One can postulate, based on the 1985-86 history, that their economic boom will wither as crude oil prices retreat to the point that working over rapidly declining frac wells is no longer attractive. That economic point varies with the debt level of the producer and the characteristics of a particular well. Numbers in the $30 to $50 per barrel range have been publicized, generally from consultants. Some independent producers have already announced cutbacks in drilling and some layoffs of personnel.
I live in Texas. The theory that Texas is going to turn blue is seriously flawed. Wendy Davis, the democratic candidate, lost the governor's race by a larger percentage than even the late polls anticipated. Further, turning blue requires that the rising Texas Hispanic population vote democratic. I have Hispanic grand children and know a large number of Hispanics. The ones I know are hard working, family oriented, Christian, and generally conservative. I detect no tendency for them to vote democratic, rather a strong tendency for them to support conservative values.
Obama has already taken steps to try to weaken Texas; NASA, immigration, drilling permit delays, environmental rules that inequitably penalize Texas to name just a few.
The house of Saud does not view the Russian with favor, as near as I can tell. They certainly did not in 1985-86. Now that the Russians actively support Saudi rival Iran, there is no reason to think the Royal family supports the Russians.
The Royal family is facing some risk from increased unrest in the middle east which might threaten their rule. However, they have significant financial reserves from which to continue paying for social programs to essentially buy support. Probably the threat to their rule is at a manageable risk level, and they can always reverse course if the risks increase to an unacceptable level.
An interesting question, who has been shorting the futures contracts for crude oil? That is the immediate mechanism to drive prices down. I can imagine that the Saudi’s and UAE have used some of their financial reserves to do just exactly that.
I have family from South Texas. They had been living their for over a 100 years (one of my great grandpa’s brothers ended up there in 1880 or so). They left because they didn’t speak Spainish, kept having their fences trashed by migrants, and no longer felt safe. They are now in Nebraska or Colorado.
By in large, the Hispanic vote is Democrat. I agree that many are hard working social conservatives (we have some in my family, again south Texas), but they vote for the Dems by in large for the same reason my Catholic relatives do. They view the Democrats as “their” team.
Now I hope you are correct, but most stats suggest that you are not (with all the caveats about stats lying).
Saudi and Russia are not friends. But their interests are aligned at the moment. Russia doesn’t have the cash reserves that the house of Saud does, but she also doesn’t have the internal dissent. Saudi has been exporting its problems for decades, but they are starting to have issues with that.
Great point about who or what is shorting the oil markets. I wonder that also. Any ideas?
A beleaguered House of Saud believes it may force Moscow to abandon its support of Damascus, and Washington to scotch a deal with Tehran. All this by selling oil below the average spot price. That smacks of desperation. Additionally, it may be interpreted as the House of Saud dithering if not sabotaging the coalition of the cowards/clueless in its campaign against Caliph Ibrahim’s goons.
An interesting question, who has been shorting the futures contracts for crude oil?
Looks like Tiger Global hedge fund is making a killing shorting oil through Cayman Islands-based shell companies.
Read more here:
http://nypost.com/2014/11/21/european-shorts-a-windfall-for-chase-colemans-tiger-global/