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Saudi's fear the US oil boom
dheffley
Member Posts: 25,000 ✭
Top Saudi investor says US energy boom could doom kingdom's economy
By Perry Chiaramonte
Published July 30, 2013
| FoxNews.com
America's energy boom is putting a scare into Saudi Arabia.
According to the Wall Street Journal, Saudi billionaire Prince Alwaleed bin Talal warned in a letter to Saudi Oil Minister Ali al-Naimi and others that the U.S. boom of shale oil and gas will reduce its thirst for Saudi crude oil.
"With all due respect to your Highness' viewpoint about shale gas and that it poses no danger on Saudi economy at `the present time,'" read a translation of the letter, dated May 13 but only recently tweeted on a Twitter page previously used by Alwaleed. "I was hoping that your Highness would also shed light and focus on the danger of this matter in the `not-so-distant future,' especially that America and some Asian countries made big discoveries in shale gas extraction which will affect the oil industry around the world in general and Saudi Arabia in particular."
The prince, who is worth an estimated $20 billion and founded Kingdom Holding, warned that the nation's near total reliance on oil revenues could leave it vulnerable when demand drops due to other nations' domestic production.
"Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92 percent of the budget for this year depends on oil," wrote Alwaleed, who owns seven percent of the voting shares in News Corp, the former parent company of Fox News. "It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately."
News of the letter comes after a newly published report from OPEC which showed that the group's export revenue hit a record high of $1.26 trillion in 2012. Forecasts have questioned whether that earning level can be sustained amid competition from fracking in countries that import OPEC oil and gas.
"The Saudis have a huge competitive advantage, in that the cost for them to produce oil is very low, just a few dollars per barrel. So, Saudi Arabia is not going to find itself unable to sell its crude oil," Jonathan Lesser, an economist who specializes in the energy industry, told FoxNews.com. "What it is likely to find is that its ability to control prices on the world oil market will decrease over time; slowly, but decrease nevertheless."
Saudi Arabia is the world's largest exporter of crude but is now extracting less than capacity because consumers are importing less. Al-Naimi has played down the significance of shale oil production despite other OPEC member nations saying they have seen a sharp drop.
Oil revenue in Algeria fell by 6 percent last year, and in Iran, where exports have been curtailed by western sanctions, exports fell 8 percent.
Data from OPEC suggests other member nations could feel the sting of revenue loss as demand for crude will fall to about 30 million barrels a day in 2014. The average price has already dropped by 4 percent this year.
Production of oil in the U.S. has grown to record highs in 2012 and is expected to continue to rise. Daily crude production averaged 6.4 million barrels per day, a 15-year high. Stateside production is catching up to import needs, as 7.5 million barrels are being made while the U.S. produces 10.6 million barrels a day.
Lesser said Alwaleed is wise to recognize that the market dynamics are changing.
"A more basic concern is that any economy that relies heavily on a single commodity - be it oil in Saudi Arabia or copper in Chile - faces greater potential disruption when the market fundamentals for that commodity change," Lesser said. "So, the Prince is correct, especially when he notes that Saudi Arabia needs to diversify its economy."
Read more: http://www.foxnews.com/world/2013/07/30/saudi-prince-worried-that-us-shale-boom-could-*-opec-economy/print#ixzz2aY8mn13L
By Perry Chiaramonte
Published July 30, 2013
| FoxNews.com
America's energy boom is putting a scare into Saudi Arabia.
According to the Wall Street Journal, Saudi billionaire Prince Alwaleed bin Talal warned in a letter to Saudi Oil Minister Ali al-Naimi and others that the U.S. boom of shale oil and gas will reduce its thirst for Saudi crude oil.
"With all due respect to your Highness' viewpoint about shale gas and that it poses no danger on Saudi economy at `the present time,'" read a translation of the letter, dated May 13 but only recently tweeted on a Twitter page previously used by Alwaleed. "I was hoping that your Highness would also shed light and focus on the danger of this matter in the `not-so-distant future,' especially that America and some Asian countries made big discoveries in shale gas extraction which will affect the oil industry around the world in general and Saudi Arabia in particular."
The prince, who is worth an estimated $20 billion and founded Kingdom Holding, warned that the nation's near total reliance on oil revenues could leave it vulnerable when demand drops due to other nations' domestic production.
"Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92 percent of the budget for this year depends on oil," wrote Alwaleed, who owns seven percent of the voting shares in News Corp, the former parent company of Fox News. "It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately."
News of the letter comes after a newly published report from OPEC which showed that the group's export revenue hit a record high of $1.26 trillion in 2012. Forecasts have questioned whether that earning level can be sustained amid competition from fracking in countries that import OPEC oil and gas.
"The Saudis have a huge competitive advantage, in that the cost for them to produce oil is very low, just a few dollars per barrel. So, Saudi Arabia is not going to find itself unable to sell its crude oil," Jonathan Lesser, an economist who specializes in the energy industry, told FoxNews.com. "What it is likely to find is that its ability to control prices on the world oil market will decrease over time; slowly, but decrease nevertheless."
Saudi Arabia is the world's largest exporter of crude but is now extracting less than capacity because consumers are importing less. Al-Naimi has played down the significance of shale oil production despite other OPEC member nations saying they have seen a sharp drop.
Oil revenue in Algeria fell by 6 percent last year, and in Iran, where exports have been curtailed by western sanctions, exports fell 8 percent.
Data from OPEC suggests other member nations could feel the sting of revenue loss as demand for crude will fall to about 30 million barrels a day in 2014. The average price has already dropped by 4 percent this year.
Production of oil in the U.S. has grown to record highs in 2012 and is expected to continue to rise. Daily crude production averaged 6.4 million barrels per day, a 15-year high. Stateside production is catching up to import needs, as 7.5 million barrels are being made while the U.S. produces 10.6 million barrels a day.
Lesser said Alwaleed is wise to recognize that the market dynamics are changing.
"A more basic concern is that any economy that relies heavily on a single commodity - be it oil in Saudi Arabia or copper in Chile - faces greater potential disruption when the market fundamentals for that commodity change," Lesser said. "So, the Prince is correct, especially when he notes that Saudi Arabia needs to diversify its economy."
Read more: http://www.foxnews.com/world/2013/07/30/saudi-prince-worried-that-us-shale-boom-could-*-opec-economy/print#ixzz2aY8mn13L
Comments
We need to be working on building more Oil Refinery's and Nuclear Reactors. Then we can start exporting energy.
If it upsets the Saudi's odds are its good for the US.
May be hurting OPEC but it sure aint helping us at the pumps!!
I agree. For years the cry of Drill baby drill was screamed in this forum and tales of how once we started punching holes up in Montana and the Dakotas oil prices would plumet. Well those states are now filled with holes, and oil producion is booming but gasoline is every bit as pricey as it ever was! Drill baby drill was great for the big oil companies but has done nothing for consumers and airlines and shipping companies still have fuel surcharges, Drill baby drill proved to be just more online BS.
quote:Originally posted by Big Sky Redneck
May be hurting OPEC but it sure aint helping us at the pumps!!
I agree. For years the cry of Drill baby drill was screamed in this forum and tales of how once we started punching holes up in Montana and the Dakotas oil prices would plumet. Well those states are now filled with holes, and oil producion is booming but gasoline is every bit as pricey as it ever was! Drill baby drill was great for the big oil companies but has done nothing for consumers and airlines and shipping companies still have fuel surcharges, Drill baby drill proved to be just more online BS.
Lack of refineries to turn oil into gas and also production output at said refineries.... We also still import 2/3 of our oil
http://content.usatoday.com/communities/ondeadline/post/2012/02/us-exported-more-gasoline-than-imported-last-year/1
If we stopped exporting our domestic oil/gas, fuel prices would drop like a lead balloon.
Source: Energy Information Administration
Saudi Arabia has been shrinking as a US supplier for a long time. With the massive growth in oil buying markets of India and China alone the Saudi's can sell every drop they can squeeze out of the sand for a long time to come. They are not under threat from our oil independence.
Prices are little affected by government or regulation. Far and away price is influenced by market forces. Most especially by speculators who buy and sell contracts for future deliveries. The vast bulk of oil price inflation is the lilly livered, emotionally immature, cowardly, inclined to panic underwear staining Commodity Futures Traders who bid up prices at every tick in the World News.
Is there a storm someplace? A terror attack? A change in political leadership? A flat beer last night or a cold cup of coffee this morning? These idiots will panic and bid up prices.
You want oil prices under control, put down the crack pipe of blaming those with no influence over it and look at where the money goes. Either reform and regulate commodity futures or get comfy with ever higher prices.
quote:Originally posted by miles
This an old article (Feb. last year) but, the exports of energy continue to keep prices high at the pump in the USA. Rather than producing our own energy here and selling it at what consumers are willing to pay, the oil companies sell it abroad based on what imported /refined oil costs on the open market.
http://content.usatoday.com/communities/ondeadline/post/2012/02/us-exported-more-gasoline-than-imported-last-year/1
If we stopped exporting our domestic oil/gas, fuel prices would drop like a lead balloon.
Pretty much agree, though prices would be propped up by someone no matter the real supply and demand effects.
It is one of the things that worries me about the Keystone XL Pipeline. If it is built we will lose the Canadian oil we are already getting from it. It will flow to the Gulf and the Super Tanker terminals. Then to be sold on the global market.
quote:Originally posted by Big Sky Redneck
May be hurting OPEC but it sure aint helping us at the pumps!!
I agree. For years the cry of Drill baby drill was screamed in this forum and tales of how once we started punching holes up in Montana and the Dakotas oil prices would plumet. Well those states are now filled with holes, and oil producion is booming but gasoline is every bit as pricey as it ever was! Drill baby drill was great for the big oil companies but has done nothing for consumers and airlines and shipping companies still have fuel surcharges, Drill baby drill proved to be just more online BS.
Most all of what was drilled, to date, is for natural gas. It doesn't help so much at the pump.[:I]
And fiery auto crashes
Some will die in hot pursuit
While sifting through my ashes
Some will fall in love with life
And drink it from a fountain
That is pouring like an avalanche
Coming down the mountain
Why do you think Obama is not supporting the pipeline because he doesn't want to offend his muslim buddies in my opinion
Not a Muslim, a Christian. Obama has opposed the pipeline out of environmental concerns, but is liable to sign off on it eventually anyway.
We will lose access to this crude oil because the American partisan political disease will not leave room for factual discussions. It all has to be about environmentalism, or insane conspiracy crapola.
Market forces and the US economic need long term into our children's and grandchildren's years? Why would we talk about that? I mean it's not like we are a bunch of Capitalists who care about our future is it? Don't we just care about who's political side scores the most points today?
Why would anything else matter?
Why do you think Obama is not supporting the pipeline because he doesn't want to offend his muslim buddies in my opinion
Dont kid yourself....that pipeline will only help the chicoms....we already get all the kunucks oil with existing pipelines. All building a new will do is make it cheaper to ship overseas, and we would still pay higher prices at the pump.
Aside from the handful of jobs building it (and all those would be union jobs[B)]), very few long term jobs would be created by it, and when it leaks, and it will, we have to deal, and pay for that while the kunucks rake in the cash....
If the Kanucks want it so bad...let them build it up there....but do you know why they dont??? They dont want oil tankers ruining the views and enviroment of vancover harbour.....but its OK to ruin ours....
NO, on this one, Obummer has it right, I just wish he would come out and say it, itsead of hiding behind tree huggers.
quote:Originally posted by mark christian
quote:Originally posted by Big Sky Redneck
May be hurting OPEC but it sure aint helping us at the pumps!!
I agree. For years the cry of Drill baby drill was screamed in this forum and tales of how once we started punching holes up in Montana and the Dakotas oil prices would plumet. Well those states are now filled with holes, and oil producion is booming but gasoline is every bit as pricey as it ever was! Drill baby drill was great for the big oil companies but has done nothing for consumers and airlines and shipping companies still have fuel surcharges, Drill baby drill proved to be just more online BS.
Most all of what was drilled, to date, is for natural gas. It doesn't help so much at the pump.[:I]
Not correct. Canadian crude oil has been flowing in pipelines for years to the point it met 15% of our needs as of 2012. Feeds refineries in the Pacific Northwest and the Midwestern states. Fills tank farms as far south as Oklahoma. We get a lot of oil from Canada. We get more from Canada alone than the entire Persian Gulf region.
The Chinese have invested heavily in Canada's pipelines. Their main goal is to push the oil to seaports. If they fail at that they still make money, but it's the oil they really want.
If we were smart we'd be negotiating long term agreements to protect American and Canadian energy needs into the next hundred years. Instead we play these silly short term partisan games while the Chinese make our long term plans for us.
quote:Originally posted by mark christian
quote:Originally posted by Big Sky Redneck
May be hurting OPEC but it sure aint helping us at the pumps!!
I agree. For years the cry of Drill baby drill was screamed in this forum and tales of how once we started punching holes up in Montana and the Dakotas oil prices would plumet. Well those states are now filled with holes, and oil producion is booming but gasoline is every bit as pricey as it ever was! Drill baby drill was great for the big oil companies but has done nothing for consumers and airlines and shipping companies still have fuel surcharges, Drill baby drill proved to be just more online BS.
Most all of what was drilled, to date, is for natural gas. It doesn't help so much at the pump.[:I]
BINGO! We have a winner! Key words is "drilled to date"
quote:Originally posted by TooBig
Why do you think Obama is not supporting the pipeline because he doesn't want to offend his muslim buddies in my opinion
Dont kid yourself....that pipeline will only help the chicoms....we already get all the kunucks oil with existing pipelines. All building a new will do is make it cheaper to ship overseas, and we would still pay higher prices at the pump.
Aside from the handful of jobs building it (and all those would be union jobs[B)]), very few long term jobs would be created by it, and when it leaks, and it will, we have to deal, and pay for that while the kunucks rake in the cash....
If the Kanucks want it so bad...let them build it up there....but do you know why they dont??? They dont want oil tankers ruining the views and enviroment of vancover harbour.....but its OK to ruin ours....
NO, on this one, Obummer has it right, I just wish he would come out and say it, itsead of hiding behind tree huggers.
I'll give you merits for providing sound logic on this mater. Few her have.
What a gift to our children and grandchildren this would be...
Brad Steele
Damn I wish I was his financial advisor
As far as the U.S. become independent from Saudi oil, it wouldnt make a difference, we will just make it up with financial aid we dont have
Cap half our wells, bleed the Middle East dry, and open the spigots as we transition to renewable energy for transportation. Short-term thinking is killing us economically.
What a gift to our children and grandchildren this would be...
Don, that just makes too much sense. Since oil costs the same no matter where it comes from and Drill baby drill now is represented as having nothing at all to do with oil (it is now all about gas) then why not use up the rest of the worlds oil supply? Once that is gone we will still have our own oil to fall back on.
Obama has opposed the pipeline out of environmental concerns, but is liable to sign off on it eventually anyway.
It has nothing to do with concern for the environment, it's all about destroying the economy of this country. Environmentalism is a fictional movement created to mask the march of socialism and wealth redistribution. If he allows the pipeline, and the expansion of drilling on public lands then there would be a huge boom in this country, and their chance for fundamental change towards socialism would be dead for another 100+ years.
quote:Originally posted by Don McManus
Cap half our wells, bleed the Middle East dry, and open the spigots as we transition to renewable energy for transportation. Short-term thinking is killing us economically.
What a gift to our children and grandchildren this would be...
Don, that just makes too much sense. Since oil costs the same no matter where it comes from and Drill baby drill now is represented as having nothing at all to do with oil (it is now all about gas) then why not use up the rest of the worlds oil supply? Once that is gone we will still have our own oil to fall back on.
The only benefit to this strategy is in the balance of trade- Just because the US has the only oil does not mean that anyone, either foreign or domestic consumer will be getting a price break. If anything, considering the lack of scruples amount corporate officers, the pricing would only be worse for the consumer.
quote:Originally posted by Don McManus
Cap half our wells, bleed the Middle East dry, and open the spigots as we transition to renewable energy for transportation. Short-term thinking is killing us economically.
What a gift to our children and grandchildren this would be...
Don, that just makes too much sense. Since oil costs the same no matter where it comes from and Drill baby drill now is represented as having nothing at all to do with oil (it is now all about gas) then why not use up the rest of the worlds oil supply? Once that is gone we will still have our own oil to fall back on.
I've thought this since the embargo of the 1970's Mark.
An insignificant people have been given significance because of a commodity they will eventually deplete. I say the sooner they return to insignificance the better.
Brad Steele
So when do we start drilling for actual oil? We can get all of the natural gas we want from Canada. We were not told in the forum over and over that Drill baby drill was going to do nothing but lower the cost of heating hot water in a gas hot water heater, we were lead to believe that Drill baby drill was going to lower fuel prices.
Mark, nearly all the wells being drilled in the Bakken play in North Dakota and Eastern Montana are oil, NoDak production has nearly quadrupled.
I think people hear " shale" and think of the Marcellus, Eagleford, Barnett, etc which are all gas plays. The Bakken, Three Forks, Niobrara are all oil shales.
Mule.
Mark, nearly all the wells being drilled in the Bakken play in North Dakota and Eastern Montana are oil, NoDak production has nearly quadrupled.
I think people hear " shale" and think of the Marcellus, Eagleford, Barnett, etc which are all gas plays. The Bakken, Three Forks, Niobrara are all oil shales.
Mule.
Thank you. I always considered you and member kristov (sadly no longer here) to be the forum authorities on oil production.
quote:Originally posted by Mr. Perfect
quote:Originally posted by mark christian
quote:Originally posted by Big Sky Redneck
May be hurting OPEC but it sure aint helping us at the pumps!!
I agree. For years the cry of Drill baby drill was screamed in this forum and tales of how once we started punching holes up in Montana and the Dakotas oil prices would plumet. Well those states are now filled with holes, and oil producion is booming but gasoline is every bit as pricey as it ever was! Drill baby drill was great for the big oil companies but has done nothing for consumers and airlines and shipping companies still have fuel surcharges, Drill baby drill proved to be just more online BS.
Most all of what was drilled, to date, is for natural gas. It doesn't help so much at the pump.[:I]
Not correct. Canadian crude oil has been flowing in pipelines for years to the point it met 15% of our needs as of 2012. Feeds refineries in the Pacific Northwest and the Midwestern states. Fills tank farms as far south as Oklahoma. We get a lot of oil from Canada. We get more from Canada alone than the entire Persian Gulf region.
The Chinese have invested heavily in Canada's pipelines. Their main goal is to push the oil to seaports. If they fail at that they still make money, but it's the oil they really want.
If we were smart we'd be negotiating long term agreements to protect American and Canadian energy needs into the next hundred years. Instead we play these silly short term partisan games while the Chinese make our long term plans for us.
Do you enjoy being wrong? You seem to revel in it.
And fiery auto crashes
Some will die in hot pursuit
While sifting through my ashes
Some will fall in love with life
And drink it from a fountain
That is pouring like an avalanche
Coming down the mountain
when the saudi's get in a pinch our govt will take the taxpayers money and give them bailouts...bet me
We already bailed them out once: The Gulf War was fought to keep Saddam out of Saudi Arabia, keep the royal family in power and ensure that the Saudi brand of ultra conservative Islam stayed the dominant force in the Middle East. It was all part of the Bush view of The New World Order, otherwise it would served us just as well to have had our stooge Saddam selling us Saudi and Kuwaiti oil while Saddam's son began opening bars and nightclubs in Riyadh.
They were angry at us for supporting Israel in the 1973 war, they reduced or cut off our oil supply, and gas prices doubled and tripled in weeks. We have never recovered from that embargo.
If it weren't for Europeans and Americans going over there and discovering the oil, and bringing the technology over to extract the oil and ship it, those Saudi kings and princes would be living in camel skin tents and fighting to the death over mudddy water holes in the desert.
They have jacked us around for long enough! Let them return to the tents and the roasted goats.
Every nation's economic security will depend upon finding new energy sources, or new supplies of old sources. Also new means of storing and distributing it, reducing waste and loss in all those systems. America is woefully behind the curve in this race, pretty much everyone has been out ahead of us for years. Some of those countries are our friends, looking upon us with disbelief.
Some of those countries are enemies of the USA, looking upon us with no small glee. That and a little bit of worry we may get over our current self destructive political streak, and take up our own better interests once again.
The Canadian supply is a temporary relief. Right alongside with our own tar sands and fracking growth, all of it is finite. Estimates of a peak in Canadian production run anywhere from 2020 to 2090, depending on remaining discoveries and guesses of further technology improvements. That window can absolutely be pushed out, but the finite quantity of naturally occurring oil supplies cannot be changed. Either we come up with ways to synthesize a replacement product or we watch for the inevitable decline of our civilization.
What we should be doing is chasing every form of energy, old or new, we can possibly think of. It truly doesn't matter to me if it is "green" or "fossil" or something between the two. So long as it prevents our grandkids from having good cause to curse us for our failure to protect their future, I'll encourage it all.
http://www.npr.org/2012/04/11/150444802/where-does-america-get-oil-you-may-be-surprised
Source: Energy Information Administration
Saudi Arabia has been shrinking as a US supplier for a long time. With the massive growth in oil buying markets of India and China alone the Saudi's can sell every drop they can squeeze out of the sand for a long time to come. They are not under threat from our oil independence.
Prices are little affected by government or regulation. Far and away price is influenced by market forces. Most especially by speculators who buy and sell contracts for future deliveries. The vast bulk of oil price inflation is the lilly livered, emotionally immature, cowardly, inclined to panic underwear staining Commodity Futures Traders who bid up prices at every tick in the World News.
Is there a storm someplace? A terror attack? A change in political leadership? A flat beer last night or a cold cup of coffee this morning? These idiots will panic and bid up prices.
You want oil prices under control, put down the crack pipe of blaming those with no influence over it and look at where the money goes. Either reform and regulate commodity futures or get comfy with ever higher prices.
quote:Originally posted by miles
This an old article (Feb. last year) but, the exports of energy continue to keep prices high at the pump in the USA. Rather than producing our own energy here and selling it at what consumers are willing to pay, the oil companies sell it abroad based on what imported /refined oil costs on the open market.
http://content.usatoday.com/communities/ondeadline/post/2012/02/us-exported-more-gasoline-than-imported-last-year/1
If we stopped exporting our domestic oil/gas, fuel prices would drop like a lead balloon.
Pretty much agree, though prices would be propped up by someone no matter the real supply and demand effects.
It is one of the things that worries me about the Keystone XL Pipeline. If it is built we will lose the Canadian oil we are already getting from it. It will flow to the Gulf and the Super Tanker terminals. Then to be sold on the global market.
I personally would not believe anything NPR put out EVER, even if they said the sun was HOT.
They are the enemy.
Why do you think Obama is not supporting the pipeline because he doesn't want to offend his muslim buddies in my opinion
That's not it at all; if the Keystone pipeline gets finished, the price of oil at the Louisiana end will drop below a sustainable level for American Producers.
That, and the fact that Canada wants to sell all the product so delivered to the ChiComs.
"We" will get none of it.
Whine about high gas prices all you want; it's still the American Producers (like me and thousands of other small-interest holders) that are able to make enough money to Drill, Baby, Drill in those as-yet undiscovered locations and open those plugged and abandoned wells to feed our Nations' appetite for gasoline and petroleum products.
Unless and until "we" are able to turn our economy around to the point that oil is used only as a feedstock for the billions of products made from petroleum; "we" will be under the thumbs of the EPA, foreign manufacturers, and stupid Gubmint policies (anti-fracking laws come to mind).