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Isn't the cheap oil the result of the Saudis arm-twisting the Russians and Iranians ? P.S: Shell is starting an exploration of oil in the Arctic, after Obama's

by enupten 12y ago

Isn't the cheap oil the result of the Saudis arm-twisting the Russians and Iranians ? P.S: Shell is starting an exploration of oil in the Arctic, after Obama's executive order. I don't think the bit about investment in new rigs is well-founded.

vixen99 12y ago
Maybe in your neck of the woods the expression has a different meaning but I thought 'arm-twisting' meant getting someone to do something they initially didn't want to do. Hardly the case with the Russians and the price of oil.
- nl 12y ago
  The implication is that the Saudis are a US proxy, and the arm twisting is that they should change their policy on Ukraine. In the case of Iran it's more just to try to hurt their economy.
- enupten 12y ago
  In my neck of the woods, people are perhaps less gullible, too.
nl 12y ago
The causes of cheap oil are many, and varied. They include: - a reduction in Chinese demand - increased shale oil production - Saudi desire to reduce competition from high cost producers including Russia and shale oil - the failure of ISIS to capture the Iraqi oil fields - unanticipated increased production from Libya That's just first order causes. Second order causes are things like the US desire to hurt Russian foreign exchange by hitting their exports, and Saudi desires to decrease investment in new technology.
zaroth 12y ago
I was referring to a declining cost of oil historically being considered an economic stimulus because oil was money that was traditionally flowing out of the country. So reducing household/business energy cost meant more money in the bank for investment / disposable income spent in the local economy. Now all of a sudden the rhetoric is the slowdown the last quarter was due to the falling price of oil leading to a decrease in manufacturing orders for pipelines and rigs. The shift being that US produces most of its own oil (or used to before the latest Price Wars). If consumer confidence is low, the energy savings are paying down debt or going to savings, so now oil price falling is a net loss to the economy? Very hard to believe this, but that's the "word on the street". Not like the price of gas actually stayed low for long, refineries tightened up and the price recovered significantly, even while oil remains down 50%. Oh well...

by enupten 12y ago

vixen99 12y ago

Maybe in your neck of the woods the expression has a different meaning but I thought 'arm-twisting' meant getting someone to do something they initially didn't want to do. Hardly the case with the Russians and the price of oil.

nl 12y ago
The implication is that the Saudis are a US proxy, and the arm twisting is that they should change their policy on Ukraine. In the case of Iran it's more just to try to hurt their economy.
enupten 12y ago
In my neck of the woods, people are perhaps less gullible, too.

nl 12y ago

The causes of cheap oil are many, and varied. They include: - a reduction in Chinese demand - increased shale oil production - Saudi desire to reduce competition from high cost producers including Russia and shale oil - the failure of ISIS to capture the Iraqi oil fields - unanticipated increased production from Libya That's just first order causes. Second order causes are things like the US desire to hurt Russian foreign exchange by hitting their exports, and Saudi desires to decrease investment in new technology.

zaroth 12y ago

I was referring to a declining cost of oil historically being considered an economic stimulus because oil was money that was traditionally flowing out of the country. So reducing household/business energy cost meant more money in the bank for investment / disposable income spent in the local economy. Now all of a sudden the rhetoric is the slowdown the last quarter was due to the falling price of oil leading to a decrease in manufacturing orders for pipelines and rigs. The shift being that US produces most of its own oil (or used to before the latest Price Wars). If consumer confidence is low, the energy savings are paying down debt or going to savings, so now oil price falling is a net loss to the economy? Very hard to believe this, but that's the "word on the street". Not like the price of gas actually stayed low for long, refineries tightened up and the price recovered significantly, even while oil remains down 50%. Oh well...