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You are right in that the article doesn't discuss what is going on with not just U.S. shale oil but also how U.S. oil can be sold on the global market rather th

You are right in that the article doesn't discuss what is going on with not just U.S. shale oil but also how U.S. oil can be sold on the global market rather than be exclusively for the domestic market as used to be the case. For Saudi Arabia the deal with America is that the House of Saud get to stay in power in exchange for the oil, it is that simple. If there is this 'uprising' that you speak of then it will be Uncle Sam's job to put it down. The original deal goes back to the time when Britain was supposed to have Iran and the U.S was supposed to have Saudi Arabia. On the back of this deal the Saudi 'Royal Family' have built some myth of entitlement to the throne and being a proper 'royal family'. It is an illusion, there is no legitimacy there. So long as they wear the 'traditional' outfits and keep the 'traditional' laws nobody is going to see that the emperor has no clothes. I don't get the impression that there is any type of organisation against this so-called 'royal family' with a class of people clued up as to how to live in a non-feudal society. They are far from socialist, mere serfs in an offshoot of empire, relatively rich because that is where the oil comes from. They never had industrial capitalism, they went straight from sand and a bit of tourism revenue to the monster of finance capitalism, trickledown economics and everything that the IMF demands. Because of the oil they do get a few empty gifts from the system such as cheap petrol. For decades those dollars have flowed back to the West in arms sales. To an extent this clawing back of the money has also happened with luxury goods too. So the serf-grade workers of Saudi Arabia are doubly screwed, when this imaginary 'uprising' happens and they impose a government that 'shares the wealth' they will find it has all been spent on underground aircraft hangars and bits of paper that are allegedly investments in the Western stock market. My favourite fact regarding oil is how it all went wrong in the 1970's with the oil crisis. What only a careful reading of the Wikipedia article tells you is that the US increased grain prices 300% to pay for Vietnam. This was bad news for the OPEC countries, places like Iran had kind of got used to affordable wheat. This wheat had kind of covered the U.S. balance of payments for oil imports before Vietnam, so it had been a happy arrangement. Our history tells the 1970's oil crisis very differently, forgetting the wheat price hikes. As the article states the government can make quite a few concessions, e.g. women driving, allowing people to go to the theatre, that sort of thing. They can buy off those that might resent how things are going by these concessions yet still keep a tight grip on the deal which is essentially oil for arms and food.

simonh 8y ago
I don't think the recent liberalisation is about buying people off. I think it's a recognition that if they're going to establish anything like a real economy, women are going to play a huge part in that because so much of their human capital is locked away in the female population. They’re dramatically more entrepreneurial and better educated than Saudi men.
- nikbackm 8y ago
  > they’re dramatically more entrepreneurial and better educated than Saudi men. How can that be if they've been locked up into their homes until recently? (To my limited understanding of KSA)
  - simonh 8y ago
    A bit over half of University graduate students within KSA are women and they generally achieve higher grades than male students. There are also tens of thousands of female students studying abroad. Their education is largely segregated within the kingdom, but they also have at least one all-female university. However less than 10% of the work force is female, so there's a huge reserve of expensively trained unused female talent.
    - conformity 8y ago
      > generally achieve higher grades than male students Because they follow rules obediently. That same tendency nets them lower salaries, with a conciliatory style during negotiations.
      - Brometheus 8y ago
        Benefits the economy even more.
adventured 8y ago
> For Saudi Arabia the deal with America is that the House of Saud get to stay in power in exchange for the oil, it is that simple. If there is this 'uprising' that you speak of then it will be Uncle Sam's job to put it down. That certainly used to be the deal. The US no longer has any need of OPEC oil. The US got 3.3 million barrels per day from OPEC in 2017, down from 4.2m in 2012. I haven't seen the last two months of data for 2018, but I believe that fell below 3m per day for 2018. That will drop by another million barrels per day over the next few years. US oil production is estimated to climb to 16-18 million barrels per day over the next eight to ten years give or take. OPEC now stands in the way of the US maximizing its oil position and the value of its enormous production. The US will benefit from destroying Saudi Arabia at some point. US global hegemony (courtesy of energy production) is increased if you permanently decimate Saudi Arabian oil production. All the countries that need Saudi Arabia's oil, including China, will find themselves into an economically compromised position and require US oil to fill the demand. Between now and the switch to all-electric vehicles globally (20-30 years), the US is economically best served to deplete as much of its oil as possible. If you're a nefarious US looking to increase your power, the only question would be the ideal time to pull the trigger and collapse them. You boost US production from 12m barrels per day, to 18m, and slash Saudi down by six plus million by turning their country into a war zone. 18m barrels per day times $85 oil = $1.53 trillion Versus today's 12m barrels per day at $50 oil = $600 billion Over ten years, that value gap is reasonably $8 to $10 trillion. How much are Exxon and Chevron (2 of the 3 largest holders of acreage in the Permian) worth under that 18m * $85 scenario? Or push it a notch further: 2029, 20m barrels per day at $100 oil (equivalent to maybe ~$60 in 2004, a tolerable inflation adjusted level). $2 trillion per year, the size of Italy's whole economy. It would pour a bonanza of epic proportions into the domestic US economy. I don't believe either 18m or 20m barrels per day of US production can co-exist in the next eight to ten years with Saudi Arabia's ~10-11m production (much less their desire/fantasy for more production at a higher price to keep up with their budget). Simple question: what will the US do to realize that value potential? It'll certainly not be concerned about the collapse of Saudi Arabia, putting it mildly. Cynically or not, there's a popular opinion about what the US is willing to do as it pertains to oil; what then will it do for its own, massive, direct benefit re oil? That benefit scenario is several fold better than just ensuring oil supply from overseas as in the past. The days of (non-Canadian) foreign oil being a strategic critical are nearly over, which means the US allegiance to the Saudi deal is running out. Everyone knows how willing the US is to flip such an allegiance when it's convenient, there's no scenario where the US will feel bound to continue with that after it no longer serves the US interests.

simonh 8y ago

I don't think the recent liberalisation is about buying people off. I think it's a recognition that if they're going to establish anything like a real economy, women are going to play a huge part in that because so much of their human capital is locked away in the female population. They’re dramatically more entrepreneurial and better educated than Saudi men.

nikbackm 8y ago
> they’re dramatically more entrepreneurial and better educated than Saudi men. How can that be if they've been locked up into their homes until recently? (To my limited understanding of KSA)
- simonh 8y ago
  A bit over half of University graduate students within KSA are women and they generally achieve higher grades than male students. There are also tens of thousands of female students studying abroad. Their education is largely segregated within the kingdom, but they also have at least one all-female university. However less than 10% of the work force is female, so there's a huge reserve of expensively trained unused female talent.
  - conformity 8y ago
    > generally achieve higher grades than male students Because they follow rules obediently. That same tendency nets them lower salaries, with a conciliatory style during negotiations.
    - Brometheus 8y ago
      Benefits the economy even more.

adventured 8y ago

> For Saudi Arabia the deal with America is that the House of Saud get to stay in power in exchange for the oil, it is that simple. If there is this 'uprising' that you speak of then it will be Uncle Sam's job to put it down. That certainly used to be the deal. The US no longer has any need of OPEC oil. The US got 3.3 million barrels per day from OPEC in 2017, down from 4.2m in 2012. I haven't seen the last two months of data for 2018, but I believe that fell below 3m per day for 2018. That will drop by another million barrels per day over the next few years. US oil production is estimated to climb to 16-18 million barrels per day over the next eight to ten years give or take. OPEC now stands in the way of the US maximizing its oil position and the value of its enormous production. The US will benefit from destroying Saudi Arabia at some point. US global hegemony (courtesy of energy production) is increased if you permanently decimate Saudi Arabian oil production. All the countries that need Saudi Arabia's oil, including China, will find themselves into an economically compromised position and require US oil to fill the demand. Between now and the switch to all-electric vehicles globally (20-30 years), the US is economically best served to deplete as much of its oil as possible. If you're a nefarious US looking to increase your power, the only question would be the ideal time to pull the trigger and collapse them. You boost US production from 12m barrels per day, to 18m, and slash Saudi down by six plus million by turning their country into a war zone. 18m barrels per day times $85 oil = $1.53 trillion Versus today's 12m barrels per day at $50 oil = $600 billion Over ten years, that value gap is reasonably $8 to $10 trillion. How much are Exxon and Chevron (2 of the 3 largest holders of acreage in the Permian) worth under that 18m * $85 scenario? Or push it a notch further: 2029, 20m barrels per day at $100 oil (equivalent to maybe ~$60 in 2004, a tolerable inflation adjusted level). $2 trillion per year, the size of Italy's whole economy. It would pour a bonanza of epic proportions into the domestic US economy. I don't believe either 18m or 20m barrels per day of US production can co-exist in the next eight to ten years with Saudi Arabia's ~10-11m production (much less their desire/fantasy for more production at a higher price to keep up with their budget). Simple question: what will the US do to realize that value potential? It'll certainly not be concerned about the collapse of Saudi Arabia, putting it mildly. Cynically or not, there's a popular opinion about what the US is willing to do as it pertains to oil; what then will it do for its own, massive, direct benefit re oil? That benefit scenario is several fold better than just ensuring oil supply from overseas as in the past. The days of (non-Canadian) foreign oil being a strategic critical are nearly over, which means the US allegiance to the Saudi deal is running out. Everyone knows how willing the US is to flip such an allegiance when it's convenient, there's no scenario where the US will feel bound to continue with that after it no longer serves the US interests.