In the Asylum Watch post last Sunday, we talked about how the chaos President Obama has inflicted on Syria and Iraq has to do who gets to control the flow of oil and gas from that region and a secret deal between the US and Saudi Arabia. In exchange for US efforts at regime change in Syria, the Saudis have agreed to increase oil production at a time of over supply and keep oil prices down for a year or two. The speculation is that this secret deal is designed to put pressure on Iran and Russia to behave themselves and to ensure that it is America’s friends who eventually will get to control the flow of oil and gas from the region. Well, so far the Saudis are living up to their side of the bargain. Oil prices are way down and you should be enjoying lower gas gasoline prices for the next year or so.
Winners and Losers
It’s probably too late for the Democrats to benefit from the lower price at the pump in the upcoming mid-term elections. Quick Draw Barry was a tad slow, apparently. But, with energy prices falling, consumers everywhere will be the big winners. No doubt the good folks in Europe, where their economies are in serious decline and Russia is threatening to cut back on their gas supplies, are breathing a sigh of relief, with winter breathing down their necks. All the SUV drivers in America are smiling, I’m sure.
Whether or not the powers that be realize the results they want from Iran and Russia, these dramatically lower prices are definitely going to hurt their economies. I read somewhere recently that Iran needs a price of around $117 per barrel to break even with their nation government spending levels. Russia will be feeling the pinch, as well. Of course, there are other countries that are heavily dependent on the revenues from their oil exports. Iraq, Libya, Mexico, Norway, and the socialist paradise where I live come to mind. Here in the 21st Century Socialist State, the government has been milking their cash cow for all she is worth for fourteen years, while keeping her on a very meager diet. Most of the oil produced here is what is called “extra heavy”. In the past, there was enough production of “light” oil to mix with the “extra heavy” to make it marketable. But, light oil production has been on the decline and the government is now buying oil at market prices from Algeria and Russia to mix with the “extra heavy” and now this Socialist Republic needs a price close to $200 per barrel to cover the spending level to which government is addicted. The cost to refine oil produced here is currently priced at $77 per barrel. That’s a long ways from $200. You can see, I hope, that this government will only be able to stay in power through even more repression. So, dear friends, keep this humble observer of the asylum in which we all have to live in your thoughts as things continue to spin out of control down here.
America will have its losers, too. Ironically, America’s oil boom of the last several years has been due the huge increase in production of “shale oil” and the use of fracking and horizontal drilling technologies and, due to its higher cost of production, it is oil shale companies that will get hit hard.
What To Do With The Money You Save At The Gas Pump?
The Federal Reserve lap dogs at CNBC have some patriotic advise for you.
I say spend, spend, spend those pennies you’re saving while gassing up the F-150. And, according to Moody’s, you should have a lot of dough to play with.
I have to wonder if the author, Todd Schoenberger, of the CNBC article will be charged with plagiarizing form Janet Yellen’s (Fed Chiairperson) recent speeches. Ms. Yellen, you see, thinks you all have been very unpatriotic during this “Recovery of No Recovery” by refusing to go deeper in debt and spending that borrowed money on ever more consumption. So, the message is clear. It is your patriotic duty to take this gift from Saudi Arabia and spend, spend, spend! Don’t you dare think of saving more or of paying down some of your current debts. That would be unpatriotic of you!
By the way, the New York Times, has an idea for how you can spend your windfall. They are offering you a chance to go on an exotic tour with one of their journalist. ( No doubt to boost their sagging bottom line.) For only $6,995, you can travel with foreign correspondent Elaine Sciolino to _ are you ready for this? _ Iran! The tour, to a country with whom the US has no diplomatic relations and is in fact placing economic sanctions on the country, is being billed as a chance to “discover the ancient secrets of Persia.” I’m sure you would go with the blessings of our Muslim -In-Chief, Barack Obama. That’s patriotism for you!
I suspect that Ms. Yellen and her lap dogs will see their Christmas wish come true, right?
Well, that’s what I’m thinking. What are your thoughts?