Good day all. One of the side effects of Epic Fury is the start of the dissolution of the Organization of Petroleum Exporting Countries (OPEC). Many of the smaller Arab oil states have long been chafing under the quotas forced on them by the larger OPEC countries. (Saudi Arabia) Add to that the competition from countries not part of OPEC who don’t give a damn about the quotas and pumps as much as they can.
OPEC was created in 1960 and over the next decade restructured the oil industry away from the traditional oil companies. That’s a nice way of saying they nationalized everything. In 1973, OPEC decided to flex it’s muscles and embargoed against the United States and Europe for their support of Israel in the Yom Kippur war.
I hate to date myself, but I remember the embargo. Fuel was rationed for the first time since World War Two and you had all sorts of things happening. I recall my father making a deal with a farmer to buy gas from him because farms were exempt from the rationing.
Because of the embargo, the United States was basically the tool of OPEC to some extent. Our internal oil industry was being regulated to death and we went from a net exporter, which we had been through World War Two, to a net oil importers. The Federal Government also instituted all sorts of price controls which made things even worse.
Finally, the idiots in Washington finally figured out that if they wanted to fix the energy crises, they needed to get out of the way. It took decades, especially with a certain political party doing it’s best to wreck the oil and gas industry, but under President Trump, the United States went from being an importer, back to being an exporter.
That brief and woefully incomplete history brings us to today. You still have the progressive idiots, especially in Eurostan, gutting or trying to gut their energy sector for wind mills, solar power and unicorn farts. Meanwhile the United States is going full speed ahead. Now OPEC is rapidly losing it’s ability to set oil prices, and OPEC countries are starting to say, “We need the money and we’re going to drill and sell more oil.” Here are the details from Fox Business News:
The price of gasoline is set to drop as the Organization of Petroleum Exporting Countries (OPEC) appears poised to collapse, experts predict. OPEC has long kept crude oil prices higher than they would otherwise be. If this pans out, it will be a major victory for the Trump administration, which is resetting global energy markets.
The news of a probable end of the oil cartel also vindicates President Donald Trump, who has previously said OPEC is “ripping off the rest of the world.” For a long time, the president has led a pressure campaign against OPEC, which has vast crude oil reserves that could easily be pumped. But the organization restricts the number of barrels of oil that each country may pump each day. That keeps gasoline prices elevated across the U.S. and much of the rest of the world.
Actually, since the formation of OPEC and the embargo, oil exploration has been a going concern, especially in the United States. Currently, Venezuela has more proven oil reserves than all of OPEC combined. Granted, it’s really sour oil and requires special refining, but guess which country has refineries capable of handling their cruddy crude?
Phil Flynn, senior market analyst at The PRICE Futures Group and a FOX Business contributor said, “Over time, the breakup of the cartel should cause gas prices to fall. With more player pricing, oil only being contained by market forces should lead to an ounce of supply and lower prices. Competition is good as it lowers prices and collusion by producers raises prices.”
Flynn linked the U.S.-Israel war with Iran as a historic marker. “I think that is a real possibility and more OPEC countries want to control their own destiny. In fact, when we look back at one of the strategic victories from Operation Epic Fury, it is that it has changed the face of the OPEC cartel forever and shifted energy dominance from the cartel back into our hemisphere. The UAE was getting tired of playing second fiddle to Saudi Arabia, the de facto leader of the cartel. The UAE wants to assert its leadership and has a competitive goal to not only increase oil production in the long term, but it wants to assert itself as the leader of the region.”
If the UAE decides to ramp up production, it’s going to be noticeable. According to Grok, the UAE is currently producing about 2 million barrels a day, but they are capable of doubling that and want to go to 5 million barrels a day. That is going to eat into OPEC’s ability to control oil prices. You also have other OPEC countries that really need more money coming in.
The simple act of the UAE quitting the cartel led immediately to OPEC losing out in a big way.
“[The UAE’s] departure removes both production weight and institutional credibility, and that’s got to be a concern to Saudi Arabia and others who remain,” says Elaine Dezenski, head of the Foundation for the Defense of Democracies’ (FDD) center on economic and financial power. “I think we’re now seeing one of the final nails in the co?n for OPEC. We’re seeing alignment from the UAE towards the U.S., which is, I think, part of a broader economic statecraft.”
Some analysts say there is also a high likelihood that the UAE’s decision to leave OPEC could trigger a domino effect. Other OPEC countries will have seen the news that the UAE will be able to increase their daily production from slightly more than three million barrels a day to five million next year. That gain in production could easily prompt countries such as Iraq to jump ship, as they would then be free to pump as much oil as they can and need rather than be constrained by OPEC quotas.
If any country needs oil revenue it’s Iraq. Frankly, that country is a mess. First you had Saddam Hussein, then the Deep State morons in the State Department along with Halliburton, and then ISIS. They’re still trying to clean things up and goats aren’t cheap.
Of course, not everyone see OPEC heading for the ash heap of history. Saudi Arabia still think that OPEC will be a going concern for the foreseeable future. According to Salman Al-Ansari, a Saudi geopolitical analyst, OPEC is going to be around for a while. History isn’t on his side.
“Cartels have a long history of working efficiently for a while and then collapsing,” Pete Earle, director of economics and economic freedom at the American Institute for Economic Research, told FOX Business. The reason for that is that members of oil cartels have an incentive to produce more fuel than their OPEC production quota. And, the cheating can ultimately lead to a breakdown of the organization, he said.
There are some things that will be different if OPEC disappears. “I don’t know whether American energy producers, oil producers, will feel happy about a lower oil price,” said Bernard Haykel, a senior fellow at FDD.
No, they won’t, but American energy producers have been planning for both higher and lower oil prices for some time. The key is to make production as cheap as possible. It’s been American oil companies that have been leading the way. Of course, they run into problems with the Libtards who see oil companies both as a piggy bank they can rob and also the enemy of the proletariat.
You’re seeing the fallout of that idiocy in Kalifornistan. Oil companies have been targeted by the Libtarded Democrats for years and they’ve finally said enough is enough and they are closing everything down and leaving the state. Now gas prices, already astronomically high between regulations and taxes is exploding upwards.
Phil Flynn, a FOX Business contributor, said, “OPEC is not only on life support, it is dead in the traditional sense. This is no longer your daddy’s OPEC and oil politics have changed forever because of what has happened since Operation Epic Fury. Still, as long as Saudi and Russia, their non-OPEC competitor, stay together, they are still a force that cannot be ignored.
There is a bit of a problem with Russia of course. They are being blocked from selling their oil. They are also having a problem refining it as well. Why? The Ukrainians are sending in missiles and drones to blow up key parts of refineries and other parts of their oil infrastructure. These parts are hard for Russia to get since they are under sanctions for starting their military disaster into the Ukraine four years ago.
Once that war finally ends, one way or the other, Russia is going to need hard currency and a lot of it. They are going to pump and sell as much oil as they can, as fast as they can. They aren’t going to pay any attention to what OPEC and the Saudis might want.
Then you have Venezuela. They are fixing the mess left by Hugo Chavez and Nicholas Maduro. You have American oil companies coming in to help fix things. They are also buying Venezuelan crude, refining it and selling it at market prices. They too need to pump and sell as much as they can. Yes, I do think that OPEC’s days are numbered.
Thatisall
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