OPEC meeting
Yes, the Nov. OPEC meeting should prove interesting as it’s not likely the Saudis will swallow the cuts singlehandedly. Will there be compliance from the rest of the delegates or none at all? Also interesting to know is what the bare minimum fall-back position of the Saudis might be (they are bound to have one) given their historical leadership role in OPEC. Thing is, the U.S really does have a right to its own self sufficiency (whether or not it that is even achievable is another matter). And is the American production push even stoppable through an OPEC cut, or would it further accommodate it? But in the meantime, barrels formerly sent to the U.S markets must now seek a home elsewhere. That’s a huge change in the dynamics of global oil. In terms of market share, the ground is shifting under us as we speak. And let’s consider some other groups that will be further marginalized in this “new world,” such as Iran, Russia and Venezuela. These countries have had generational acrimonious disputes with the United States and they will truly end up on a siding for perhaps another generation as there will be no investment capital for them and their oil businesses until the global economy has completed its adjustment to this U.S. energy expansion. Take Venezuela for instance, stripped of its oil personnel who fled to Calgary during the Chavez era. It sits there with its rusting infrastructure and I’ve heard that tankers going there to fill have no guarantee that they will even be filled on time.
Let’s look at the Middle East. Perhaps it’s my Presbyterianism coming through that clouds my judgment but I could never accept the self indulgence of building covered air conditioned ski resorts in the middle of the dessert, silver plated Ferraris or 5 cent a gallon gas for their citizens all paid for by the rest of the world. Something didn’t seem right but the fact that it lasted so long eventually makes one thinks that it must be legit. Best book your room now in the Jumeirah and tour the Palm islands before they join the lost Atlantis. Who knows? It may even change Arab/Israeli relations. Having to actually work to put food on the table and pay the mortgage can significantly change your focus.
But let’s not get carried away. Cheap oil means more consumption and so the merry-go-round readies for the next turn that may come next week, next month, next year, who knows?