The good news is despite President Obama’s war on oil and thanks to oil shale, the US is on the verge of surpassing Saudi Arabia as the world’s leading oil producer. Bloomberg reports, “The U.S. will surpass Russia and Saudi Arabia as the world’s top oil producer by 2015, and be close to energy self-sufficiency in the next two decades, amid booming output from shale formations, the IEA [International Energy Agency] said.” Oil and gas production in the US is booming, and that’s about the only economic sector that is. The private sector still provides. The laws of supply and demand still work.
But that’s not the real story. The best lies are based on half-truths, and that’s what’s going on here. The establishment wants us to believe that suddenly, in just the last few weeks, US production has ramped up so much that it drove down prices. All hail Obama!
Of course that isn’t true. In an interview with Indian newspaper The Economic Times, legendary investor Jim Rogers tells what really drove down prices. The Times explains, “Even as crude oil prices have dipped to all-time lows, Jim Rogers of Rogers Holdings told ET Now that the decline is 'artificial'. ‘Some of this (oil price decline) is artificial. OPEC is trying to drive down prices because of Shale competition. The oil situation is very artificial at the moment.’”
I hate to disagree with Rogers, but even he’s only half right. OPEC was dumping oil, but not because of shale competition. OPEC doesn’t exist to drive prices down. It exists to keep them high. In fact, these low prices are causing problems for the Saudis. Vox presents another piece of the story. “Oil that's below $90 a barrel will throw the Saudi budget into deficit. But the Saudis have a big cash stockpile accumulated over the years,” Vox reported. “Oil that cheap will cause much more serious budgetary problems for the Saudis' regional rival, Iran. It's also bad for Russia, whose behavior in Syria has been at odds with Saudi policy. And Saudis hope that cheap oil will also crimp American production, effectively putting a floor under further price drops.”
The reality is these low prices are driven more by politics than economics. The economics are bad for the Saudis. “Of course this is not an uncontroversial strategy. Prince Alwaleed bin Talal, the ultra-rich Saudi investor potentate, recently released an open letter criticizing the Kingdom's official strategy of complacency,” Vox continued. “Even the biggest budget reserve will eventually go broke, after all, and further technical innovations could keep Bakken production profitable even at levels where it doesn't currently make sense.”
But the political elephant in the room oddly unmentioned in any stories about this recent, sharp fall in gas prices is the upcoming US election in which Republicans are threatening to take over the Senate. If they do, they’ll be able to force Obama into a bunch of unpopular vetoes, improving their chances at winning the presidency and both houses of Congress in 2016. This is why this midterm election is the most expensive in history, with nearly $4 billion being spent. The bigger and more powerful the government gets, the more wealth there is to be stolen in each election. Therefore the more money gets spent on each election.
But you don’t have to take my word for it. Bloomberg informs, “Saudi Arabia, the world’s biggest crude exporter, said it cut production by 408,000 barrels a day last month amid signs of a supply glut and Brent oil trading below $100 a barrel.”
The article continues, “The Saudi decline is the largest monthly drop in production since December 2012, according to data compiled by Bloomberg. Other estimates collated by OPEC, based on secondary sources, show that the kingdom cut output by 55,200 barrels to 9.86 million a day last month.”
The party is over. The Saudis know how long it takes to turn oil into gasoline. They cut production in order to drive up prices right after the US election. They’re helping Democrats because Obama has kindly agreed to blow a bunch of Syrians to bits and bomb Syria back into the stone age for them. In the Sunni-Shia regional civil war our government has dragged us into, Shiite Iran is enemy number one for the Sunni Saudis, and taking down President Assad in Syria is a stepping stone to attacking Iran. Obama helped the Saudis arm and train Sunni Islamic State [ISIS] fighters, and he’s destroying oil facilities in Syria. The Saudis drove down the price of gas in an evil quid pro quo. Not to mention Saudi Arabia continues to sell oil in dollars.
So fill your gas tank with cheap gas while you can. After election day, prices will climb back over $3 a gallon, then back over $3.50, in hopes of extending the life of the doomed US dollar.