Words of Advice:

"Never Feel Sorry For Anyone Who Owns an Airplane."-- Tina Marie

If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

Flying the Airplane is More Important than Radioing Your Plight to a Person on the Ground
Who is Incapable of Understanding or Doing Anything About It.
" -- Unknown

"There seems to be almost no problem that Congress cannot, by diligent efforts and careful legislative drafting, make ten times worse." -- Me

"What the hell is an `Aluminum Falcon'?" -- Emperor Palpatine

"Eck!" -- George the Cat

Wednesday, December 17, 2014

Oil & Russia

The price of crude oil has dropped by half since six months ago.

There has been speculation that the Saudis are going after the shale producers the frackers, Russia Venezuela or Iran. And others, who say that is all humbug.

Oil exploration sometimes tends to run as a sort of in-house pyramid scheme, with the revenue from drilled wells partially funding the drilling of more wells. But if the last set of wells doesn't pay off, then the driller's entire enterprise can come crashing down. It's happened before. I drove through Texas in the late `80s, when crude oil prices had fallen by two-thirds from the late `70s. There were hand-lettered signs on telephone poles which advertised homes for sale. If this goes on for a lot longer, the North Dakota Oil Patch may soon resemble a ghost town.

I don't know about Venezuela. I suspect that those whispering in the Saudis' ears to punish Iran and Russia are smoking crack. The Iranian clergy has a firm grip on the police and the military and as long as the money is there to pay them, they have an iron hand controlling the population. The Shah may have had some reluctance to machine-gun crowds, the mullahs' probably don't.

As for Russia goes, dream on. The KGB FSB effectively runs the country and Vladimir Putin runs the FSB. The Russian people will be told, with some justification, that their hardship is a result of economic warfare against the Rodina, that what is happening is an economic variant of an invasion. The Russian government will be able to play that card because of moves such as this one.

People in most countries coalesce behind their national leaders when their country is being attacked. The Russians are no different. Stalin killed millions of his own people, through both engineered famines, mass arrests, brutal slave-labor camps and executions, but when the Germans invaded, the Russian people worked miracles.

Against a disciplined populace, sanctions are meaningless. You need only to look to Cuba to see that. But Russia isn't Cuba. Cuba is a mouse-belch on the economic stage. Russia is the world's eighth largest economy; waging economic war on Russia is risking damaging everyone else. And if the world slips back into a recession over this, nobody's going to be blaming the Russians for it.

1 comment:

Joe said...

The link doesn't work, but that's OK. It only takes a minute to think of half a dozen things that it could refer to.