Analysts are busily writing theories regarding the cause and effects of the current oil crisis. Most often they are using historical models from previous oil gluts to draw parallels and predictions.
But what if they are looking in all the wrong places? What if the parallel has nothing to do with historical oil gluts and everything to do with another interesting model? What if, the game is Tactics II and the entire end result has already been drawn?
An interesting discovery; I found a few articles dated March 27, 2014 in which three analysts discussed the possibility of the US collaborating with the Saudi’s to flood the oil market and thus cause Russia’s economy to collapse. The articles talked about this from the perspective of oil at $90 a barrel and they came on the heels of George Soros making the recommendation. They all concluded that neither the Saudi’s or the US would follow through on such a plan because it could create a global economic tailspin.
In September, it was announced that the US and Arab allies would launch airstrikes on Syria and Iraq specifically targeting oil refineries. Oil supplies in Iraq are considered the fifth largest in the world. The Saudi King was fuming when Russia intervened and stopped the US from bombing Syria. The Saudi’s want control of Syria. The US wanted to destroy the Russian economy. A deal was struck.
But there was even more at stake.
History Lesson: the banking fiasco of the 1980’s was basically fueled by greed and competition. As of 1985, there were over 18,000 independently owned banking institutions. Today that number is around 6800. Deposits in banks swelled from $2 trillion to $9.6 trillion. As of 2011, the top five bank’s assets were equal to 56% of the total US economy and 44% of the assets held by all US banks.
That’s what they wanted, and mergers and acquisitions made that possible. A simple way to eliminate competition.
In the same way, today the oil glut is destined to root out the small guys as we watch them fold, fail or get eaten by the bigger companies. In Colorado alone there are over 100 oil companies. In Texas I counted one hundred and only got through the “e’s”. Competition is making for weaker profits from the big oil companies. Today the biggest in the US include: Exxon, Chevron, Conoco, Occidental, and Apache.
If it worked in the banking industry, why not the oil industry?
So while we point the finger at the Saudi’s and claim they are to blame for not lowering production during this freefall so as to stabilize output and pricing, no one else has lowered production either – including the US. And the US ranks third in the world for oil production. Of course, no one wants to take the gamble and be the first to lower output because the risk would be that the other countries won’t follow suit. No one really trusts anyone. If the Saudi’s cut output, they risk losing their ranking as second largest producer and the US would take over that spot. On the other hand if in these failings, the Saudi’s can take control of Iraqs oil and Syria’s oil, it pushes to first place.
Not only have companies become ripe for takeovers, countries share that risk as a grand few try to wage war for control of the countries resources (Ukraine has the third largest reserves of shale in all of Europe). Both Shell and Chevron face human rights violations that don’t seem to make the news much; Chevron is accused of recruiting and supplying Nigerian military forces involved in massacres of environmental protesters in the oil-rich Niger Delta, and Shell has faced charges of complicity in torture and other human rights abuses against the Ogoni people of southern Nigeria.
The disinformation that the media would have us believe might have some truth to it, but if the fundamental truth is corrupted, the end truth is corrupted. In the midst of this oil war there will be other casualties; alternative energy will collapse in an already feeble market as competition pushes them down the proverbial drain. Loans will default and banks will bear the brunt. Unemployment will go up. Maybe that’s why the fall happened so quickly – to quell the lingering disruption so that the reshuffling could happen faster.
Word is out that there is trouble but no one can do a thing about it. The media tries to cover the true damage with reports that consumers are really feeling the lighter load of prices, but the reality is that the average savings amounts to about $127 – per year. Not exactly fodder for a party. Whoopee…
When all is done, the bigger will control the majority of the world’s oil. Big banks – big oil – big pharma.
The winners in an world oil purge would include; Saudi Aramco, Russia’s Gazprom, National Iranian, Exxon (which is trying merge with Russia’s Rosneft), PetroChina, UK’s BP, Royal Dutch Shell, Mexico’s Pemex, Chevron and Kuwait Petroleum. Of course the Saudi’s want Iran and the US wants Russia, so those are on the table in the game of War.
And as Hillary so aptly noted, (paraphrased): Casualties? Who cares, that’s part of the game.
In reality think of it as similar to science – or even gossip – if your beginning truth is corrupted or simply a theory, no matter how many facts you pile on, the end truth will always be corrupted.