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Texas Is About to Create OPEC’s Worst Nightmare (bloomberg.com)
132 points by selimthegrim 3 months ago | hide | past | web | favorite | 126 comments



Texas is in a funny place. They are pumping oil like crazy, but they are building wind like crazy as well.

Look at the City of Austin and the amount of renewables year over year: https://data.austintexas.gov/Utilities-and-City-Services/Gen...

You can see a real-time chart of energy mix here: https://austinenergy.com/ae/about/environment/renewable-powe...

Most days renewables are 50% of electricity consumes. I pay a bit extra for 100% wind- and it's not that much more than 50/50. I could easily see Texas being a majority renewables while at the same time exporting more and more Oil.


> Texas is in a funny place. They are pumping oil like crazy, but they are building wind like crazy as well.

There isn't really anything contradictory about that. Oil has a vastly different set of use-cases than wind energy. There are no electric alternatives for most long distance transportation, which is a huge chunk of our energy consumption.

Gaining independence from OPEC by supporting local oil extraction while simultaneously moving as much of the grid to renewable as possible is a completely rational choice.


>There are no electric alternatives for most long distance transportation, which is a huge chunk of our energy consumption.

What about trains?


At this point, there are no long distance electric trains in the US. Odd, it seems like it would be mutually beneficial to have the electric grid run on rail right of way and be used to power trains.


I imagine it would bring some ability for load balancing moving more freight during specific hours.


This seemed like a good idea at first, but I have a suspicion that it would mess with schedules.


Power lines can climb much steeper hills than trains.


Exactly! Hillclimbing is a huge weakness of trains which significantly increases the cost of rail construction.


Texas has plenty of cargo trains with a pretty sophisticated setup.

There are currently at least two groups trying to do passenger trains between Austin, Dallas / Fort Worth, and Houston. I'm not sure what they want for Federal or State money.


Trains don't get you and your overseas goods across oceans (yet).


It may not be fast, but wind power is a proven technology for that application.


It’s also not as economical. If your competitor uses shipping that’s weeks faster and more reliable, then you’re not staying in business long.


At some point, we'll make shipping companies pay for their heavy externalities (https://en.wikipedia.org/wiki/Externality#Negative) and we'll have to choose between slow, clean and cheap or fast, dirty and expensive.


Shipping (boats onna water) aren't the 90% problem to solve, that is all on land. You solve that before you worry about the other 10%


Nothing is a "90% problem", even on land.

Tankers' environmental impact is disastrous, although they actually are comparatively quite CO2-efficient for shipping goods. It's just that there is so many of them now.


Shipping accounts for ~2% of total US oil consumption so that's a tiny little chunk.

Source: https://3kpnuxym9k04c8ilz2quku1czd-wpengine.netdna-ssl.com/w...


Air is listed right beside that, which is probably closer to what he was referring two. Combined, they sit at 10%. Not as much as he thought, but nothing to scoff at.


Neither do cars or trucks.


> (yet)

I do wonder what happened to the Transatlantic tunnel


Natural gas is an alternative to oil for long distance transportation, although both are still fossil fuels. Progress is being made on algae biofuels. If electricity gets cheap enough it can be used to make synthetic hydrocarbon liquid fuels.


But again, if electricity is cheap enough, why not electric trains like we do in Europe? Or hydrogen if you need some energy storage on board? See http://www.imeche.org/news/news-article/could-hydrogen-train...

I bet that this would be much better for the environment than algae.


Short range commuter rail will be electrified in some places like Caltrain.

http://www.caltrain.com/projectsplans/CaltrainModernization/...

Hydrogen is probably a dead end. It's too bulky, hard to handle, and the energy efficiency is terrible. Most hydrogen fuel today is produced from natural gas, which is just stupid.


>why not electric trains like we do in Europe?

While electrification of the US freight rail network certainly may happen, you have to remember the US is twice as large as the EU (9.1M sq km vs 4.5M sq km) and only a quarter the population density (33 vs 117 per sq km). Long distance passenger train routes don't really make sense (electrified or not, very few people want to spend 2 days on the train when a flight is 4 hours), meaning rail in the US is almost entirely freight.


China has a similar size to the USA and has invested heavily in HSR as an alternative to flying. Beijing to Guangzhou is 9 hours by train, which is pretty competitive with a flight when considering travel time to/from airports as well as the other hassle.

China also does a lot of freight and has gone through a lot of electrification (75%). Freight runs between Beijing and Lhasa, which is similar to NYC to LA.


I haven't gone deep into the economics, but I've found rail cost several times as much for a 30 hour ride with nowhere to sleep, compared to the 2 hour flight or 20 hour drive. So of course ridership is low.

Some intersection of actually-competitive pricing and higher speed tracks, and it seems like rail would have the potential to be plenty competitive. Lower vehicle purchae, maintenance & fuel costs, greater comfort. If I could make a 2 hour flight in 4 or 6 hours by train for 90% of the cost, I'd probably never fly again.


To my knowledge, Europe doesn't have an extensive network of freight railways, instead it has a working network of passenger rail, with lots of electrification.

The US freight network hasn't yet managed to fully rollout positive train control, electrification seems like a much harder problem. Moving freight requires a lot more power than moving people, and also has a lot more sidings and things. Some lines run double height cars, which I'm guessing would add additonal complications.


Europe has freight rail, they often use separate tracks, and most of it is electrified.

China has a lot of freight, is as large as the USA, and has a decent amount of electrification as well.


In other news, coal prices are actually going up! And China's coal exports began to ramp up, for first time in a decade!

https://www.forbes.com/sites/timtreadgold/2018/09/20/the-inc...


Make no mistake: Big oil, coal, etc. will move to "green" energy. However, this is how they want to do so:

- Maximize returns on existing investments: Mineral rights and leases and options and equipment.

- Maintain and gain control. Renewable energy is just fine, then, as long as they are in control and profiting from it.

The problem is, this screws over a lot of people and environments, in the meantime. Slows investment -- the U.S. has already lost much of the technology lead and even more of the manufacturing lead, to overseas. And, it vests the least progressive elements of our society with control over our energy future.

Oh, and environmental pollution -- not just CO2, but the outfall of CO2, heavy metals, radioactive byproducts (yes, from fossil fuels), continued support of authoritarian and criminal regimes...

Oh, yes, they can actually slow deployment, as well. Such as trying to get state legislatures to "outlaw" self-sufficient home deployments. Fighting, as they did for some time, end user feeds back into the grid (that can require grid upgrades to handle, at scale).

Anyway, these are not the people and organizations I want in control of our future energy production and distribution. Nor, in my opinion, do they deserve to profit from it.

But that's their goal.


Don't forget that Texas is also one of the largest producer of nuclear energy in the nation.


Lots of people in Texas have gotten good at making money from producing energy. Simple as that.


It is probably the most innovative place in the world for energy production. Hydraulic fracturing was invented there. Well, not invented, but innovated upon enough to the point where it was basically invented there. Without discussing the environmental problems that came with its onset, it’s easy to acknowledge how that one technique completely transformed the natural gas industry and the overall energy industry in the last 20-30 years.


We're also the largest electricity consumer, so that might not mean anything special.


I'm curious whether they see some kind of writing on the wall and realize that while they embrace renewable energy and lead the nation in Wind Power they also need to pump hard so this vast resource of oil (1 trillion barrels) is not left stranded when/if the day ever comes where oil is not required (in vast quantity).

They are incredibly smart business people and a State Gov that is incredibly business friendly, which has made Texas an energy powerhouse from renewable energy, oil, natural gas, refining capabilities and the infrastructure to move it all to market.


Isn't that what Norway has been doing for years?


I mean, sure. But Texas produces almost 3x as much as Norway.


Yes, but mostly hydro for power generation.


It makes sense. Like how the Gulf countries invest in solar. It's because they have the interested parties (Energy industry) on the phone every day.


You should know that oil is hardly used for elec. gen in developed countries. They are only indirect competitors - through the automobile.


You in fact shouldn't know this as the EIA reports that 3,239,699 barrels of petroleum products were consumed in august of this year alone for electrical generation in the US (source https://www.eia.gov/totalenergy/data/browser/index.php?tbl=T... )


I'll change my comment from not -> hardly.

https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

While your number seems like a lot, it's really just a drop in the bucket. The US consumes close to 8 billion barrels of oil annually. I was, however, surprised that it was still as high as 0.5%.


Hawaii likes to generate power that way. Northern parts of Alaska do too.


>You should know that oil is not used for elec. gen in developed countries.

Eh? When I worked for a United States generation company our coal-burning plants could and would be switched to bunker fuel if the price was right. To be fair it's not much (less than 5%) depending on how you slice it, but in their 2016 annual report [1] Dynegy reported 2.6 TWh (terawatt hours) sold into the wholesale market and .7 TWh into retail.

Be careful about blanket statements unless you're an expert in the area because other HN readers are experts.

[1] = https://www.dynegy.com/sites/default/files/Dynegy_2016_Annua...


> To be fair it's not much (less than 5%)

https://www.eia.gov/tools/faqs/faq.php?id=427&t=3

Here's a better source. It's 0.5%. I felt that was enough to warrant using "not used in developed countries," but fair enough.

>Be careful about blanket statements unless you're an expert in the area because other HN readers are experts.

Easy there hotshot


> You should know that oil is hardly used for elec. gen in developed countries.

Visit Hawaii sometime. Oil on Oahu. Diesel on the other islands.


You’ll see diesel generators powering islands in Southeast Asia as well.

Diesel is a useful option for places not connected to a larger grid.


I do know that. I'm commenting on the fact that Texas is investing in renewables while at the same time investing nonrenewables at the same time.


Renewables are primarily for domestic consumption, oil is an export good.


At my last apartment, I was paying only about $40/mo for 100% wind/solar. It's incredible what a little government-mandated competition can do.


Isn't it typical for each economy to export the thing it is best at producing?

Also look at Norway--huge petroleum wealth, lots of Teslas because oil is dirty.


Not quite. It exports everywhere there is a comparative advantage. https://en.m.wikipedia.org/wiki/Comparative_advantage


Ah, but this too, not quite. If your economy is better than other economies at producing cars, but _far_ better than anyone else at producing microprocessors, it may be rational to produce microprocessors exclusively and import cars. Cf. revealed comparative advantage.


One mind-blowing item at a time. ;-)

But seriously, thanks for sharing. TIL: https://en.m.wikipedia.org/wiki/Revealed_comparative_advanta...


Depending on where you get the electricity to charge your Tesla it could be worse than oil. But seeing as Norway gets almost all of it's electricity from renewable energy that's not the case there.


There is no electrical generation source that is worse than oil, for any electric car. Only 12-30% [1] (EDIT: replaced 1% after correction from nradov) of energy makes it to the wheels when burning petroleum to propel a vehicle forward.

Your electric car will get cleaner over time (90-95% of new generation coming online each year are renewables), your petrol vehicle will burn petrol forever.

[1] https://www.fueleconomy.gov/feg/atv.shtml


> There is no electrical generation source that is worse than oil, for any electric car. Only 1% of energy makes it to the wheels when burning petroleum to propel a vehicle forward.

What? You say "there is no electrical generation source that is worse than oil" then say "Only 1% of energy makes it to the wheels when burning petroleum to propel a vehicle forward." A gasoline powered car is not an electrical generation source so I'm sure what your saying, especially because coal is a much dirtier source for generating electricity. Also a quick google search shows that gasoline powered vehicles have a tank to wheel efficiency around 16%[1][2] which is much higher then the 1% you stated.

And my original point was, If a electric vehicle is being charged from a dirty source like a coal plant then it can be more polluting then driving an efficient petroleum car. Coal is more polluting then Oil when burned and converting the heat to electricity is a huge hit to efficiency. Only about 30% of the energy from coal is turned into electricity. Plus you have transmission loss from getting the electricity from the power plant to the EV.

[1]: https://cleantechnica.com/2018/03/10/electric-car-myth-buste...

[2]: https://matter2energy.wordpress.com/2013/02/22/wells-to-whee...


> A gasoline powered car is not an electrical generation source

Just a minor thing, and doesn't change your point, but have you considered that cars have alternators which use the turning of the engine to generate electricity?


You're way off. Modern cars turn about 30% of the energy in gasoline into forward motion. However, electric cars do have a lower carbon impact in almost all cases.


Even though Norway is the perfect country where it makes sense to go full EV, few countries would gains from switching to electric (even from coal)

https://en.wikipedia.org/wiki/The_long_tailpipe#Carbon_footp...

And all grids get greener every year. And this accelerates, so your argument gets weaker over time.


A couple year ago, they were the highest producer of energy of any form in the US (including oil, coal, solar, and wind).


This sounds like a preeminently practical strategy.


The only funny thing about it is people learn their world view is incorrect. Texans are capitalists: if there was a dollar to be made pumping water uphill, there'd be the world's largest salt lake in West Texas.

Oil is an important automotive fuel, but it's a chemical stock for everything that's touching your skin at the second. Hilariously, we should probably start wondering if our plastics come from oil sourced from "ethicality regulated states" or something.


Another interesting thing about Texas is that it has an independent power grid.


> Texas is in a funny place. They are pumping oil like crazy

Texas had always pumped a lot of oil. Texas was the oil capital of the world for a long time before saudi arabia came around.

> but they are building wind like crazy as well.

That's because one of the wealthiest men in the world has been a big fan of wind energy.

http://www.nbcnews.com/id/19231397/ns/us_news-environment/t/...

> I could easily see Texas being a majority renewables while at the same time exporting more and more Oil.

No major state or country is going to be renewable majority for a very long time ( if ever ). Least of all texas.

https://www.eia.gov/energyexplained/images/charts/primary-en...


Now if we would only take on smart modern nuclear reactors, but I'm afraid the greenies in the USA will keep killing that and eventually we'll be buying advanced modular nuclear power from the Chinese in about 10 years.


Look up information on the PUCT's "CREZ" project.


The best thing we could do from a strategic standpoint is ready these wells (but not use them), then wait for other countries to exhaust their supplies of petroleum first.

But what's going to happen is we'll frack everywhere, destabilize our bedrock and pollute our water, and still encounter a Hubbert peak in roughly the time it's taken us to ramp up domestic production (probably sometime around 2040). There's no way to predict an exact date for this though.

Then since Venezuela, the Middle East, Russia, the Baltic states, Canada, etc have more oil than anyone, we'll be at their mercy again:

https://en.wikipedia.org/wiki/List_of_countries_by_proven_oi...

The best thing we could do from a scientific/environmental/human rights standpoint is to stop using petroleum for fuel and only use it for manufacturing and as a bridge to renewable energy. This is unprofitable^H^H^H^H^H^H^H^H^H^H^H^H unrealistic so we'll burn it all until externalities can no longer be ignored and the overall prices matches solar. This happened sometime between 2000 and 2010, but it will take a generation for the the general public to notice.

In the meantime I'm a typical hypocrite with an 80s Toyota truck like the one in Back to the Future that gets 15 mpg. YMMV.


A good related article from The New Yorker:

https://www.newyorker.com/magazine/2018/01/01/the-dark-bount...

Interesting pieces:

In large part because of high oil prices, a disproportionate share of America’s economic growth over the past decade has come from Texas. The gross domestic product of the state is $1.6 trillion; if it were an independent country, its economy would settle in around tenth place, eclipsing those of Canada and Australia. California, with forty per cent more residents, has a G.D.P. of $2.6 trillion, but since 2000 job growth in both Dallas and Houston has expanded by about thirty per cent—three times the rate of Los Angeles.

..

.. Because native Texans were suspicious of outside corporate interests—especially John D. Rockefeller’s Standard Oil—two local companies were formed to develop the new field: Gulf Oil and Texaco. (Both companies have since merged with Chevron.)

..

.. To entice investors to help him drill yet another well, he drew up fake geological reports indicating the presence of salt domes and stratified-rock folds, which can trap oil and natural-gas deposits beneath them. The phony report suggested that, at thirty-five hundred feet, a well could tap into one of the greatest oil deposits in the world. Once again, a wild prediction turned out to be true.


Fracked wells have awful production curves. It will be done a few years after they run out of permian to drill. No gentle dropoffs like traditional reservoirs. Though, I'm just an interested bystander, so if any petroleum geologist know of changes that contradict I'm happy to be corrected.


Why so gloomy? Something like 6-8 billion barrels in the Permian, we're talking at least 15-20 years out before it's even remotely an issue. Lot more short term and medium them effects to consider before optimizing frack jobs.


https://assets.bwbx.io/images/users/iqjWHBFdfxIU/izx7rgFSlvy...

From https://www.bloomberg.com/news/articles/2017-08-08/shale-exp...

>Here is the free cash flow after capital expenditure for a sample of 33 E&P companies, grouped by their main shale basin (all figures compiled by Bloomberg).

>It doesn't require the closest examination of that chart to see fracking is very capital intensive, with E&P firms spending way beyond their means even in the relatively halcyon days of 2012 and 2013. The 14 Permian-exposed companies in that sample saw their cash burn accelerate over the past 12 months to a collective $11.5 billion.


Agreed - fracking only makes sense as long as its easy to borrow money


It's truly scary. US will get accustomed to the increased domestic capacity and lower prices, and then have the rug pulled out from underneath.


It’s unfortunate that we’re in a glut of oil and the price is going down when we should be trying to use less oil. We’re not running out any time soon and there’s lots of coal too, so it could be very dangerous for the planet.


Coal is currently being wiped out by economics in the west and it's past its peak globally, so there's a silver lining.


I'm hopeful that America can further lessen our dependence on Saudi Arabia as much as possible through this. Alas, the alliance is based around a lot more than just oil, and the Saudi vision is to shift away from oil reliance, but I'll gladly take a chink in the armor.

> "Global oil demand has so far absorbed the extra U.S. crude barrels, limiting the impact on prices"

This slightly curbs my optimism.


This isn't feasible. The refineries in the US are not designed for the same oil produced by the Permian basin (the Permian is producing light crude, US refineries are configured for medium to heavy crude). More importantly, oil is fungible on the world market; you can't effectively dictate "Oil produced in America is consumed in America" without drastically regulating the energy market with public policy (not going to happen).

https://www.reuters.com/article/us-usa-oil-exports-study/sha... (Shale oil growth to overwhelm U.S. refiners, fuel exports: study)

https://www.cnbc.com/2018/04/17/shale-oil-has-a-refining-pro... (Shale oil has a refining problem, and Morgan Stanley thinks investors can profit)

If you want to lessen your dependency on middle east energy, switch to electric cars, trucks, and busses faster.


China imports more oil than we do and their demand for energy is only going to go up. We’re producing more energy domestically and lessening our reliance on foreign energy, so China has a bigger incentive to change their energy equation —in addition, their gov can just issue a decree and change policy with but a little corruption interfering a bit.


We have spent a non-insignificant amount on the Fifth Fleet (25 navy vessels) to ensure the stable supply of middle eastern oil onto energy markets. That seems to be of substantial incentive to mitigate our need for oil to drive our economy.

https://en.wikipedia.org/wiki/United_States_Fifth_Fleet

> Well, even a blind pig finds an acorn once in awhile. While working on a recent piece on how to cut $1 trillion from the $7-trillion-plus U.S. defense budget over the coming decade, I stumbled upon a provocative analysis by Roger Stern, an economic geographer at Princeton University. He says the U.S. has “mis-allocated” — others might say “wasted” — $8 trillion since 1976 protecting the oil flow from the Persian Gulf that fuels much of the global economy. Especially since in 2010, when the U.S. was the destination of less than 10 percent of the oil flowing out of the Gulf.

> The U.S. has insisted, since the days of the Carter Administration, that the oil flowing out of the Persian Gulf is a vital national-security interest of the U.S. Beyond that, Presidents and the Pentagon have said, the narrow Strait of Hormuz is a vulnerable bottleneck for shipping headed out of the Gulf. Any troublemaker — especially Iran — could bring the U.S. and world economies to their collective knees by shutting it down by sinking a couple of tankers as they pass through. Consequently, the U.S. has poured tons of money into the region since then, including three wars. It has bulked up its military forces in the neighborhood — including the U.S. Navy’s 5th Fleet, headquarters in Bahrain, smack dab in the middle of the gulf — to keep the oil flowing.

http://nation.time.com/2011/04/24/a-question-for-the-obama-a... (Have we wasted $8 trillion defending the Persian Gulf from a non-existent threat?)


Much of keeping gulf oil flowing is to keep the European and east Asian economies stable —they are petroleum poor. We get most of out foreign petros from Canada, Vz and Mx.

No doubt Trump would love to recall rhe fleet, if possible, but it’s not. Unless he’d like to see chaos in the world economy.


How does the presence of the 5th Fleet ... make any difference? Are they on active patrol duty? How does this work?


> Unless he’d like to see chaos in the world economy.

Like trade wars usually tend to cause?


Depends. Sometimes you have cause on your side. In this case we do know China does not play fair. Nothing weird about it except previous prezes always crossed their fingers, knocked on wood and hoped others would play fair just cuz. I’m actually pleased a president finally decided to call it for whst it is and do something about it and not just talk and take token steps for publicity and then forget about it.


My main concern is that the Permian Gulf Coast pipeline in the article is linking up to the Bayou Bridge one in Louisiana, and driving its construction rationale further. ETP is no saint and I don’t want to see them handed more of a reason to trample over people’s rights.


"refineries in the US are not designed for the same oil"

"oil is fungible on the world market"

In the medium term, these two statements contradict each other. If all it takes to avoid a 1970s-style OPEC crisis is to update the facilities at a few refineries, that job will get done. Actually, that job will probably get done anyway, because after all, shipping oil overseas isn't free.


Adjusting for immaterial quality differences it is fungible, but I’d imagine the transportation costs are non negligible which sort of defeats the point, no?


Did your desire to use the word fungible outweigh the fact that the US has drastically reduced its dependence already?

Anyway, you're right that decreasing oil demand will lessen dependency on foreign oil. You're wrong that our current approach "isn't feasible". Our oil imports from Saudi and worldwide are falling. See: https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0...


> Did your desire to use the word fungible outweigh the fact that the US has drastically reduced its dependence already?

No, facts are facts. Your own citation shows the US is still importing 3 million/barrels a day from OPEC (~33% of US daily consumption), and has held somewhat constant at that level since 2013. The price of oil would rise if those 3 million/barrels a day weren't on the world market, or if the US was required to source those barrels elsewhere.

https://www.eia.gov/tools/faqs/faq.php?id=727&t=6

Not a lot of electrical generation sources in the US run by authoritarian governments compared to oil producers. If it's not Saudi Arabia, it'll be another government attempting to control energy supplies. Can't control a country's electrical generation so easily, and therefore it makes the most sense to incentivize the rapid electrification of transportation.


America now produces enough oil that cutting off Saudi Arabia wouldn't be any kind of energy crisis. The only reason to be nice to tolerate their journalist murders at this point is for military strategic advantages in the middle east.


>for military strategic advantages in the middle east.

Really? As a European, I feel much closer to Iran's history and culture than Saudi Arabia's. My understanding is that the US chose a side a long time ago (cf. ARAMCO foundation) and decided to go "all in", even if it goes a long way against its interest. And things are getting worse with time.


Saudi Arabia has a much larger budget to spend on arms deals (the real US interest) and allying with Iran would anger Israel who the US considers an important ally (for tech, geopolitical, military, and electoral college reasons).


All these factors link back to oil. It's crucial to sell arms there because there's oil in the region. Israel has become a big ally because it's the closest one in the world's oil well. Switch to renewables and the US won't care about the region (just like the US doesn't really care about Africa and South America).


The main reason the US cares about "military strategic advantages in the middle east" has been oil, at least since the fall of the USSR.


>>America now produces enough oil that cutting off Saudi Arabia wouldn't be any kind of energy crisis.

This is naive. When you cut off Saudi Arabia, you cut off all OPEC. And that would devastate America, even at the current levels of domestic production.


Why would Saudi Arabia be any different than Russia or China (who we trade with (minus the Trump idiocy) without compunction) we don't comment on their murder of journalists or their dictatorships? Saudi Arabia is our only big ally in the region, why do you want to cut off all ties to them? It won't change anything and will just hurt us in the long run.


> the alliance is based around a lot more than just oil,

curious what else


Intelligence sharing, mutual distaste for Iran, strategically placed ally, arms deals.


> Intelligence sharing, mutual distaste for Iran, strategically placed ally, arms deals.

It's the snake that bites its own tail, because these all go back to oil.

About the alleged common "distaste for Iran", for instance: https://en.wikipedia.org/wiki/Nationalization_of_the_Iranian...


I think that's an oversimplification of current affairs. It's complicated. Iran wants to spread its sect of Islam, and that is at odds with a lot of the Arab world. Iran also hates Israel much more than Saudi Arabia does, and that comes into play. The Middle East is also important because of radical Islam (you can debate the role of Saudi Arabia in 9/11 and whatnot but I don't see that being about oil).

I don't see how the coup in 1953 means that we don't have a distaste for Iran today. Obviously it's an important part of recent history, but the government is not the same. The US and the UK used to fight in wars, but now we are allies.

Arms deals don't go back to oil because it benefits the American military industrial complex, not the energy industry.

Edit: Clarified statement on coup.

Edit again: I clicked on your old unedited link so I replied to a false understanding of what your point was, now my reply looks dumb.


Sorry for the late link change, it was to correct a copy-paste error

>Iran wants to spread its sect of Islam, and that is at odds with a lot of the Arab world

That had nothing to do with the US.

>I don't see how the coup in 1953 means that we don't have a distaste for Iran today

I understand that the Iranian Revolution is an obvious reaction to the 1953 coup, which made the two nations distaste one another for a gooood time. Without oil, no coup. Without the coup, one less big reason for Iranians to put Islamist to power and chant https://en.wikipedia.org/wiki/Death_to_America

All these things became complicated because of oil. Switching to renewables would slowly but surely simplify all of this.


Strategically for what? all of those are related to oil and ARAMCO. Peace would not be an objective if the goal is to sell arms. And i doubt the americans have an inherent preference between the saudi and iranian people (maybe you could say that about israel however)


If anything the military side of things is far more advantageous to us than the oil. They are the major counter balance to the theocracy in Iran that would like to unbalance the entire region and establish an Iranian born caliphate.


you realize SA is a theocracy as well? Plus the main reason why iran wants death to america is because of the US oil policy


It's far more about politics than it is oil. If we lose Saudia Arabia to China/Russia the US influence in the middle east will be nil and then there will be 0% chance of democracy, just more more Dictatorship.


There is a pincer: Texas on one side and electric vehicles on the other: https://news.ycombinator.com/item?id=18473697.


... which is why SA is so determined to diversify its holdings.


For that t succeed, they'll have to convince the world to buy into Aramco's IPO – right when EV sales will have crossed the chasm in multiple countries: https://valuendow.com/wp-content/uploads/2018/08/Exhibit-1.j...

I hope they have good sales reps.


Many of them would turn a profit even with crude prices as low as $30 a barrel.

That is impressive and would seriously undercut a whole lot of nations including Russia and Venezuela. It really shows the advances and quality of the oil.


Less dependency on foreign oil is good for peace since the US will not be "protecting their interests". And Saudi Arabia having less budget for their wars is also a good thing.


The US will always seek to control Middle East oil, it’s a huge lever on the rest of the world.


For another decade or two, yes.

In the meantime, China is building a global supply chain to provide with world with solar panels and batteries. And bankrupt all the US companies/banks that keep investing in fossil fuels. It's all about your investment horizon I guess.


>>For another decade or two, yes.

If the US stays focussed on mid-east for the next 2 decades, and not counter China. Or rather just let China be as they are. China will have the world domination on a platter for the next few centuries.

Oil is the old game. That game probably even ended after the 1990's. The US has been fighting wrong wars for the past 30 years.

China is quietly, and yet steadily emerging as the next super power. Albeit like the UK in the past. No intention to fight any direct wars or make aggressive moves. Instead control the world's oceans, and establish trade empires. Let the current super power bankrupt itself fighting wars.


The current administration doesn't seem to particularly care about peace, so I'm skeptical that this will make any difference at all. The US is even treating long standing allies as enemies these days.


This is a disaster for the climate.


how so? Consumption won't go up proportionally to the drop in price of fuel. I see it as an antidote to the middle east conflict where the developed countries have a hand in it. If petro nations source of income is affected, there's a hope that Middle East conflict will end.


Everyone is now rushing to sell oil, before demand for it will start falling rapidly.


The Texas oil bubble is fueled by massive debt and very rosy long term exploitation projections. Too rosy maybe according to some; there's been some rumors a lot of oil companies in Texas have been overstating their long term supplies. Either way, low oil prices are a good thing since it cuts off more the expensive sources as a realistically viable.

It's actually helping to kill off oil investments because why bother if the prices stay below what is actually profitable. A lot of recent investments only made sense at 70$+ a barrel. Now that 30$ is on the table, those investments are effectively under water. The price volatility alone should scare investors. Imagine it drops another 10$ because Opec throws in the towel and unleashes the floodgates?

Meanwhile, oil dependence is being addressed by ongoing electrification so lower demand is going to keep prices low even as supply declines. This ensures that by the time the shit hits the fan (cheap supplies run out), it won't be as much of an issue. In 20 years when most transport is electric, the barrel price for oil will be much less relevant for most. There will still be a need for oil of course but not at the levels needed today.


> Everyone is now rushing to sell oil, before demand for it will start falling rapidly.

This also gives countries a great opportunity to raise fuel/carbon taxes without suffering high oil prices -- which would keep demand lower, resulting in even lower pre-tax prices and a very helpful feedback loop.


How about we leave all that shit in the ground where it can't kill us?


...because the US is the only market for oil, right?


The AMP version linked is barely readable on a large display; but the regular version is at https://www.bloomberg.com/news/articles/2018-11-21/opec-s-wo...


The AMP version with Firefox's reader view is great.



Does this mean oil will continue do plummet bc of so much supply?


What hyperbolic clickbait nonsense.

> If Saudi Arabia and its allies cut production when they gather Dec. 6 in Vienna, higher prices would allow shale to steal market share.

Considering oil prices have gone from near $80 to near $55 in about a month, I'm guessing they've decided to maintain or even increase production. That is unless the saudis and the wall st banksters decide to game the market as they do from time to time. But of course the bloomberg "journalists" wouldn't know anything about it or investigate that because they are allergic to real journalism like more establishment media.

> But because the Saudis need higher crude prices to make money than U.S. producers, OPEC can’t afford to let prices fall.

The saudis make money on their oil. They don't need higher prices for that and certainly their oil is more profitable than shale oil. What they need is higher oil prices to maintain their government budget.

If you want to know what a joke bloomberg is...

The same journalist wrote this today : "Saudi Oil Production Surges to Record in Early November"

https://www.bloomberg.com/news/articles/2018-11-21/saudi-oil...

If anyone working at bloomberg knew what they were talking about, they wouldn't be working at bloomberg. They'd be raking in the millions working for themselves.


I also find it weird that bloomberg articles keep popping up and being upvoted here. It's not exactly clear where bloomberg stands quality-wise (whatever happened to those tampered chips that nobody found??). Doubly so, because bloomberg has a tight grip on investors and can directly manipulate markets, which should make them a target of regulation. I don't even understand why bloomberg changed its model from being exclusive to pursuing becoming a mainstream medium.




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