August 25, 2015

The Oil Wars Continued

This is interesting.

The author paints a picture of a very grim future for oil reliant economies. The long and the short of it is that fracking and shale are the doom of the Saudis and likely a few others.

The Saudis have no price floor from an extraction standpoint but they do have a domestic funding problem with prices below a certain value. (That value seems to be in dispute.)

If Mr. Maudlin is correct, there isn't even anything the Saudis can do to stave this off. Looking at the list presented shows more than a few nations that would crumble into anarchy but for oil funding. Saudi Arabia, Venezuela (already well on their way), Russia, Iran, Nigeria, Algeria. I think their demise would be dependent on how much of their GDP is on oil. I don't know much about most of them and how tied into oil they are but I can tell you the Saudis and the Iranians are in big big trouble if he's right.

Moreover, I'm afraid of what comes after. What happens to Saudi Arabia when the petrodollars dry up? Mass riots, topple the government and ISIS takes over. Frankly the laws the Saudis live under aren't too far off of what ISIS has in mind.

If he's right, we're about to get on a very very rough rollercoaster for the next few decades and I don't think its going to be fun. Let's hope he's wrong and I am too.

Posted by Duffy at August 25, 2015 03:11 PM | TrackBack

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