War Against ISIS

SolarWind · Dec 11, 2015

2007yellow430 said:
The USA's economy for the most part will benefit significantly from the low price. Texas, and the South where a lot of the oil is produced will suffer big time. The boom they had will be gone, but when the prices increase, they will recover. The rest of us will get huge benefits from $30 oil. A while back a friend in the oil business told me to watch for $35 oil, and he believed that would be the floor. Time will tell. He's been right more often than not.

Some sources suggest SA and some others in OPEC are at or near peak capacity already.

Relax! History shows oil can't go any lower

Feanor · Dec 11, 2015

gazzzwp said:
Good articles. I doubt seriously that the US economy will suffer from low oil price. It's economy is very balanced and currently in it's best shape for a decade. It will however deeply affect Russia.

There are Russian economists who think that low oil prices in the long term are very good for Russia. They argue that it will force the Russian state to diversify the economy, and the weak rouble will keep exports growing. The transition would be a painful one, but the end result highly desirable. They argue that the state investment model which Russia has been following so far has exhausted itself, and low oil prices will force the government to acknowledge this and actively seek an alternative. To some extent this is already true. Russia agricultural export is going to hit ~20 billion USD for 2015. This is almost 50% of Russian natural gas export.

SolarWind · Dec 11, 2015

Feanor said:
There are Russian economists who think that low oil prices in the long term are very good for Russia. They argue that it will force the Russian state to diversify the economy, and the weak rouble will keep exports growing. The transition would be a painful one, but the end result highly desirable. They argue that the state investment model which Russia has been following so far has exhausted itself, and low oil prices will force the government to acknowledge this and actively seek an alternative. To some extent this is already true. Russia agricultural export is going to hit ~20 billion USD for 2015. This is almost 50% of Russian natural gas export.

Weak rouble will keep benefiting Russian exporters first and foremost and encourage growth in any export sectors, even potential export sectors, thus causing diversification. The rise of the agricultural sector is not fully unexpected, as fertile land is one of Russia's abundant factors of production, but goes on to show that Russia has effectively learned from the failures of Soviet economic models. More needs to be done however, especially now, particularly protection for small and medium business and better business loan terms. Without these, economic growth is seriously hampered.

wsb05 · Dec 12, 2015

Feanor said:
There are Russian economists who think that low oil prices in the long term are very good for Russia. They argue that it will force the Russian state to diversify the economy, and the weak rouble will keep exports growing. The transition would be a painful one, but the end result highly desirable. They argue that the state investment model which Russia has been following so far has exhausted itself, and low oil prices will force the government to acknowledge this and actively seek an alternative. To some extent this is already true. Russia agricultural export is going to hit ~20 billion USD for 2015. This is almost 50% of Russian natural gas export.

It is certainly true that Russian Agriculture has a lot of room to grow and is a necessity but:

1- SMEs need to be supported by government sponsored loans (government refunding interest)
2- Focus on consumer goods and the civilian marker. It is funny that South Korean cars, consumer goods and electronics are far more successful than Russian ones in international markets. What is stopping Russian Ministry of Industry of supporting the industry and actively working to penetrate foreign markets with quality products?! They even sold majority in avtovaz instead of employing foreign management and developing lean manufacturing skills to start competing on the world stage. Why would Renault be able to do this?!
3- Ease of doing business and reduction of corruption. There is progress
4- Infrastructure development.

KiwiRob · Dec 12, 2015

Feanor said:
There are Russian economists who think that low oil prices in the long term are very good for Russia. They argue that it will force the Russian state to diversify the economy, and the weak rouble will keep exports growing. The transition would be a painful one, but the end result highly desirable. They argue that the state investment model which Russia has been following so far has exhausted itself, and low oil prices will force the government to acknowledge this and actively seek an alternative. To some extent this is already true. Russia agricultural export is going to hit ~20 billion USD for 2015. This is almost 50% of Russian natural gas export.

They are having the exact same discussions in Norway, the low oil prices have put tens of thousands out of work, stopped investment in it's tracks and have really showed that the Norwegian economy isn't in the best shape, hopefully Norway will come out of it stronger and more diversified.

ngatimozart · Dec 12, 2015

KiwiRob said:
They are having the exact same discussions in Norway, the low oil prices have put tens of thousands out of work, stopped investment in it's tracks and have really showed that the Norwegian economy isn't in the best shape, hopefully Norway will come out of it stronger and more diversified.

Is this slump in oil prices a temporary blip or is it a "permanent" market readjustment? How long can the Saudis afford to keep prices low before they are forced to raise them again? Or has this adjustment gone beyond the point that any Saudi attempt to raise prices will hurt them? Hence will they then try to restrict supply such as in 1973? My thoughts are that the Saudi ploy of flooding the market with cheap oil to undercut the US shale oil industry may end up back firing on them, or it already is starting to.

gazzzwp · Dec 12, 2015

ngatimozart said:
Is this slump in oil prices a temporary blip or is it a "permanent" market readjustment? How long can the Saudis afford to keep prices low before they are forced to raise them again? Or has this adjustment gone beyond the point that any Saudi attempt to raise prices will hurt them? Hence will they then try to restrict supply such as in 1973? My thoughts are that the Saudi ploy of flooding the market with cheap oil to undercut the US shale oil industry may end up back firing on them, or it already is starting to.

More likely they are trying to undercut Russia; their adversary in the current conflict.

I wouldn't be too optimistic about a price rise in the near term. An ocean of Iranian oil will hit the market very soon.

On a different note Russia announces a successful launch of a Sineva missile.

https://www.rt.com/news/325744-russia-ballistic-missile-launch/

Feanor · Dec 12, 2015

SolarWind · Dec 12, 2015

ngatimozart said:
Is this slump in oil prices a temporary blip or is it a "permanent" market readjustment? How long can the Saudis afford to keep prices low before they are forced to raise them again? Or has this adjustment gone beyond the point that any Saudi attempt to raise prices will hurt them? Hence will they then try to restrict supply such as in 1973? My thoughts are that the Saudi ploy of flooding the market with cheap oil to undercut the US shale oil industry may end up back firing on them, or it already is starting to.

The reason for decline in oil prices is an ongoing price war which Saudis have claimed is a war for market share. The cause is world oversupply. This type of market competition (price war) leads to eventually prices equaling costs and higher cost producers dropping out of the market entirely. Saudis' actions have already caused new oil projects put on hold worldwide. Now I suppose they are waiting for higher cost producers to drop out.

Ultimately, in a free market, prices are established by supply and demand. With a multitude of producers, prices are more than likely to be very low, equaling costs. The only way around that is an international cartel reducing production and driving prices up. As long as non-cartel production is very low, cartel has a chance. This is why it makes economic sense for Saudis to attempt to bankrupt North American oil and invite Russia into OPEC.

the concerned · Dec 12, 2015

Reading all the stuff about Turkish troops being in Iraq. Surely the Iraqi government knows that although they are unwelcome they are not a threat right now and can be dealt with once isis has been dealt with so all the rhetoric coming from the Iraqi government will end up prolonging the problem not solving it. The problem is that although the Turkish government is making some mistakes at the moment if other countries push too hard this could either result in a bigger conflict or the Turkish government could completely refuse to co-operate with isis operations and refuse airspace and airbase usage which wouldn't help

Toblerone · Dec 12, 2015

The Iraqi president is under great pressure from shia iranian proxies to resist foreign forces. Personally, I was disappointed to find out about the close relationship between the iraqi kurds and the turks, very problematic. At the danger of sounding confrontational, every turkish action/involvement anywhere is dangerous.

Good to hear about the Ramadi victory. Just a few days ago I was reading about the battle there and it seemed it would take weeks. Maybe it is the standard early victory announcement and there is a lot of cleanup to do still.

Now when will one of the big cities in Syria fall into SAA hands? Many people refuse to acknowledge the shift in balance since the russian involvement and western media parrot the "quagmire" argument. It'd be nice to have something to rub on their face.

Toblerone · Dec 12, 2015

accidental double post

Twain · Dec 13, 2015

SolarWind said:
The reason for decline in oil prices is an ongoing price war which Saudis have claimed is a war for market share. The cause is world oversupply. This type of market competition (price war) leads to eventually prices equaling costs and higher cost producers dropping out of the market entirely. Saudis' actions have already caused new oil projects put on hold worldwide. Now I suppose they are waiting for higher cost producers to drop out.

Ultimately, in a free market, prices are established by supply and demand. With a multitude of producers, prices are more than likely to be very low, equaling costs. The only way around that is an international cartel reducing production and driving prices up. As long as non-cartel production is very low, cartel has a chance. This is why it makes economic sense for Saudis to attempt to bankrupt North American oil and invite Russia into OPEC.

A lot of north american companies did go bankrupt, mainly the smaller companies. The problem from OPEC's standpoint is that the assets (existing wells, drilling rights etc.) of the smaller companies were bought at discount prices by the big players in the market. The big guys were already more effecient than the smaller players, having a break even cost for fracking of a bit over $60 a barrel vs $70 for the smaller companies. Because of this, their break even is now ver near $60 a barrel. Once oil gets into that $60-$70 a barrel range, north american drilling will quickly start up again and it will be under the direction of much better financed and run companies than in the past. In effect, we should see a soft cap on WTI in the $60-$75 dollar range with brent having a small premium and urals crude a small discount as compared to WTI.

Nick underscore · Dec 13, 2015

Twain said:
A lot of north american companies did go bankrupt, mainly the smaller companies. The problem from OPEC's standpoint is that the assets (existing wells, drilling rights etc.) of the smaller companies were bought at discount prices by the big players in the market. The big guys were already more effecient than the smaller players, having a break even cost for fracking of a bit over $60 a barrel vs $70 for the smaller companies. Because of this, their break even is now ver near $60 a barrel. Once oil gets into that $60-$70 a barrel range, north american drilling will quickly start up again and it will be under the direction of much better financed and run companies than in the past. In effect, we should see a soft cap on WTI in the $60-$75 dollar range with brent having a small premium and urals crude a small discount as compared to WTI.

Not disputing the analysis, but I think you'll find the cost price for large-medium US frackers, in the $40-50 range handle.

Let's also pay close attention to the fact that a huge amount of floating storage plays, are currently in abundance..

gazzzwp · Dec 13, 2015

I wondered if anyone knows if the US have released satellite images of Russian hardware in Syria recently?

The last ones I could find are dated September 2015.

gazzzwp · Dec 13, 2015

gazzzwp said:
I wondered if anyone knows if the US have released satellite images of Russian hardware in Syria recently?

The last ones I could find are dated September 2015.

Could this be further proof of the effectiveness of the new Russian EW system?

Is the US had recent satellite images surely it would have released them?

ADMk2 · Dec 13, 2015

gazzzwp said:
Could this be further proof of the effectiveness of the new Russian EW system?

Is the US had recent satellite images surely it would have released them?

EW systems are capable of stopping a satellite photographing an airfield, eh?

Hmmm...

gazzzwp · Dec 13, 2015

ADMk2 said:
EW systems are capable of stopping a satellite photographing an airfield, eh?

Hmmm...

I'm really not sure AD. It seems a bit of a coincidence that the last images we have were taken in September this year, then after the Russians move in hardware nothing has been released.

It's also a bit of a coincidence that if you look at images of the Ukraine they are really very poor in quality. To be honest I don't know what to make of it accept for the coincidences.

http://d.ibtimes.co.uk/en/full/1396533/ukraine-nato-satellite.jpg

US releases satellite images of Russian forces near Ukraine borders - Telegraph

gazzzwp · Dec 13, 2015

Duplicate.

PO2GRV · Dec 13, 2015

gazzzwp said:
I'm really not sure AD. It seems a bit of a coincidence that the last images we have were taken in September this year, then after the Russians move in hardware nothing has been released.

It's also a bit of a coincidence that if you look at images of the Ukraine they are really very poor in quality. To be honest I don't know what to make of it accept for the coincidences.

I think a much more logical explanation is that the US doesn't *want* to reveal the photos it is undoubtedly taking. I can see this for a number of reasons: The photos themselves reveal a quality/capability the US doesn't want to show, the photos show something else the US doesn't want to show, the photos implicate an ally in someway or distort the "narrative" of the situation

Or a million and twelve other reasons. Russian space- or aerial-based anti-sat EW wouldn't be in the top fifty

Furthermore, why on earth did you reply to yourself instead of editing your post?

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