Fossil Fuel Divestment - Saudis Want Out

[SageBrush]

I don't know anything about the Saudi justice system.
Is it like the American military tribunal, a kangaroo court for show that uses torture for admissible evidence, or a system of due process and rights for the accused ?

 

[SageBrush]

pick a fight with underfunded enemies in the region to create uncertainty and boost the price of oil.

Not even close. Those wars are proxies for the regional sunni/shi'i power struggle. You can bet that the US has been egging Saudi Arabia on in hopes of curtailing Iranian influence.

Any jump in oil prices is just a nice bonus for them. And I would say a wake up call to the countries dependent on their oil, but I well know how impervious the locals are to the obvious importance of moving away from fossil fool.

 

[mspohr]

I don't know anything about the Saudi justice system.
Is it like the American military tribunal, a kangaroo court for show that uses torture for admissible evidence, or a system of due process and rights for the accused ?

I think that's the problem. Could be just an excuse to jail opposition. Warning to foreign businesses.

 

[TheTalkingMule]

Not even close. Those wars are proxies for the regional sunni/shi'i power struggle. You can bet that the US has been egging Saudi Arabia on in hopes of curtailing Iranian influence.

I'm seeing the word "inevitability" surrounding a direct war between SA and Iran. Remember everyone, when you turn back your clocks to end daylight savings time, it's a good reminder to make sure your kids are registered for the draft.

 

[SageBrush]

'm seeing the word "inevitability" surrounding a direct war between SA and Iran

That would be like a war between the US and Grenada.

Saudi Arabia has (mostly) put up with the the US for only one reason: they are extremely vulnerable military wise by themselves. Your "inevitable" war is akin to saying that the US declares war on Iran and by extension, Russia. Trump might be that stupid, but I think the Generals would assassinate him first. Sane countries do not usually bring World wars down on themselves, they manipulate proxies.

 

[SageBrush]

I think that's the problem. Could be just an excuse to jail opposition. Warning to foreign businesses.

How so ?

The US loves doing business with dictators and despots. The whining only starts if nationalization occurs.

 

[TheTalkingMule]

That would be like a war between the US and Grenada.

Saudi Arabia has (mostly) put up the the US for only one reason: they are extremely vulnerable military wise by themselves. Your "inevitable" war is akin to saying that the US declares war on Iran and by extension, Russia. Trump might be that stupid, but I think the Generals would assassinate him first. Sane countries do not usually bring World wars down on themselves, they manipulate proxies.

What if anything other than world war is a threat to your entire existence? SA is done once oil peaks, Putin is sitting on a $200B pile of cash made from oil and gas. It's certainly in their interest to mix things up directly to some degree, get oil markets destabilized for 5 years, and distract gov'ts from moving off fossil fuels. Is there another option I don't see?

Fortunately China is likely the ironic calming influence here as they've had to foresight to get out from under Saudi and Russian energy influence. No way they join this mess on the Saudi side.

And I wonder what the next phase looks like for Israel? Apparently they're whispering approval in the ear of MBS to counter Iranian influence in the region, but what happens when a Saudi/Russian alliance ratchets up the rhetoric even further?

If this is all just a show.....then it's a pretty impressive effort.

 

[SageBrush]

And I wonder what the next phase looks like for Israel? Apparently they're whispering approval in the ear of MBS

Is this some goofy anti-semitic conspiracy theory ?

Saudi/Russian alliance ratchets up the rhetoric even further

You have your alliances mixed up.

SA is done once oil peaks,

That is not informing their actions today or anytime soon, except to the extent that they are embracing alternative energy -- and even that is an arbitrage play at its core in the sense of making more money by selling oil internationally rather than burning it locally.

 

[mspohr]

How so ?

The US loves doing business with dictators and despots. The whining only starts if nationalization occurs.

I think the problem is that the Saudis have jailed over 500 people without any charges being filed. This is a system ripe for abuse.
SA is not really a country where the rule of law applies. It's the rule of the whims of a dictator and anybody or business which is perceived as a threat or might be an attractive target financially could find themselves in trouble. Business does demand a stable legal environment.

In Saudi Arabia, Where Family and State Are One, Arrests May Be Selective

 

[wayner]

Saudi Aramco does have huge oil reserves, much more than XOM and most of that oil is easy to lift. The problem with buying shares in the company is that I don't know what the objective function for Saudi Aramco is. I know that XOM is trying to maximize shareholder wealth. I am guessing that this is one of the objectives of Saudi Aramco but even more important would be to preserve political stability in the country or enrich those in power. We have seen this with other state-owned oil companies like Petrobras in Brazil and PDVSA in Venezuela. I would be very wary of buying into Aramco, not because oil is a stranded asset, but because it isn't clear what the company is trying to accomplish.

 

[TheTalkingMule]

Is this some goofy anti-semitic conspiracy theory ?

I'm no ME expert, but it certainly looks like Saudi Arabia, US and Israel aligning together against Iran. In the news anyway.

 

[wdolson]

It was disappointing to see people lapping up that Obama angle yesterday. He did nothing but work quietly(and sometimes openly) against the Saudi's his entire time in office and in a lot of ways made the Arab Spring possible. How absorb and accept this nonsense is beyond me. It's like believing I'm secretly trying to help the Mets.

The Arab Spring started over skyrocketing grain prices because over the span of several years one or more of the primary grain exporters in the world had problems and didn't export enough grain. A couple of years were due to drought in Australia, horrible spring weather in the US affected crops for a couple of years and one year Russia lost much of its grain harvest due to fires.

At the start of the crisis, American grain silos were so full people didn't know what to do with the extra grain, but by the time the Arab Spring happened the silos were empty.

As more countries can't grow enough food to feed their people, there will be unrest in the poorest countries as the wealthier countries in need soak up most of the grain supply. This could happen soon, India and China have heavily relied on ground water to grow their food for a while now. China is on its last aquifer, they can't go any deeper to get water. When that runs out, they will be unable to feed themselves. India is a few years behind China, but they have a water crisis coming too.

In both countries the region where most of the food is grown is a long ways from the coast. Desalinization on a scale large enough to make up for the shortfall of groundwater would take years to build, be very expensive, require a lot of energy (which can be provided with solar and possibly tidal power, but that needs to be built too), and would likely displace a lot of people. China has the money to do it, but India doesn't.

Obama was a bit less friendly with Saudi Arabia and Israel than a lot of other US administrations have been, but he wasn't exactly hostile either. I'm pretty sure oil prices are low right now due to a deal he struck with the Saudis to hurt Russia after they invaded Crimea.

 

[SageBrush]

I'm no ME expert, but it certainly looks like Saudi Arabia, US and Israel aligning together against Iran. In the news anyway.

Saudi Arabia and Israel may indeed have some similar state interests when it comes to curbing the Iranian sphere of influence expansion, but don't read cooperation, let alone "having the ear of the crown prince" into the situation. Saudi Arabia remains a mortal enemy of Israel today, no less than it has been for the last 70 years.

 

[SageBrush]

Business does demand a stable legal environment.

Business demands an environment they can profit in. This means one where their interests are not destroyed or stolen, and their activities are unimpeded. This usually works out to be countries with strong and stable, law and order regimes.

I'm not sure what Trump thinks he understands when he applauds the Saudi arrests, although rest assured of two things:

1. He could not care less about due process, human rights, or the "rooting out corruption" propanganda
2. He presumably imagines a future improved oil supply, cheaper prices, and/or heightened Saudi investment or American business opportunity.

You might think that America might learn its lesson about embracing foreign despots and dictators in the interests of business exploitation, but history and American ignorance and arrogance, as well as short term thinking, says otherwise.

 

[mspohr]

Interesting article in The Intercept about the US role in SA
Saudi Arabia’s Government Purge — And How Washington Corruption Enabled It

And plotting with UAE
Leaked Documents Expose Stunning Plan to Wage Financial War on Qatar — and Steal the World Cup

 

[SageBrush]

Interesting article in The Intercept about the US role in SA
Saudi Arabia’s Government Purge — And How Washington Corruption Enabled It

And plotting with UAE
Leaked Documents Expose Stunning Plan to Wage Financial War on Qatar — and Steal the World Cup

OK ... so the US and UAE colluded with MBS to seize power. Interesting stuff, and quite typical of US politics to play dictator maker. I'm still not sure what Trump and/or the US get out of this, but I presume Trump will tweet something if he thinks it toots his horn.

Too bad they have not learned the same lesson over and over again, that unexpected results arise from their 'nation ' aka dictatorship meddling.

Of one thing we can however be sure: Trump will disavow any responsibility for negative repercussions and blame then on Clinton and the NYT

 

[TheTalkingMule]

Saudi Arabia is set to raise domestic gasoline and jet fuel prices by 80% in January. A new electricity tariff will also be added, but it doesn't apply to commercial or government ratepayers. This should go over well!

Saudi Arabia Plans to Raise Gas Prices by 80% in January

 

[wayner]

But apparently this is a slow down of the original plan as they will now take at least five years longer to phase out the subsidies:

Excluding jet fuel, prices won’t reach international levels until 2023 at the earliest, and potentially by 2025. Electricity tariffs won’t be increased directly, but will rise gradually with other energy prices, the person said. The Finance Ministry, which oversees the subsidy reform program, did not immediately respond to a request for comment.

The new plan represents a slower timeline for the removal of subsidies as the government tries to offset the impact of the measures on a struggling economy. Authorities first reduced subsidies in December 2015 after years of debate as oil prices plummeted. Officials later said they would eliminate them entirely by 2020, part of Crown Prince Mohammed bin Salman’s Vision 2030 plan for the post-oil era.

 

[Ulmo]

Saudi Arabia is set to raise domestic gasoline and jet fuel prices by 80% in January. A new electricity tariff will also be added, but it doesn't apply to commercial or government ratepayers. This should go over well!

Saudi Arabia Plans to Raise Gas Prices by 80% in January

That's great news. They were wasting a lot of money on polluting fossil fuels that caused them not to earn that money by selling it internationally. If they can shift some of their oil production into profit rather than wasting it domestically, that will make them much better off. Then, they will also be more interested in direct solar power (rather than indirect) and electric vehicles.

 

[GoTslaGo]

SA of all countries needs to go Solar (wind too?) + batteries. Export the oil, use Solar/battery for domestic consumption (they just have a ton of empty space and sunlight).

Same principle with Norway (hydro for domestic and export the oil), and far better than nuclear. Hopefully this move in raising gas prices will work themselves in that direction.