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Ultimatum to Saudi's $50 a barrel

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Ultimatum to Saudi's $50 a barrel

Unread postby dorlomin » Tue 24 Jan 2012, 16:01:45

GoIllini wrote:We threatened that in the '70s and they embargoed us.
The 1973 oil embargo was over US help to Israel during the Yom Kippur war.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby GoIllini » Tue 24 Jan 2012, 16:03:15

dorlomin wrote:
GoIllini wrote:We threatened that in the '70s and they embargoed us.
The 1973 oil embargo was over US help to Israel during the Yom Kippur war.

And also the nationalizations of US oil company assets and the decline of the USD. It was a dare by OPEC to invade them. And we didn't. That was when we still produced 2/3 of our oil. I would call the issue settled.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby dorlomin » Tue 24 Jan 2012, 16:07:52

GoIllini wrote:No, what I'm saying is the fact that Saudi Arabia is a swing producer keeps oil prices about $5 higher than they otherwise would be-
Does it now.

So if the price is higher than it should be, buyers would drop out of the market because they cannot afford it. The oil price is set by what consumers are prepared to pay. If you dont want to pay a price for oil but another consumer does, the market shifts the supply there. If no one wants to pay that price a glut builds up and people have to supply at a lower cost to entice a buyer into the market.

That buyer maybe a tupperware box, an airtravel ticket or petrol at the station.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby dorlomin » Tue 24 Jan 2012, 16:10:12

GoIllini wrote:And also the nationalizations of US oil company assets and the decline of the USD. It was a dare by OPEC to invade them.
Yes, I am sure it was.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby GoIllini » Tue 24 Jan 2012, 16:14:07

dorlomin wrote:
GoIllini wrote:No, what I'm saying is the fact that Saudi Arabia is a swing producer keeps oil prices about $5 higher than they otherwise would be-
Does it now.

So if the price is higher than it should be, buyers would drop out of the market because they cannot afford it. The oil price is set by what consumers are prepared to pay. If you dont want to pay a price for oil but another consumer does, the market shifts the supply there. If no one wants to pay that price a glut builds up and people have to supply at a lower cost to entice a buyer into the market.

That buyer maybe a tupperware box, an airtravel ticket or petrol at the station.

It's also set by what producers can produce it for and how much speculators are willing to pay for the convexity. At $200/barrel, Saudi Arabia's price floor of $60 wouldn't matter very much. (Of course at that point, they would up it to $100). But here, that floor is something that speculators can take advantage of in their pricing.

This is coming from a quant- an active participant in the markets who doesn't disparage speculators at all, but also knows how it works. Take out the price floor, you take out the convexity. Take out the convexity, and you reduce the premium over fair value that speculators are willing to pay.

Also, I think the tupperware box is made from natural gas these days.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby GoIllini » Tue 24 Jan 2012, 16:15:23

dorlomin wrote:
GoIllini wrote:And also the nationalizations of US oil company assets and the decline of the USD. It was a dare by OPEC to invade them.
Yes, I am sure it was.

And we didn't. Back then, we knew an invasion of Saudi Arabia would have meant war with Russia. Today, we know it means war with China. Both of us have nuclear weapons and the war would be settled in 30 minutes and everyone would be unhappy.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby dorlomin » Tue 24 Jan 2012, 16:19:43

GoIllini wrote: Back then, we knew an invasion of Saudi Arabia would have meant war with Russia.
No it wouldn't.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby GoIllini » Tue 24 Jan 2012, 16:40:24

dorlomin wrote:
GoIllini wrote: Back then, we knew an invasion of Saudi Arabia would have meant war with Russia.
No it wouldn't.

Of course it did. And a war on two fronts. And international condemnation. They were backing a lot of these regimes while we were backing Israel.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby dorlomin » Tue 24 Jan 2012, 16:59:43

GoIllini wrote:
dorlomin wrote:
GoIllini wrote: Back then, we knew an invasion of Saudi Arabia would have meant war with Russia.
No it wouldn't.

Of course it did. And a war on two fronts. And international condemnation. They were backing a lot of these regimes while we were backing Israel.
You dont even realise that you are just making this up. From a mush of half understood history of Soviet support for Egypt you have baked a fairy tale of Soviets being prepared to intervene in Saudi.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby GoIllini » Tue 24 Jan 2012, 18:21:35

dorlomin wrote:
GoIllini wrote:
dorlomin wrote:
GoIllini wrote: Back then, we knew an invasion of Saudi Arabia would have meant war with Russia.
No it wouldn't.

Of course it did. And a war on two fronts. And international condemnation. They were backing a lot of these regimes while we were backing Israel.
You dont even realise that you are just making this up. From a mush of half understood history of Soviet support for Egypt you have baked a fairy tale of Soviets being prepared to intervene in Saudi.

Don't forget Soviet support to Syria and not just Egypt in the Yom Kippur War. The Soviets nearly threatened to intervene in it. Surely they would have if we'd invaded the middle-east for their oil.

It's even worse today. Russia was largely self-sufficient on oil, but China isn't. Much of their and India's oil comes from the middle-east. So getting involved in regime changes over there doesn't seem all that smart. Especially after we spent $2 Trillion- about a decade's worth of oil imports- on Iraq.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby SeaGypsy » Tue 24 Jan 2012, 18:25:27

The OP is nuts. The only way this guy is going to scare anyone is by explaining his version of economics to them. Frightening indeed, but enough to get the saudis to decrease their price for their 10%ish of the total oil supply by half? He would have to pull a really mean face and take the bag off his head. Perhaps remove the rose colored glasses?
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby Cog » Tue 24 Jan 2012, 18:35:55

I can't believe you let a cornie troll take you down a 3 page thread. The whole concept of Saudi selling oil at $50, because we want them to, is retarded in the extreme.

Shame on you guys for not calling him out earlier.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby GoIllini » Tue 24 Jan 2012, 18:42:26

Cog wrote:I can't believe you let a cornie troll take you down a 3 page thread. The whole concept of Saudi selling oil at $50, because we want them to, is retarded in the extreme.

Shame on you guys for not calling him out earlier.

For what it's worth, we're kinda the ones who are saying the end is nigh. In reality, things have gotten a lot better over the past couple years- including record low natgas prices, and we're still kinda hanging onto a different worldview. To many folks, some of us look a bit extreme, too.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby SeaGypsy » Tue 24 Jan 2012, 18:46:46

Not if you keep track of the conversation on here. The USA's situation could really be a hell of a lot worse. Many regulars here have accepted that the USA/ rest of the world/ is not going down the toilet next week because of peak oil. The situation is fluid and dynamic, reflected in an adult conversation on the subjects involved.

As opposed to the OP which is basicly flat out trollery.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby mjacqson » Tue 24 Jan 2012, 18:50:40

SeaGypsy wrote:Not if you keep track of the conversation on here. The USA's situation could really be a hell of a lot worse. Many regulars here have accepted that the USA/ rest of the world/ is not going down the toilet next week because of peak oil. The situation is fluid and dynamic, reflected in an adult conversation on the subjects involved.
Heads in the sand here we go again...salute from heaven....

As opposed to the OP which is basicly flat out trollery.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby SeaGypsy » Tue 24 Jan 2012, 18:54:57

Hey Mecweird, this isn't facebook and I don't know your 'code'. We write in plain English here, mostly.
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby eXpat » Tue 24 Jan 2012, 19:01:18

thisisit wrote:
eXpat wrote:
thisisit wrote:The fact remains that I don't care about Saudi's neither do you, so let's not extrapolate how they could accept to sell their oil at 50 or 35...I am beeing generous when I offer a 50 dollar target...I'd rather get it free and when I say free I mean free I only presume they would find it a right price at 50 in their infinit kindness...

How would you do that? Threaten then with nukes?

I have the answer to your question but I'm afraid it is a defense security matter, my hope is intelec in the decision office find it by them self...I suppose they are smart enough,...

Sooo, is a "if I tell you i would have to kill you" thing?? 8) [smilie=glasses7.gif]
What are you going to use? HAARP?
You understand that the rest of the world wouldn´t sit on their hands while the US goes bullying the most relevant producer of Oil, don´t you?
"I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it."
George Bernard Shaw

You can ignore reality, but you can't ignore the consequences of ignoring reality.” Ayn Rand
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby Pretorian » Thu 26 Jan 2012, 17:32:38

ian807 wrote:And short of seizing their entire country as well as all their other customers willing to pay more, how would such a thing be enforced?


Naval blockade
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby Pretorian » Thu 26 Jan 2012, 17:38:11

GoIllini wrote:We tried that in the 70s. Back then, they only had to spend a few hours in line. Given that we import much more of our oil today and that you've just priced the Bakken Shale out of production, try more like days instead.

The best solution to high oil prices... is high oil prices. High oil prices get people to buy smaller cars, get oil companies to drill more places (like the Bakken Shale) and bring more to market, and ultimately force the price of gasoline (or a replacement energy) back down.


How about this.. High oil prices AND a $50 a barrel tax to fund US Navy and whatnot that will be guarding those tankers as they pass by. 3 billion barrels per year and you got yourself a free Navy :wink:
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Re: Ultimatum to Saudi's $50 a barrel

Unread postby Pretorian » Thu 26 Jan 2012, 18:01:38

Cog wrote:I can't believe you let a cornie troll take you down a 3 page thread. The whole concept of Saudi selling oil at $50, because we want them to, is retarded in the extreme.


No, the whole concept is to monetize US military. With $ 2 billion per day budget, it has to get pro-active in terms of earning it's keep eventually. Half of the world was skipping on their military for 60 years or so, it's a good time to call in the chips now. Again, no invasion is necessary.
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