out the USSR or rebuild its economy? The Soviets should never have colluded with the Nazis to carve up Poland. They brought that betrayal on themselves.
FDR basically used the masses of Soviet conscripts as fodder to weaken Germany. Stalin was begging FDR and the Allies to launch a second front as early as 1942. Even so, the vast majority of Western aid (food and war material) to the USSR during WW2 was from the US through the lend lease program. This was significant in allowing the Soviets to survive the German Army and eventually go on the offense.
What obligation did the US have to help economically the UK and France? Neither of which stood any chance of defeating Germany/Italy. And precious little chance with significant US help if the USSR hadn’t won on the eastern front.
What obligation did the US have to come to the economic aid of countries that declared war on us? Shouldn’t helping all allies that paid a huge price in defeating an enemy come first? What are you a Democrat that after winning throws leftist allies under the bus and parties with the GOP?
I wasn’t speaking as to helping the UK or France but responding to your assertion that we were obligated to help the USSR. I’m still not entirely convinced we shouldn’t have stayed entirely out of the European portion of that war and left the Europeans to kill each other as they had done for centuries.
The simplest answer is that the US and the USSR were only temporary and very reluctant allies. Both countries had imperial ambitions and the US, like all countries, put its own interests ahead of some notion that the US and the USSR were ever going to be friends.
Your last sentence is just a strange comparison but I did find it amusing.
As I said elsewhere about “the enemy of my enemy”, Stalin was no friend of America. Or vice versa. They needed us to supply materiel. We needed them to bleed out the Germans on the steppes. So the USA supplied ships and arms and tanks and planes, which we are good at and Russia supplied millions of cannon fodder serfs which they are good at.
But — but — Ted Cruz said, “”Back in Washington there’s a diet that is now very, very popular. It’s called the Obama Diet. Works very, very well.” (Wait for it. . . ) “You simply let Putin eat your lunch every day.”
(Hit two rimshots and the cymbal.)
Oil and gasoline prices are very complicated and very political. The OPEC price shocks of 73-74 forced a rethinking of the whole structure. It caused a complete rethinking of the relationship between the oil oligarchs in all the parts of the world. Today, while there is some basic supply/demand that factors into it (as happened in 2008 with the global housing/finance bubble crash), most major shifts are due to coordinated planning.
This isn’t new. About 10 years after the fall of the Soviet Union a few veterans of the Reagan administration described how they worked with middle eastern powers and heads of the big oil companies to depress prices for several years in the mid-1980s to starve out the USSR. The USSR had been a net exporter of oil and that access to about $4 billion in annual “hard” currency was keeping the otherwise economically nonviable system afloat. Of course, this was done by making various long-term promises to all involved, which were kept. It was very effective. The motivation behind glasnost and perestroika was a desperate – and ultimately unsuccessful – attempt to address that country’s bankruptcy. Similarly, the release of the satellite countries in eastern Europe was done for budget reasons.
But this political strategy had major impacts domestically. Oil prices and gas prices are separate things, although they correlate to some degree. The oil price you hear quoted on the news is on the spot market. Most oil is bought using long-term contracts – some of which are fixed priced but most of which have some price indexing built-in. This means that in the short run you can see a big variance in the international spot oil prices and domestic gasoline prices, but in the long run gasoline will follow oil.
So, in 1986 as oil prices plummeted local economies, such as Houston, really suffered. But another effect was that people started buying gas guzzlers again – big time. Youngsters don’t know this, but from the mid 1970s through the mid 1980s gas mileage was a major factor in car purchase decisions and in how people evaluated other people’s car choices. “Oh, you have a gas guzzler ….”
What the oil industry learned is that while gasoline demand is extremely inelastic in the short term is is very elastic in the long run. If gas prices are high and people believe they will stay high people will adapt their lifestyles in response – smaller cars, fewer cars, shorter commutes, etc. The reverse is also true – if prices seem low people will (on average) seek high gasoline consumption lifestyles.
The trick the oil industry learned – and I’ve had this confirmed by a high-level marketing executive at one of the majors – is to mix high-price and low-price periods such that they can skim profits with high prices, but use the low price periods to prevent major long-term downward shifts in gasoline consumption.
Today’s low oil prices have absolutely zero external explanation – this is purely and simply about starving the new Soviets economically. But the oil industry is using this opportunity to temporarily lower prices domestically to encourage people to go BIG with their gasoline consumption lifestyle choices. The timing is good. Hybrids were never a real threat to the oil companies – at best they provide a 10% fuel economy savings over a comparable car. (The only reason this isn’t obvious is that there is no non-hybrid Prius, but compare any other Toyota hybrid to its non-hybrid version and you’ll see that with the same horsepower engine it’s at best a 10% improvement. They key is to compare the 2.4L Camry to the hybrid, not the 3.3L Camry.)
However, today electric vehicles (including all cars with a plug) are starting to make inroads. They are very small – less than 1% nationally although in some states it is closer to 3%. But anyone who studies product lifecycles recognizes the signs of an incipient breakthrough that could radically reduce domestic gasoline demand. Lower gasoline prices combined with an anti-EV publicity campaign (designed, as always, to appear to come from the grass roots) may be able to keep those profits flowing in for ExxonMobileChevronTexicoArco by reducing EV demand and twisting manufacturer’s arms to not make EVs. This is why Honda and Toyota are pushing Fuel Cell cars, not battery EVs – they cost a ton more both for the cars and the infrastructure but the only cheap way to manufacture hydrogen for the Fuel Cells is using natural gas, ideally with oil-powered machinery. Clearly oil companies prefer fuel cells as they will still be the supplier of the energy source.
○ Russian Ruble Correlates with Price Barrel of Oil
Putin’s power is fully dependent on oil and gas export. The Russian people won’t revolt, perhaps the leadership of Gazprom will.
Putin has doubled his popularity with the common Russians in 2014.
Just as stupid as the common American.
Unless the very sluggish “growth” in the US and China, largely kept levitated by arguably optimistic metrics and downright misrepresentation, really represents a fall in demand for energy, especially in manufacturing, mining, capital projects and transportation.
Not saying the oil price is not being manipulated, it always is, but it is a lot easier to manipulate down in the context of declining demand. For some this opportunity may have seemed to good to miss; Putin notwithstanding.
The only winner here is China and only if their Emperor is actually wearing clothes.
Growth and demand haven’t fallen that much. Here in the USA the sale of huge gas-guzzling behemoths have soared coincident with this temporary fall in gas prices. When they go back up, the behemoth drivers will complain about gas taxes.
This is the first quarter revisions for the year:
It hasn’t improved much since; it’s notable that GDP is most widely reported at the, recently, optimistic, first estimates. The downward revisions which have followed in most cases not so much.
Three percent is not much and rising employment, even part time employment, increases gasoline demand. Unless the three per cent is factories and office buildings shutting down, it doesn’t do much for oil demand.
Not sure if 2nd and 3rd quarter final figures are in yet. In the US, China, Europe and elsewhere demand is not robust; the Chinese will happily stockpile at this price but will cease eventually. Don’t pay attention to the stock market for indications of economic health; the Dow and S&P are off with the fairies.
We’ll see; I don’t expect a rebound above $80/bbl any time soon.
Re stock market: http://www.zerohedge.com/news/2014-12-16/total-chaos-massive-market-moves-spark-selling-panic-close
I’d be curious what would happen to Cuba if Putin financed a coup in Alabama and there was a Russian fleet conducting exercises in the Gulf of Mexico.
The oil situation is a byproduct of Saudi action that has the possibility of bursting the speculative bubble on tar sands oil and fracked natural gas, taking down a bunch of overleveraged US energy companies as well as the Russian ruble.
On the other hand, Russia’s response showed its financial weakness in markets essentially controlled by Western corporations.
That is all well and good. Except that now is the appropriate time to show some political understanding of the situation that Russia (Putin will be dealt with by the Russian people in the end and that is unpredictable) and Iran is in by taking a softer line on some key issues so that those governments do not perceive themselves to be totally cornered.
Obama is capable of this. He has been generous to Republicans after they had some unfortunate accidents.
But the US should also be wary of the motives behind Saudi Arabia’s yanking the price rug out on oil. There is probably a bunch of strategy relative to the US that is buried in that policy.
Yes, Putin shot himself in the foot with the ruble move. Let’s not have schadenfreude substitute for sanity in what is becoming a dangerous game in the midst of global austerity. Rigid positions are the ticket to rapid destabilization from one Archduke Franz Ferdinand incident. Especially with the idiot Republicans posturing as always “tougher than”.
Wow that analogy is piss poor.
The oil situation is a
byproduct of Saudi action that has thepossibilitypurpose of bursting the speculative bubble on tar sands oil and fracked natural gas as well as torpedoing American, Japanese, and European efforts to wean themselves from oil. The Saudis aren’t worried about the Russians and they don’t take orders from the USA. The USA takes orders from them.The Russians are our enemies and the Saudis are even greater enemies.
What action? The Saudis haven’t DONE anything recently. Why are to blame for the current oil surplus when they haven’t increased their production? Not their fault that Americans love their gas guzzlers and hate public transport. They may be like smut producers, but their business models only work as long as there are plenty of consumers for their products.
Very true, The “action” is the refusal to go along with the rest of OPEC that wanted to cut production, showing who is really the big dog.
An interesting prediction that I saw was that Russia will sell oil to China in exchange for US treasuries to shore up the ruble. By reducing Chinese demand for midEast oil, that would drive prices even lower. Just somebody’s prediction but it makes sense for both parties. I’d go further and say that Russia may trade oil to China for food. Since China is buying up US food producers that would give a backdoor way around trade sanctions as say US chickens are suddenly relabeled as Chinese chickens and the Chinese laugh all the back to the bank.
I’ll say it again…I’m paying more for a gallon of Milk than a gallon of Gas…
I find that crazy
Pretty close for me. $2.52 for the milk. $2.489 for the gas. But you are in Chicago, right? Both prices are higher there.
But the milk does have 2% sales tax on top and sales tax is already in the gas price.
Cheapest gas in the neighborhood is $2.61/gallon.
Cheapest milk is at Aldi’s: $2.69/gallon.
Milk at Jewel. Gas at Sam’s Club but BP is only five cents higher.
Gas $2.409 this afternoon, but oil is up so gas will go up soon, hopefully only for the holidays.
Bet India feels real great about their deals with Russia.
Are MiGs sold in rubles? If so they just got a lot cheaper.
Well it was a trade deal but today they announced a new fighter jointky designed fighter. India Russia relations always leave me sour.
Will the software be full of bugs? Or are the Russians doing that part?