Saudi Arabia may go broke before the US oil industry buckles

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    Aug 16, 2015 2:24 PM GMT
    It is too late for OPEC to stop the shale revolution. The cartel faces the prospect of surging US output whenever oil prices rise

    If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.

    The contract price of US crude oil for delivery in December 2020 is currently $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.

    The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6m barrels a day (b/d) into the teeth of the downturn.

    Bank of America says OPEC is now "effectively dissolved". The cartel might as well shut down its offices in Vienna to save money.
    http://www.telegraph.co.uk/finance/oilprices/11768136/Saudi-Arabia-may-go-broke-before-the-US-oil-industry-buckles.html

    Interesting article. I thought the Saudi tactic of pumping more oil to counter the US shale oil boom would work, but apparently it hasn't and never will. The sooner the West weans itself off Middle Eastern oil dependence, the better.
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    Oct 08, 2015 9:17 PM GMT
    No more new cars or furniture, says king as oil slump forces cuts on Saudi Arabia

    The Saudi government has banned official purchases of cars and furniture and slashed travel budgets and infrastructure spending as it faces its gravest fiscal crisis for years because of low oil prices, according to leaked internal government documents.

    Secret Saudi policy memos issued by King Salman to the finance minister detail the new economic austerity measures to be implemented across all government ministries. Saudi public finances have been depleted this year by tumbling oil prices to such an extent that the kingdom is expected to run a deficit of at least 20% of GDP in 2015.

    http://www.theguardian.com/world/2015/oct/08/no-more-new-cars-furniture-king-oil-slump-forces-cuts-saudi-arabia

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    Oct 08, 2015 9:32 PM GMT
    Oh, how horrible! icon_razz.gif

    P.S. That gilded casino looking furniture.....icon_lol.gif
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    Oct 08, 2015 9:45 PM GMT
    bon_pan saidOh, how horrible! icon_razz.gif

    P.S. That gilded casino looking furniture.....icon_lol.gif


    lol

    You never know; with austerity might come good taste - but don't hold your breath.

    Saudi-Qatar-meeting.jpg
  • tazzari

    Posts: 2937

    Oct 08, 2015 10:32 PM GMT
    Think of the great lawn and garage sales!
  • tj85016

    Posts: 4123

    Oct 09, 2015 5:19 AM GMT
    nah, they'll face hard times, but their debt/GDP is about 4% - and they'll continue to pump oil
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    Oct 12, 2015 2:21 PM GMT
    shale oil was big back in the 80's, how did that work out?
    shale-tongue-flames-m.jpeg
  • rnch

    Posts: 11525

    Oct 12, 2015 2:31 PM GMT
    Karmic Payback for more than a few items.
  • tj85016

    Posts: 4123

    Oct 12, 2015 4:15 PM GMT
    oh ex-Mil, you can make the same case for Norway going broke in the same manner

    the general economics of Saudi Arabia and Norway are almost identical (toss in Australia and Canada if you want to include the huge downturn in mining too)
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    Oct 12, 2015 5:34 PM GMT
    tj85016 saidoh ex-Mil, you can make the same case for Norway going broke in the same manner

    the general economics of Saudi Arabia and Norway are almost identical


    You can make the case, but it's not a particularly valid one. Oil and gas revenues as a percentage of fiscal receipts are a whopping 90% for Saudi Arabia, but only 30% for Norway. Norway is in the best position of any oil producer. It not only has the world’s largest sovereign wealth fund — double the size of its economy at $870bn — but it can also tolerate a lower oil price than Saudi Arabia. According to Fitch, even at a price of $40 a barrel Oslo would still balance its budget.

    84a2c01e-9bda-4011-b1cf-4292f87eb146.img
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    Oct 13, 2015 12:59 AM GMT
    The end of Saudi Arabia would be a wonderful thing.
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    Oct 23, 2015 11:08 PM GMT
    Saudi Arabia could be bankrupt within five years, IMF predicts

    Saudi Arabia’s cash reserves are in free-fall and the country could have only five years of financial assets remaining due in large part to the fall in oil prices, according to a report by the International Monetary Fund (IMF).

    Saudi Arabia currently has $654.5bn in foreign reserves, but the cash is disappearing quickly.

    http://www.independent.co.uk/news/world/middle-east/saudi-arabia-could-be-bankrupt-within-five-years-imf-predicts-a6706821.html
  • KissTheSky

    Posts: 1981

    Oct 23, 2015 11:55 PM GMT
    It would be a real revolution if their economic peril forced them to join the modern world, open up their society and provide good education for all their citizens, including girls. Oh, and dump the fundamentalist religious nonsense that has kept their country in the dark ages.
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    Oct 30, 2015 9:14 PM GMT
    Saudi Arabia downgraded after budget surplus turns negative

    Standard & Poor's downgraded Saudi Arabia's credit rating on Friday.

    The dramatic plunge in oil prices over the past 18 months has caused a "pronounced negative swing" in Saudi Arabia's financial picture, S&P warned.

    The oil-rich kingdom has gone from a healthy budget surplus of 7% of GDP in 2013 to a projected deficit of 16% this year. S&P estimates that unless oil prices rebound meaningfully, Saudi Arabia will suffer deficits each of the next three years. A lower credit rating means that borrowing becomes more expensive.

    http://money.cnn.com/2015/10/30/investing/saudi-arabia-downgrade-oil-prices-opec/index.html
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    Oct 30, 2015 9:29 PM GMT
    Wow, maybe the US can reclaim Aspen soon.

    ... I paid $1.64 / gal for unleaded this morning, after grocery points. Amazing. icon_razz.gif
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    Oct 30, 2015 9:53 PM GMT
    mindgarden saidWow, maybe the US can reclaim Aspen soon.

    ... I paid $1.64 / gal for unleaded this morning, after grocery points. Amazing. icon_razz.gif

    The best I did today was $2.11 for Texaco in Florida. 7/11 gas is almost below $2.00, but I'm not sure about their sourcing and its quality.

    BTW, a big factor in gas prices differences by US State is not necessarily distribution costs from the refinery, as many assume. A primary cause is differences in State taxes. Federal taxes are uniform across the US.

    Some of the reddest States, that preach lower taxes for corporations (rarely for ordinary citizens), have the highest taxes at the gas pump. Isn't that amazing! But it's always fair game to reach into the pockets of the poor working guys who can least afford it.
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    Oct 30, 2015 10:52 PM GMT
    Art_Deco said
    mindgarden saidWow, maybe the US can reclaim Aspen soon.

    ... I paid $1.64 / gal for unleaded this morning, after grocery points. Amazing. icon_razz.gif

    The best I did today was $2.11 for Texaco in Florida. 7/11 gas is almost below $2.00, but I'm not sure about their sourcing and its quality.

    BTW, a big factor in gas prices differences by US State is not necessarily distribution costs from the refinery, as many assume. A primary cause is differences in State taxes. Federal taxes are uniform across the US.

    Some of the reddest States, that preach lower taxes for corporations (rarely for ordinary citizens), have the highest taxes at the gas pump. Isn't that amazing! But it's always fair game to reach into the pockets of the poor working guys who can least afford it.


    If true, that would make for a very positive 2016 for the GOP. Would be happy to have these states.

    http://www.bankrate.com/finance/taxes/states-with-highest-gasoline-excise-taxes-2.aspx

    Pennsylvania, 70 cents per gallon
    California, 65.98 cents per gallon
    New York, 62.86 cents per gallon
    Hawaii, 62.06 cents per gallon
    Connecticut, 59.26 cents per gallon
    Washington, 55.9 cents per gallon
    Florida, 54.82 cents per gallon
    North Carolina, 54.65 cents per gallon
    West Virginia, 53 cents per gallon
    Illinois, 52.48 cents per gallon



    "The best I did today was $2.11 for Texaco in Florida. 7/11 gas is almost below $2.00, but I'm not sure about their sourcing and its quality"

    We're at 2.10 to 2.20 in spite of the regular attempts of raising prices 30 to 40 cents a gallon at a time. Funny how that works. Prices drift down over a period of 6 or 7 days then it's either BP or Marathon tries to jack prices by that amount. And then within 30 minutes or so, everyone is at the new higher price. It's never a few cents at a time. And Marathon and BP are the two big refineries around here.

    Last several times, their attempt at prices fixing hasn't been working. Android app named Gas Buddy and you watch it happen.

    Someone call Sherman and tell him about the price fixing. I've been writing letters to the antitrust division of the Justice Department for several years about this and they obviously aren't interested.
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    Oct 30, 2015 10:54 PM GMT
    Well, I had 50 cents off for paying too much for groceries last month. Still, a nice "back to the future" moment.

    Our gas prices are usually 10 or 20 cents higher than points east and west because we are about half-way in between marine terminals. Our gas is trucked from Portland, while farther up-river in Central Washington, or even northern Idaho, it's cheaper because it is transported by river barges.