Saudis Trying to Kill U.S. Frackers as Oil could fall to $20 for the first time in 15 years.

PJ Media ^ | 12/09/2015 | Stephen Green

[SeekAndFind]

Saudi Arabia might just bust OPEC by keeping its taps open, but right now the Kingdom's main concern is strangling American shale production.

Read:

Markets had been expecting Opec to announce a new ceiling on production after last Friday's meeting, but analysts at Barclays said the lack of any curbs in its announcement was a sign of discord. "Past communiques have at least included statements to adhere, strictly adhere, or maintain output in line with the production target. This one glaringly did not. " they said.

Saudi Arabia needs oil prices of $100 a barrel to balance its budget, but as the world's biggest exporter of crude it is gambling that the low price will knock out the threat posed by so-called unconventional supplies, such as shale.

The chief executive of Saudi Aramco, Amin Nasser, said at a conference in Doha on Monday that he hoped to see oil prices adjust at the beginning of next year as unconventional oil supplies start to decline.

In a sign that US production could dip, Baker Hughes' November data showed US rig count numbers down month-by-month by 31 to 760 rigs.

The story also notes that "Venezuela, in particular, is thought to be suffering badly as a result of the drop in oil prices." But that's what happens when you're a one-industry socialist country which has been neglecting to invest in that industry.

But here in America? The Saudis aren't stupid, so they must understand that our shale oil isn't going anywhere. Sure, a lot of wells will go offline at $40, even more at $30, and the fracking industry might nearly shut down at $20.

And then what? Oil prices will rise, and those shale wells will come back online.

Saudi Arabia has one big advantage. Its crude oil is plentiful, easy to get to, easy to refine, and cheap to transport. That lets Riyadh set a price floor far below anywhere that most anyone else can make a profit.

American shale oil is also plentiful, but it's much harder to get to, harder to refine, and more expensive to transport. But there's so dang much of it that our frackers can set a price ceiling far below OPEC's salad days of $100-plus crude.

Thanks to the cutthroat capitalism practiced in this country, new extraction methods bring that ceiling lower. Fracking once required $100 oil to make a profit. Now some producers can go as low as $50. And that number will continue to shrink.

Until and unless the Saudis can convince Washington to hobble American frackers by law -- and don't think the Democrats haven't tried and won't try again -- then OPEC's salad days aren't coming back for a very long time, or maybe ever.

[AdmSmith]

It is heating up:

RIYADH: Saudi Arabia Monday mobilized counter-insurgency units on its border with Yemen, official media said, after rebel strikes into the kingdom killed more than 80 people this year.

http://www.dailystar.com.lb/News/Middle-East/2015/Dec-14/327335-saudi-mobilizes-counter-insurgency-units-on-yemen-border.ashx

[RinaseaofDs]

I had no idea.

The question is whether they are Shiite or Sunni. The alliance with Iran is interesting.

[AdmSmith]

The muslims in Russia are overwhelmingly Sunnis.

http://windowoneurasia2.blogspot.se/2015/10/some-of-russias-sunni-muslim-majority.html

[AdmSmith]

That concern is widespread in American counterterrorism circles, where the Obama administration’s worries about appearing “Islamophobic” are well known. This White House early on warned intelligence personnel about using the term “Islamic terrorism” even in classified reports that would never be released to the public. “Since 2009 we’ve opened investigations of groups we knew to be harmless,” explained a Pentagon counterterrorism official, “they weren’t Muslims, and we needed some ‘balance’ in case the White House asked if we were ‘profiling’ potential terrorists.”

I have castigated European countries over their refusal to take their jihadism problem seriously, pointing out that the threat is now so great no intelligence service can fix it. We have been lucky in America, our domestic jihadism problem is much smaller than Europe’s on a per capita basis, but Obama’s reckless policies are changing that rapidly. No intelligence in the world can move political leaders who refuse to address terrorism and extremism realistically. There is still time to act, but not much.

http://observer.com/2015/12/the-intelligence-lessons-of-san-bernardino/