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What is Putin up to this time? July 6, 2015

Posted by hslu in China, Cold War, Economics, Energy, Global Affair, Middle East, Obama, Oil, Putin.
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What is Putin up to this time?

The names of Russian president and a Saudi Prince are two names which usually won’t show up in the same sentence. But there is always a first. In fact, it wasn’t any Saudi prince; it was the Deputy Crown Prince and Minister of Defense Mohammed bin Salman who is the 29-year old son of the current Saudi ruler: King Salman bin Abdul-Aziz Al Saud Salman. Crown Prince bin Salman visited St. Petersburg in mid-June and signed several agreements with Putin in several key strategic areas: global oil market, investments, space program, nuclear energy, nuclear technology, Syria and war in Yemen.

Questions:

  • What prompted the two countries to talk in the first place?
  • What is Putin up to talking to the Crown Prince of the Saudi Kingdom?
  • What Putin intends to do with the Saudi’s on oil projects in October of 2015 when they will form a working group to work on projects? Mind you that Crown Prince bin Salman is the chief of Saudi’s oil and gas industry too.
  • Did they talk about trading oil on the world market in currencies other than the U.S. dollar?
  • Russia and Saudi, the two largest oil producers in the world for decades, are discussing matters on world oil market. Did Saudi do this against the wish or demand of the U. S.?
  • Is Saudi interested in developing its own space program?
  • Why wasn’t Saudis talking to the U.S.; i.e., GE, on nuclear technology?
  • Does Saudi’s nuclear program have a long term military component which is aimed at Iran’s apparent successful launch of its own nuclear weapons?
  • Is Saudi still a friend of the U.S. when Iran is closing in on a new deal with the U.S. and other nations?
  • Does Crown Prince bin Salman’s visit to Russia signal the end of the pro-U.S. stance of the oil kingdom?
  • Was Ukraine on the agenda?

Obama, with EU’s support, has forced Putin’s hand and forced Russia to cooperate with China. Putin is doing more now and is trying to open a new market in the Middle East.

Obama has effectively abandoned the Middle East and decided to leave the mess in the Middle East to nations in the region. Additionally, Obama has been trying to be friends with Iran and is trying to remove embargo against Iran after the nuclear talk.

I heard that the enemy of my enemy is my friend.

I guess it goes without saying that the friend (U.S.) of my enemy (Iran) is my (Saudi) enemy.

No matter what happens between Russia and Saudi Arabia, the visit by Crown Prince bin Salman was a “game change” in the balance of the world power. There is simply no other way to describe it.

Is Obama worried?

I don’t think so. He is trying to live like a king during his remaining terms without major f*** up.

敗家子沒折了 January 9, 2015

Posted by hslu in Economics, Energy, Global Affair, jobs, Oil, stocks.
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I have said that American shale oil producers acted like 敗家子 because they tried everything they could to get shale oil out of the ground as fast as they physically can without considering the future or preserving some for the raining days.

https://hslu.wordpress.com/tag/敗家子/

https://hslu.wordpress.com/2014/11/29/saudis-weapon-of-mass-destruction/

In the process, these oil producers ran up a huge debt to fund a frantic drilling program because shale oil production rate drops like a rock once it begins production. As much as 40% annual decline, sometimes faster, forced them to drill longer and closer to each other, frack them with ever increasing pressure and prop the fractures up with more propants and chemicals.

In the mean time, they hired more roughnecks to run the rigs and hundreds of trucks to haul drilling and fracking equipment.

Oil production ramped up quickly along with company profits. CEO’s options were jacked up as company stocks ran through the roof. The happy 敗家子 saw their personal wealth blooming and everyone in the shale oil business was happy with the year end bonuses and the rising market value of their 401(k)s.

The media talks about the good time is here to stay and America will be the king of the world again. Production will surpass 10 million barrels per day and America will be the largest oil producing country in the world.

Again.

People who could only find jobs at local truck stops flipping burgers or at local 7-11 selling hot dogs, quit their $8 an hour job, drove to North Dakota, Texas and Pennsylvenia searching for $25 an hour career and a better life.

Around cities where shale oil boom started about 5 years ago, trailer homes spread out in the country side. Rent skyrocketed. Bars popping up everywhere. The oldest business was revived. Roads are crowded. Triffic lights were added at town center. Housing markets were hot and condo prices went tmup by 20, 30 or even 40% a year. Cities tried to catch up with more roads and increase civil services. Schools, hospitals and police stations were built as fast as they could.

Everyone was happy. The good time is rolling and it is here to stay as oil flows and flows while money just seemly coming down from the sky.

Then the bloom popped almost over night.

The price of WTI came down and down and down. $100. $90. $80. $70. And then $60. Analysts then stressed the psychologically important $50. Predicts come out every day on CNBC and even more on the Internet.

And boom, WTI is below $50.

Now what?

What will the 敗家子 do?

Not much but to watch the price of WTI drops futher and their stock price cut by 50, 60 and even 70%.

As for the shale oil bananza in the US, most of that will probably stay in the ground especially the marginal fields. Saudi will control the oil market and make sure shale oil will not be profitable again for at least a decade. Oil price will be kept within a range of $60 to $80 a barrel, just below the cost of most shale oil projects on a full cycle base.

Saudi will be happy with their $20/ barrel or below cost. They will see their market share bump up and OPEC will be the boss again. 

American 敗家子 will be broke. Some will bankrupt and American oil renaissance will fade into memory. Rig count will drop. Shale oil projects will be dropped. Finally pink slips will fly.

Plenty empty buildings will be standing still in the wind. Grass will grow. The good times will be a dream people talk about. Trucks will stop rolling down the street. Bars will be closed. Houses will remain half built. The roughnecks will go back to truck stops flipping burgers again. The boom will be over before people even know it had ended.

Not everything is lost though. Most of them will have a new car and a 72-month new car loan to pay off with their $8 an hour job.

Americans: So short-sighted! January 4, 2015

Posted by hslu in Economics, Global Affair, Oil.
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American’s corporations have on average a vision of about 90 days.

That’s one quarter, exactly.

Americans are not any better:
Their car buying habit is dictated by nothing more than the cycle of oil price.

Here is a prove

Through the first 11 months of 2014, according to Autodata, sales of pickup trucks were up 5.4% and sales of SUVs of all sizes were up 11.7%.

But, sales of the hybrid Prius were down 15.8% over the same period.

The reason is the recent drop of gasoline prices across the U.S.

This mentality is no different from GM’s push for luxury gas guzzlers, Hummers, right about the time when crude oil price skyrocketed at the turn of the century. Hummer’s sales tanked and the company bankrupted in 2010 because GM couldn’t find a buyer.

Hmmm, as Americans ditch the hybrids and go for big cars, American car companies will retool their assembly lines to make more SUVs and pickup trucks.

In the mean time, how long will Saudis keep its oil production up this time?

America’s de facto surrender to Iran’s nuclear ambition November 23, 2014

Posted by hslu in Cold War, Global Affair, Middle East, Military, Muslim, Obama, Oil, Politics.
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No matter what the outcome of the ongoing P5+1 discussion with Iran, one thing is clear: Iran has been for years a country with nuclear technology and thousands of centrifuges capable of making weapon grade uranium and delivery mechanism.

America has been at it with Iran for many years covering many administrations with nothing to show for. Sanction after sanction and inspection after inspection, the only thing these steps orchestrated by the U. S. have been able to accomplish was buying more time for Iran.

Since a nuclear Iran has already been accepted by the Obama administration, any negotiation is just a waste of time.

The consequence is deep and the outcome is unpredicable, but a few things are very likely:

1.  Israel may strike Iran to slow it down with or without America.

2.  Saudi will want the same technology Iran has and America will help the kingdom to get it. Covertly, of course. Since Saudi, with its vast oil reserve and strategic importance to America, has been a friend of U. S. ever since 1973 oil embargo, the rules applied to Iran or Russia do not apply to the desert nation. (Note: Let’s not forget that the oil embargo was instigated by Saudi which caused significant economic pains to every American back then.) If you want proof. Look at Israel.

3. Many other sunni nations, i.e. Iran’s enemies, in the middle east with deep pockets from oil exports like UAE, Qatar and Kuwait, want what Iran has. They are friends of America too but not as important as Saudi. America may close one eye and let them acquire nuclear technology from other countries such as Russia, China, Pakistan or North Korea.

4.  A middle east nuclear initiative or a cooperation effort may be at work to counter Iran’s nuclear ambition.

5.  A regional nuclear arm race has started. You say that middle east is a dangeous place now, wait until some of the nations or groups have a few nuclear missiles to play with.

6.  Of course, these nations have tons of money; money contributed by Americans at local gas pumps over the years. They can buy a dozen or more nuclear missiles.

The drama has just started even before 11-24-2014 deadline comes.

Arabs laughing their ways to banks with US money January 16, 2011

Posted by hslu in Economics, Energy, Global Affair, Obama, Oil.
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Saudi used to be our friends and the United States has done everything they could to make sure of that.

They would raise their production when America asked them to. The higher supply caused oil price to drop and the United States could go back to their SUV’s. Of course, both countries denied that.

Obama sees himself a closet Muslim and claims him a friend of the Arabs. But I don’t see oil price drop to a more reasonable level. And the Saudi’s has said that they are comfortable with $100 per barrel oil.

Yes, you heard it right. $100 per barrel. That translates into about $4 per gallon gas for you and me.

Of course, they are happy with $100/barrel oil because they are pocketing $810+ million a day from their oil exports. That comes to $295 billion for one country alone. Of course, only a small portion of that money came from the United States. But, have you ever heard of any noise from the US about trade deficits with Saudi’s? Of course not! The United States are afraid of Saudi’s, Iraq, Iran, and other Middle East countries because these countries got the US by its tail.

There are other Arab countries making off with tons of our money: Iraq, Iran, Kuwait, Qatar, UAE, and many other Arab countries. Plus Venezuela.

The second half of the 21 century belongs to those Arab countries. Mark my words.

And Obama and his EPA don’t want to drill oil on US soils.

I say that he is a good friend of those Arabs.

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