Middle East - Oil or Oil?

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KugsCheese's picture
KugsCheese
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Middle East - Oil or Oil?

The volatility in Oil has been framed as a FED devalue issue.   But maybe if we take a step back, oil is running out and that is why the ME is combusting?   (less oil revenue in the ME means less handouts to keep the people happy.)

No_Fiat's picture
No_Fiat
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 I do not think that the

 I do not think that the oil is running out yet.  A new 1100 mile pipe was completed in 2001-2002, from the Caspian Sea to a seaport just 5 miles north of Iraqian northern border.  It heard that the muslim nations do not want to accept the US dollar as payment anymore.

signalfire's picture
signalfire
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Not running out so much as

Not running out so much as being encircled and ever-more controlled by a few power centers.  The wagons are circling and both the natives and the cowboys have nuclear weapons.

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wizardg
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The quickest way to hurt

The quickest way to hurt America and our flawed way of life is to stop taking dollars for oil.

 

But what are they going to take Euros?

 

 

Damnthematrix's picture
Damnthematrix
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running out
KugsCheese wrote:

The volatility in Oil has been framed as a FED devalue issue.   But maybe if we take a step back, oil is running out and that is why the ME is combusting?   (less oil revenue in the ME means less handouts to keep the people happy.)

I believe so too.....  Google "Export Land Model".

OPEC nations traditionally subsidise fuel to ridiculous levels.  This occurred in the US' heyday too....  5c/gallon gasoline and three ton cars to burn it in!  Until that is, they hit Peak Oil.  At which point all bets are off, and if Saudi Arabia has peaked, as I suspect, they will need to rectify the subsidies, and it could easily cause high inflation and a revolution as happened in Egypt.

Running out is not an issue, it's ALWAYS flow rate.  Pipelines or not.  Remember when BP replaced a rusty 18" pipeline in Alaska a couple of years ago with a new 12" one? (not sure of the exact numbers, but you get my drift......)

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jumblies
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Damnthematrix wrote:
Damnthematrix wrote:

Great interview. Interesting he says (2:40 mark) Mexico is the number 2 exporter of oil but will be a net importer in the next 5 years. I wonder if Mexico will see some troops paying them a visit? And he mentions Angola around the 3:15 mark which 'aint a million miles (it's about 2000 Km) from Uganda where those 100 heavily armed US "advisors" (not combatants, honest) were deployed this month.

Good times head.

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FuelPoor2507
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Normal 0

Oil is not necessarily running out, there are massive discovered, and undiscovered, reserves under the Saudi desert and the surrounding ME countries. There are massive reserves across the world such as the Russian Federation countries – especially in Kazakhstan; the Caspian region also has some relatively recent large oil reserve discoveries. Much of the discovered reserves now tend to be in the most inhospitable locations throughout the world. They are either under the sea bed in some of the worst sea conditions, or in areas that are challenging to get to. Another aspect of oil reserves tends to be that they are ‘owned’ by countries ruled by despotic leaders or unstable governments.

The production of oil is like most commodities throughout the world; put too much on the market at once and the price will fall due to a glut, this obviously results in lower revenues for the producers, so they control the quantity released onto the market to ensure sustainability in a rational return on the product.

There is always a ‘Bash America’ comment on most political issues, but oil tends to at the forefront of the argument in most cases. To suggest that the producers refuse to take dollars in payment for oil is a rather irrational statement; oil is and always will be traded in Dollars an institution that would be very difficult to change. Above all else I suspect that the producers, and especially the Saudis and their Arab brothers, would only accept Dollars. They see the US Dollar as a symbol of real wealth and spending power; I doubt they would hold such currencies as the Euro in such high esteem. So there is NO chance of bashing America in this way.

America (US) was the first country to utilise oil, and other hydro-carbon products, in such large quantities, especially as they were developing their automobile industry and large fleets of heavy inefficient engined, cars were appearing on the roads of the US. About this time, during the early 20th. Century, the US had discovered oil on it’s door step and was fairly self-sufficient; oil across the world had largely gone undiscovered. As discoveries were realised in other regions of the world the Americans began purchasing oil from overseas in an effort to hold back their own reserves. This could be considered the reason why oil is traded in Dollars, and also reason for scowering the world for other as yet undiscovered reserves.

 

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jumblies
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FuelPoor2507 wrote: Oil is
FuelPoor2507 wrote:

Oil is not necessarily running out

Right, and I don't think anyone here would be suggesting that it is. Peak oil is about it becoming prohibitively expensive to extract and produce it, not about the oil running out.

FuelPoor2507 wrote:

there are massive discovered, and undiscovered

How can we say it's massive yet undiscovered? Surely we should discover it first and then go "wow, it's massive!". And in terms of the massiveness, how massive? And if the same amount was discovered a year later would we consider it massive still? (global demand is rising). And massive it may be, but how much would it cost to extract? I'd suggest any remaining reserves will be very expensive (financially and ecologically) to extract (like shale and deep-sea wells).

FuelPoor2507 wrote:

Much of the discovered reserves now tend to be in the most inhospitable locations throughout the world. They are either under the sea bed in some of the worst sea conditions, or in areas that are challenging to get to.

Right, and as mentioned above this is where peak oil theory comes in. I'd suggest checking out the excellent theoildrum.com for more info.

FuelPoor2507 wrote:

Another aspect of oil reserves tends to be that they are ‘owned’ by countries ruled by despotic leaders or unstable governments.

I would suggest that much of the instability comes from outside influence. We've seen quite a lot of that in the Middle East and South America, typically instigated by the USA.

FuelPoor2507 wrote:

There is always a ‘Bash America’ comment on most political issues, but oil tends to at the forefront of the argument in most cases. To suggest that the producers refuse to take dollars in payment for oil is a rather irrational statement; oil is and always will be traded in Dollars an institution that would be very difficult to change.

Well, as mentioned above the US has a well documented track record of interfering in other country's affairs, so no smoke without fire. And if you consider the case of Iraq and Libya, both these country's leaders were looking to shift their trading of their oil from USD to Euros and gold. They are both dead and the US instigated this action. And as for it always being traded in USD, I think the writing is on the wall that this will be changing very soon.

FuelPoor2507 wrote:

This could be considered the reason why oil is traded in Dollars

A cursory glance at the history books says otherwise.

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FriscoMike
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FuelPoor2507 wrote: To
FuelPoor2507 wrote:

To suggest that the producers refuse to take dollars in payment for oil is a rather irrational statement; oil is and always will be traded in Dollars an institution that would be very difficult to change. 

When you say difficult to change....do you think the devaluation of the $ would help facilitate that change?  

I have heard that the IMF is looking at going to Special Drawing Rights as a form of new currency.

Wonder why China is slowly but surely dumping all us $ by buying commodities with it?

Alliances are not eternal.

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