If lower oil prices are a covert war by the USA and Saudi Arabia against Russia and Iran, should we volunteer and join the fight?

Chairman Mao believed that political power grew from the barrel of a rifle. He was correct of course, but where did the rifles come from? They came from the cash provided to buy the guns. Putin’s Ukrainian adventure works because of the cash he has supplied to the power brokers in Russia, and that has come from oil. The price peaked in 2009 at $140 per barrel, crashed with the financial crisis but has steadily recovered since then. The high oil price has kept the economy in Russia alive. It has paid for pensions, it has paid for the military and it has paid for the annexation. of Crimea and the war in Eastern Ukraine. But now the party could be over. Oil is now around $80 per barrel and due to fall further.

The smart way to defeat an enemy is not to fight a military battle but to take away the money that buys the guns and that seems to be the unfolding story behind the current collapse in the cost of oil.

Oil is not a free gift for any country. It has be extracted from the ground and that costs money. If the price for oil is high, there is an incentive to produce more, to explore difficult areas which, with a low oil price, would be uneconomic. If the price drops to below not only the cost of exploration but production, then production stops and the taxes which governments put on the product, falls. No money, no power and no guns. Both the USA and Saudi Arabia can now produce oil at an unbeatably low price, at a price which countries with expensive extraction costs cannot match. And they can keep on producing it, at least for as long as it takes to put their ‘enemies’ out of business.

It may be devious, it may be sneaky, but it is a lot less harmful than a military conflict.

Ultimately they will run out of oil, but by then the world could really haveembraced the other mean of power production, the sun and its output. And the sun shines on almost everybody.

Join the fight now, reduce your consumption of oil and embrace the future.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s