Skip to comments.Leave It To The New York Times To Gin Up A Downside To The American Oil Boom
Posted on 05/02/2013 8:31:48 AM PDT by 2ndDivisionVet
In a clunky op-ed in the Sunday New York Times called The Dark Side of Energy Independence, Benjamin Alter and Edward Fishman, staffers at Foreign Affairs, see all sorts of negative geopolitical effects resulting from an American oil industry that has become so good at extracting fossil fuels that were set to enjoy energy independence from the the rest of the world.
In their eyes, America wont get to enjoy this energy independence at all. Rather we will suffer the consequences of it. Thats because Americas oil and gas bonanza will drive down global energy prices, undercutting the foundations of petrostates everywhere, they write.
Alter and Fishman cite the head of commodities research at Merrill Lynch who has suggested that oil could fall to $50 a barrel within two years. This price is so low, they write, that it would destabilize already unstable autocracies like Bahrain and Saudi Arabia and even Russia, all of which rely on petrodollars to pay off restive elements and pacify the masses.....
(Excerpt) Read more at forbes.com ...
You mean the ones who hate us and want to kill us?
Well, it’s easy to see they’re playing for the other team now, isn’t it?
If we stopped buying oil, and the far East started using methane hydrates, the current oil producing nations would be hurt very badly.
They also made the point that the oil dollars flowing into those States distorted they economies,and set them up to fail long term. In other words, a nation that is a boom town.
Not as nuts as it sounds.
You sir, win the Bill Maher award: “Liberal Bullshit”
Regardless of whether one approves of his methods, GWB at least tried to do something about this potential problem - and what did the Times have to say about that?
It often seems New York liberals think their city should be the only developed part of North America - that everybody else should live on cute little farms and use horses for transport and labor and be no nuisance to their betters in Manhattan who are making the big decisions for them.
What BS. Energy demand will grow with supply. China and India will remain has major importers and their economies will rapidly grow with cheaper energy.
Developing countries with oil will be able to divert more of their energy supplies to domestic use..this is a net win for everybody. Fracking rules.
From a long-term geopolitical view, I don’t see it as bad. For centuries, the Arabian Peninsula was more akin to the Middle Ages than the rest of the civilized world. Sand, camels, harems, tribes, etc.
Then came oil. Entire world strategies had to be devised to protect the oil. Lives and treasure were expended for that oil.
Their culture cannot, nor will it ever, support a Western-style government as long as their cult (some call it a religion) holds sway.
If the west becomes energy independent, the region will again revert to the Middle Ages, which is where they belong.
I see no downside.
You are right - the Times is doing what liberals always do, which is running every scenario through a zero sum game mentality (not to mention the America is always wrong mentality too). No other way to reach their absurd conclusion.
the same ones that send their terrorists to kill us, you mean??
Do these fools realize that petrodollars is the main reason the raghead terrorists are able to be terrorists at all? If we need no more oil from Muslim states, they become irrelevant no matter who is in charge. Let them crash and burn and go back to being goat herders and humpers and killing themselves, because they will no long have the monetary ability to kill us.
Those countries don’t give a damn about us. Who gives a Shiite what happens to them? Those people take our money and rape and kill us!
The naval gazers are speculating that oil at $50 per barrel will some how destabilize countries. They are forgetting that as early as 2004, oil was LESS than %50 per barrel.
I call this the Wall Mart economics fallacy (Trademark by Tenaciou1).
Liberals insist that Wall Mart is bad for the American economy because they drive the price of staples lower (more affordable goods). What they really mean is that Wall Mart is an evil empire that rakes in too much money and doesn't pay enough taxes.
What they miss is that the standard of living is improved across the board when Wall Mart drives staple good prices down or when the price of energy goes down. There is more private disposal income available for consumer distribution when prices fall. The dollars go farther to drive the private economic engine.
The authors narrative presumes that the wealth of the state (government) is more important than that of the citizens. In America, our government does not own the fossil fuels and thereby cannot profit (revenue) from it except through taxation. There are a great many countries where the government does profit from fossil fuel sales. Saudi Arabian citizens do want energy costs to go up. It helps their country by pacifying their government.
Lower energy prices as traded on futures markets, ironically, would not necessarily improve the net profits of "Big Oil". The volume might go up but the revenue as prices drop may remain level at some point. HOWEVER, the diversity and reserves will drive OPEC to compete with a burgeoning private faction. At some point OPEC will have to cede control of market supply and start competing with each other again (in theory).
Any way you cut it, the authors are wrong on the impact to Americans.
Aren’t these the same people that have been pushing alternative energy so we won’t be dependent on those countries?
It happened in the 80’s and libs were happy as little clams that the oil industry in the USA was practically destroyed.
I see no downside for the US to become totally energy self-sufficient and for the Islamofascist, terrorist-supporting oil producing states to go bankrupt.
This was in the New Yuck Times?!!
I could have sworn that the NYT gospel was that the US might was the source of all evil and instability in the world.
They don't have to worry from their perspective. If oil falls that low our boom will be over. The tight fields like shale are expensive and have a rapid decline rate. If we reach $50 we won't stay there long.
Black Gold! ... Texas Tea !!
Free market capitalism kinda works that way.
Payback is gonna be a real bummer for them.
PEAK OIL, PEAK OIL....let’s just let the market decide the supply/demand equations on energy.
They tell me that they have to have about 68 bucks a barrel to stay on top. But, once pumping is started, many wells cant be shut down because they lose the well due to pressure reduction. Oh they can shut them down for a couple days, but after that, they have to get them going again.
The same. Which explains why NYT has taken this gloomy position.
Yes, and ironically the alternative sources they’re pushing are such lousy substitutes for fossil-fuel energy that they instead make us MORE dependent on foreign oil.
Wouldn’t it be terrible if the petrostates were unable to finance the expansion of Islam? Oh no we can’t have that. /s
So if we become independent the Mooslips will really want to kill us?
Pray for America to Wake Up
The supposed reason for government supported alternative energy programs, CAFE standards for automobiles and all the other government imposed and taxpayer funded energy conservation programs is to make America energy independent.
Hundreds of billions of taxpayer dollars have been wasted and stolen to supposedly achieve energy independence.
None of the programs ever came close to working but the are still supported by the Obama Administration and the MSM.
Now that advances in oil and gas drilling and (horror of horrors) fracking technology is causing energy independence, it is called a terrible thing by the MSM.
None of this oil and gas technology was funded by taxpayers or the liars and fools in government who promote wasteful alternate energy programs.
Obama’s head of the Department of Energy said he wanted to see gasoline priced at $10 per gallon. Now that the price may go down the government liars and their agents in the MSM are upset.
How can you say such a thing about the most inclusive group in the entire world?
So let me get this right...according to the NYT the US should not develop its own oil resources which would give us cheaper energy prices as well as more jobs and economic growth and instead keep importing oil at inflated OPEC prices just so some despot oils sheiks can stay in power and fund terrorism against the US. Is this an episode of the Twilight Zone?
This could be catastrophic. Where would our enemies get the money to pay off the families of their suicide bombers if we didn’t buy oil from them. We need to increase federal aid to these unstable terrorist regimes, so they will not be hurt by our success.
They really think this way. Which is how they justify paying off restive elements and pacifying the masses of unstable autocracies like US and UK with tax dollars and borrowed dollars. Anything to prop up the corrupt political class. Especially when you see yourself as one of them.
Local MPLS Star & Sickle does this at least once a week.
Nothing good to say about Bakken.
No need to drive down oil prices, just export for a dime a barrel less than Saudi Arabia. The house of Saud is running out of oil anyway.
Oh well, back to beating camels and marrying women, or was it the other way around? Not sure with Mohamads rules and all.
It is only ironic if you think that is accidental. This article shows the NYT does not think that way. They have been using the "we are doing this for your own good" to destroy America for a long time now. Evil people have a hard time controling strong moral and independant people. So, things had to "Change".
Do you believe the Saudi oil price is fixed at a certain dollar amount? Contract delivery prices vary by the hour.
Doyou belive that the Saudi’s do not fix the price of oil by their published production quota? They openly state when the price is getting too low that they will reduce production to jack the price back up, and the market obliges. If the US could supply the same production they could say that they will produce zero and the market would not oblige.
The price of oil is set by its availability now, because of monopoly. A healthy market price is set by demand. Seems the same but it actually is quite different. If it was set by demand, the price of oil would hover just over the price of production. It does not.
But the issue is that they are going to fall one way or another. Oil rich nations tend to be distorted in that oil becomes the main, or only, pillar of their economy. That weakens the state in the long term. Like a company town when the factory closes, the oil country dies. They don't have any other source of income to transition to.
For the US, long term, this can be a good thing. If we have someone who actually does long term strategy (which I doubt), it would place us in a stronger position.
They have been exporting their hotheads to us now, and they are already getting desperate on their declining oil supply. As they get more desperate, they will fund more terrorism to keep the heat off themselves.
Again, this doesn't have to be a bad thing. We just need to be prepared to counter the destabilizing effect.
They did not make sense. They spouted some correct facts, but connected dots that do not connect, took a vacuous view of cause and effect, and filtered everything through moral equivalency.
In other words, liberal bullshit.
The price of oil is not fixed, it constantly moves. The OPEC production ceilings quit being issued in 2007. They still talk about a target, but do not hold/penalize countries to a set amount.
They openly state when the price is getting too low that they will reduce production to jack the price back up, and the market obliges.
I would say the market responds to change in supply and demand, basic econ 101.
If the US could supply the same production they could say that they will produce zero and the market would not oblige.
The US has constantly supplied all it could and the market reflects that. While we don't shut down production from established wells, when the price is high we drill more, and when it is low we drill. Wells constantly decline in production so there is a lot of moving targets.
The price of oil is set by its availability now, because of monopoly.
The price of oil is not set, it constantly responds to constantly changing market conditions. What price would you base your -10¢? The moment you offer oil for sale at below market prices, you change the market price.
A healthy market price is set by demand.
All commodity markets have their price set by supply and demand. A monopoly in that market is part of the supply, regardless if you like it or not.
Go for it, believe what you want, what I have to say means nothing to you anyway.
You have a good day.
“At a time of desperate steel shortage, we cannot afford to permit the expansion of a steel company which produces too much, because it might throw out of business the companies which produce too little, thus creating an unbalanced economy which...”
Insert oil for steel and it’s right off the pages of Atlas Shrugged. Who wants to bet money the government will latch onto this news story as a justification to put even more limits on oil drilling?