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Pax Americana vs Pax Sinica vs Multipolar World


Strannik

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The Fresh Prince Of Riyadh can make any threat he wants; functionally the only leverage he has is cutting oil production. When he did that last week unilaterally, global markets yawned. If there is a US Iran deal, that will only further cut into his market share. If he wants to invite China in to set up shop he’s welcome to, but he’s going to have to buy a new Air Force. I think Russia is indisposed right now and lacks any ability to project naval power into the Gulf even if you handed them the 5th fleet base in Bahrain.

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44 minutes ago, Josh said:

The Fresh Prince Of Riyadh can make any threat he wants; functionally the only leverage he has is cutting oil production. When he did that last week unilaterally, global markets yawned. If there is a US Iran deal, that will only further cut into his market share. If he wants to invite China in to set up shop he’s welcome to, but he’s going to have to buy a new Air Force. I think Russia is indisposed right now and lacks any ability to project naval power into the Gulf even if you handed them the 5th fleet base in Bahrain.

He doesn't need a new AF with the peace with Iran.

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1 hour ago, Strannik said:

He doesn't need a new AF with the peace with Iran.

The “peace” is MBS giving up on his hopeless war against Houthi and The Blowfish. Point, Iran. Opening an embassy != peace. Lots of adversaries maintain embassies; no one is suggesting the U.S. and the PRC can stop their respective military buildups just because they share embassies. Pretty sure Ukraine hosted a Russian embassy, until it didn’t.

Edited by Josh
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The fact is that there was no retaliation for SA cutting supply several month ago despite the strong US ask.  Also SA is doing another cut.

The relationship (US-SA) will be transactional, the current ask is  a complete  nuclear cycle for SA.  US is balking.

Everything else is yours ramblings.

Edited by Strannik
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10 hours ago, Strannik said:

The fact is that there was no retaliation for SA cutting supply several month ago despite the strong US ask.  Also SA is doing another cut.

The relationship (US-SA) will be transactional, the current ask is  a complete  nuclear cycle for SA.  US is balking.

Everything else is yours ramblings.

Everything Biden touches has a whiff of disaster to it.  Josh is saying that the Americans can play silly buggers with OPEC because Iran will bail Europe out.  I think he means the same Iran that is currently helping Russia build drone factories in Russia to defeat Ukraine and the same one that is pouring missiles into Syria to defeat Israel.

Myself, if I were president I wouldn't count so much on Iran helping us, but that's just me.

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24 minutes ago, glenn239 said:

Josh is saying that the Americans can play silly buggers with OPEC because Iran will bail Europe out. 

He is likeky referring to the rumored deal that US are trying to do with Iran that would allow Iran to export 1 mln bpd.

To no avail so far.

 

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12 minutes ago, Strannik said:

He is likeky referring to the rumored deal that US are trying to do with Iran that would allow Iran to export 1 mln bpd.

To no avail so far.

 

The danger for the West is actually quite simple - if all the oil producing countries, say, halve their production, then oil prices will go over $200 a barrel.  It's prisoner's dilemma - if none of the producers defect, then all can make more money by producing less.  Now, a competent president would be able to make sure that does not happen by doing what Trump did and carefully cultivating key allies like the Saudis.  But the Americans do not have a competent president at the moment, they have Biden, who is reflexively and personally toxic to a level that has not been seen in this office since...since I don't know.  

So we get what we get, which is a kind of perpetual rolling crisis where things get gradually worse, but never openly disasterous, but always with a stench of increasing brittleness about it.  But, maybe I'm wrong and its all 3D chess beyond my pay grade!

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50 minutes ago, glenn239 said:

Everything Biden touches has a whiff of disaster to it.  Josh is saying that the Americans can play silly buggers with OPEC because Iran will bail Europe out.  I think he means the same Iran that is currently helping Russia build drone factories in Russia to defeat Ukraine and the same one that is pouring missiles into Syria to defeat Israel.

Myself, if I were president I wouldn't count so much on Iran helping us, but that's just me.

I’m saying the KSA no longer has the pull to unilaterally set the price of oil due to Russian and U.S. production. I’m also saying that the KSA is very dependent on the US and almost completely dependent on the west for its military equipment and maintenance. The KSA can cut production as retaliation, but currently the market is such that this puts no pressure on the Biden administration. If they want to go buy Chinese they can.

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31 minutes ago, glenn239 said:

The danger for the West is actually quite simple - if all the oil producing countries, say, halve their production, then oil prices will go over $200 a barrel.  It's prisoner's dilemma - if none of the producers defect, then all can make more money by producing less.  Now, a competent president would be able to make sure that does not happen by doing what Trump did and carefully cultivating key allies like the Saudis.  But the Americans do not have a competent president at the moment, they have Biden, who is reflexively and personally toxic to a level that has not been seen in this office since...since I don't know.  

So we get what we get, which is a kind of perpetual rolling crisis where things get gradually worse, but never openly disasterous, but always with a stench of increasing brittleness about it.  But, maybe I'm wrong and its all 3D chess beyond my pay grade!

Historically OPEC achieved that kind of unity only once, in a vastly different market. With the current cut to KSA production, the US out produces Russia or the KSA by 2-3 million barrels.

Also one does wonder what China would think of $200 oil, given that they are far more dependent on mid East exports than the U.S.

Edited by Josh
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The point is not that KSA can unilaterally determine oil price these days (it can't anymore - it's a strawman), but that US- KSA relationship has changed from deferential to transactional - see the topic...

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1 hour ago, Josh said:

Historically OPEC achieved that kind of unity only once,

1973? They did it again in 2007 but that led to the fracking revolution.

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4 hours ago, Strannik said:

The point is not that KSA can unilaterally determine oil price these days (it can't anymore - it's a strawman), but that US- KSA relationship has changed from deferential to transactional - see the topic...

Perhaps it is more antagonistically transactional than it used to be, but I don’t think functionally it operates any differently. It’s not like the KSA just did whatever the US wanted pre-Biden. It would correct to say Trump was much closer to MBS, given the numerous business deals he and his family members in his cabinet have in country.

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1 hour ago, glenn239 said:

Fracking doesn't cover the requirements of America's allies in Asia or Europe.  

Energy markets don't work the way you seem to think they work.

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On 6/10/2023 at 11:07 AM, JWB said:

1973? They did it again in 2007 but that led to the fracking revolution.

Exactly. Biden hamstringing US domestic production and transport from Canada has set the table for the benefit of OPEC and Iran. Were he to reverse that course, then that’d be a different table. But he’s beholden to this America third course. 

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6 hours ago, rmgill said:

Exactly. Biden hamstringing US domestic production and transport from Canada has set the table for the benefit of OPEC and Iran. Were he to reverse that course, then that’d be a different table. But he’s beholden to this America third course. 


how specifically has production been hamstrung?

 

https://www.axios.com/2022/01/12/oil-production-surge-biden-gas

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https://www.politico.com/news/2022/03/15/drilling-permits-spiked-then-plunged-under-biden-00016814

 

Interior Department approvals to drill oil and gas wells on public lands have dropped significantly in recent months, a shift from 2021, when the Biden administration topped the Trump administration’s permitting record in its first year.

The Bureau of Land Management in January approved just 95 permits for oil and natural gas wells across federal lands in the United States, a plunge from the zenith of 643 issued last April, according to a review of data by E&E News.

 

 

The reason for the permitting slowdown is unclear, but it comes as Biden administration officials have been pushing the oil and gas industry to increase drilling amid surging gas prices. Many environmental groups also have been frustrated with the rapid pace of approvals, seeing it as a betrayal of President Biden’s pledges to confront climate change. They say the approvals carved into the number of backlogged permits Biden inherited by nearly 1,000 by year’s end.

 

ut the output from BLM offices in states like New Mexico and Wyoming has gradually declined, and overall permit approvals have dropped after particularly high outputs in the spring and early summer of last year, according to the data.

Last month, permit approvals rallied from their January bottom to 186. But that was still the fourth lowest number of monthly approvals since Biden took office.

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https://www.csis.org/analysis/biden-makes-sweeping-changes-oil-and-gas-policy

President Joe Biden has followed through on a campaign pledge by introducing a moratorium on new oil and gas leasing on federal lands and waters. With nearly 25 percent of U.S. oil and gas production coming from federal lands, the policy shift may have significant implications for future investment and production. The backlash from oil and gas producing states will be fierce and lawsuits have already begun, but the Biden administration views this policy as a key part of its climate agenda and is unlikely to change course.

Q1: What changes has Biden made? 

A1: In a January 27 executive order that introduced a sweeping, government-wide approach to climate policy, Biden announced several new oil and gas policies. The Biden administration is halting new oil and gas leasing on federal onshore lands and offshore waters “to the extent consistent with applicable law.” This pause will not affect existing operations or permits for existing leases, and private lands will not be affected. The Department of the Interior states that Native American tribal lands will be exempted. Biden has also directed the secretary of the interior to consider whether to adjust coal, oil, and gas royalties in order to account for corresponding climate costs, suggesting the possibility of a royalty increase. Biden ordered the Department of the Interior to take steps toward conserving 30 percent of public lands and waters by 2030 and toward doubling offshore wind production in the same timeframe. These moves follow executive orders that halted implementation of a leasing program in the Arctic National Wildlife Refuge and effectively suspended new leases, contracts, or drilling permits for at least 60 days. Biden’s January 20 executive order also withdrew the permit for the Keystone XL pipeline and directed agencies to consider new rules to curb methane emissions from oil and gas. Last, Biden has directed government agencies to work toward eliminating fossil fuel subsidies by fiscal year 2022.

Q2: How will this affect U.S. oil and gas production?

A2: Federal land accounts for about 24 percent of oil and gas production in the United States, mainly in the offshore Gulf of Mexico. But since companies with existing leases will not be affected, the near-term impact on exploration and production as well as royalties to states will be limited. With more than 26 million onshore acres and 12 million offshore acres already under lease, there is a deep inventory of exploration opportunities. Companies may have secured more onshore and offshore permits in recent lease sales in anticipation of a policy change by the Biden administration. A more permanent leasing ban would have a significant impact, although visible offshore production declines may not materialize for up to 10 years, given the typical timeframe for planning, exploration, appraisal, and development. Onshore production declines could conceivably show up faster, but leases typically last for 10 years and drilling activity on recently acquired leases may not begin for some time. A permanent ban on new leases would affect numerous states with oil and gas resources. New Mexico—home to the prolific Delaware Basin—is an exception to the rule that most shale oil and gas resources are found on private lands, and the state accounts for more than 60 percent of existing federal drilling permits. Rocky Mountain states including Wyoming, Colorado, and Montana would take a hit from a permanent leasing ban. The Gulf States would be harmed by declining exploration and production due to lower royalties, as well as the impact on the oilfield services sector and related industries. In general, a leasing ban on public lands would drive more investors to private and state land.

Q3: Will this lead to a permanent leasing ban on public lands? 

A3: The leasing moratorium is likely just the beginning of a significant policy shift. The president has asked the Department of the Interior for a comprehensive review of the federal oil and gas program, and directed government agencies to examine the climate impact of future oil and gas activity on public lands. These reviews are likely to generate new rules and guidance. The Bureau of Land Management (BLM) could potentially impose stricter requirements for future resource management plans for onshore areas, perhaps by introducing tougher climate impact assessments in the National Environmental Policy Act reviews of proposed land use plans. Applications for permit to drill (APDs) on federal lands are typically granted for two years and are often extended. In the future, however, the BLM could impose tougher requirements related to gas flaring or water management that will make it harder for onshore operators to secure new drilling permits. The Bureau of Safety and Environmental Enforcement could take the same tack with offshore APDs. The exact rules and guidance that may emerge are difficult to predict. But aside from outright bans on new leasing, there are many ways to raise the regulatory bar so high that it could be difficult for companies to operate on federal lands.

Q4: How are resource states reacting?

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A4: Industry associations object to Biden’s executive orders, arguing that they will deter investment, kill jobs, reduce state revenues, and shift oil and gas production to other countries. Legal battles have already begun. Lawmakers in states like Alaska, Wyoming, Montana, and the Gulf Coast states have vowed to contest Biden’s plans, and may argue that laws including the Mineral Leasing Act require regular lease sales on public lands. Some governors may seek exceptions to the ban on leasing, but such efforts seem unlikely to succeed. The Biden campaign made these pledges to halt new leasing months ago and knew they would generate a backlash. The administration is determined to push ahead with its climate and energy priorities and emphasizes the number of new jobs that will be created in expanding renewable energy and associated infrastructure.

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