The Russians think these low oil prices are an American-Saudi conspiracy. American commentators believe that the Saudis have driven down prices to punish North Dakota’s shale oil revolution and drive its high-cost producers out of the game. In Canada, the paranoia in Calgary is that the Saudis and other Gulf oil producers want to drive the oil sands out of business.
But what are the Saudis up to and are they powerful enough to control prices? This week the Saudi minister blamed low prices on oversupply from North America. But that is simply trash talk.
The Saudis and Gulf States have engineered this price crash as a tactic in their war against Iran, its potential nuclear bomb and its proclivity to export terrorism across their neighborhood. This collapse in prices is cheaper than what they face in terms of military and other costs down the road if Iran is not solved.
The Gulf States’ control is absolute because the governments own the stuff; they can act unilaterally unlike free enterprise nations; they have more of it than anyone else; they have gotten very rich over the decades and can finance themselves at lower prices and they have the lowest costs in the world so lower prices don’t mean losses.
This means they will win any game of chicken and, by the way, they have done this before. They outlast competitors and can, and do, ignore their cartel colleagues like Nigeria and Venezuela who are dependent on oil revenue and are whining about prices a lot these days.
This price drop is simply economic war waged by the Arabs against Iran and a shot across the bow in the Shia versus Sunni religious war underway in the Middle East. Iran is “Shia” oil and Gulf or Saudi oil is “Sunni” oil. Iran has exported revolution for decades throughout the region and has spent years developing nuclear power that may, or may not, become nuclear weapons. Indications are that Iran has even been financing ISIS (even though it is Sunni-based) just to create chaos among Sunnis. And there is solid evidence that Iran has been supporting the wholesale suppression of Sunnis in both Iraq and Syria.
The timing of this price drop is designed to keep Iran at the nuclear negotiating table by crippling its economy (and that of its nuclear supplier, Russia). These talks continue with faintly positive signs of resolution and the oil cloud will help. It may even be a bargaining chip and that is why it would be a good bet if Iran signs onto a non-proliferation treaty, and meaningful audits and inspections, prices will increase.
Few realize that fear grips the Gulf States and has led to a massive military buildup, for political and religious reasons.
“Almost all Middle Eastern and North African states are evolving in the opposite direction of Europe, having doubled – or even tripled – their defense spending in recent years,” according to a 2014 report by the European Union Institute for Securities Studies. “Six of the world’s top ten military spenders are now located in the Middle East and North Africa: all of the Gulf States, for instance, have tripled their spending since 2003.”
Arab concerns are that if Iran gets a bomb, they must too at a cost of half a trillion dollars or more over several years. This means if you are the King of Saudi Arabia the calculus behind this price plummet is simple: lower oil prices at a cost of tens of billions to the Royal treasury in order to avoid spending half a trillion to develop nuclear deterrence. The aim is to bring Iran to heel, and make support for Shia violence against Sunnis difficult or impossible.
Another side benefit is that Mr. Putin has been delivered the biggest sanction of all for illegally invading Ukraine. The Russian economy, and corporate roster, is headed for a major meltdown and Mr. Putin is now exposed as a potentate with a gasoline station, not a sustainable empire builder.
A Palestinian teen was killed by Israeli military gunfire after hurling rocks at Israeli cars in the West Bank, the IDF said Monday.
The assailant, identified in Palestinian media as Imam Jameel a-Safeer, 16, received preliminary medical treatment on the scene but succumbed to his wounds shortly after, the IDF spokesman said in a statement.
Safeer was shot at after throwing rocks at Israeli cars near the Tapuah settlement, in the central West Bank, according to the IDF. The army said the rock throwing endangered drivers on the road.
IDF soldiers fired several warning shots at Gazans in two separate incidents on Monday, a day after three Palestinians were reportedly injured in a cross border exchange.
In the first skirmish, several Palestinians approached the border with Israel in the northern Gaza Strip, prompting army gunfire, according to the Ynet news outlet.
The navy also reportedly shot at a Palestinian ship off the Gaza coast. The circumstances of the latter incident were not immediately clear.
He has been called the “superman pope”, and it would be hard to deny that Pope Francis has had a good December. Cited by President Barack Obama as a key player in the thawing relations between the US and Cuba, the Argentinian pontiff followed that by lecturing his cardinals on the need to clean up Vatican politics. But can Francis achieve a feat that has so far eluded secular powers and inspire decisive action on climate change?
It looks as if he will give it a go. In 2015, the pope will issue a lengthy message on the subject to the world’s 1.2 billion Catholics, give an address to the UN general assembly and call a summit of the world’s main religions.
The reason for such frenetic activity, says Bishop Marcelo Sorondo, chancellor of the Vatican’s Pontifical Academy of Sciences, is the pope’s wish to directly influence next year’s crucial UN climate meeting in Paris, when countries will try to conclude 20 years of fraught negotiations with a universal commitment to reduce emissions.
According to Vatican insiders, Francis will meet other faith leaders and lobby politicians at the general assembly in New York in September, when countries will sign up to new anti-poverty and environmental goals.
In recent months, the pope has argued for a radical new financial and economic system to avoid human inequality and ecological devastation. In October he told a meeting of Latin American and Asian landless peasants and other social movements: “An economic system centred on the god of money needs to plunder nature to sustain the frenetic rhythm of consumption that is inherent to it.
“The system continues unchanged, since what dominates are the dynamics of an economy and a finance that are lacking in ethics. It is no longer man who commands, but money. Cash commands.
“The monopolising of lands, deforestation, the appropriation of water, inadequate agro-toxics are some of the evils that tear man from the land of his birth. Climate change, the loss of biodiversity and deforestation are already showing their devastating effects in the great cataclysms we witness,” he said.
According to Neil Thorns, head of advocacy at Cafod, said: “The anticipation around Pope Francis’s forthcoming encyclical is unprecedented. We have seen thousands of our supporters commit to making sure their MPs know climate change is affecting the poorest communities.”
“A papal encyclical is rare. It is among the highest levels of a pope’s authority. It will be 50 to 60 pages long; it’s a big deal. But there is a contingent of Catholics here who say he should not be getting involved in political issues, that he is outside his expertise.”
Francis will also be opposed by the powerful US evangelical movement, said Calvin Beisner, spokesman for the conservative Cornwall Alliance for the Stewardship of Creation, which has declared the US environmental movement to be “un-biblical” and a false religion.
“The pope should back off,” he said. “The Catholic church is correct on the ethical principles but has been misled on the science. It follows that the policies the Vatican is promoting are incorrect. Our position reflects the views of millions of evangelical Christians in the US.”