Although Saudi Arabia and several of the Gulf states are also major oil exporters, they differ from other producers in two important ways. First, their cost of extracting oil is extremely low, which means that they will be able to produce profitably at the current price ”“ or even at a much lower price. Second, their enormous financial reserves allow them to finance their domestic and international activities for an extended period of time, as they seek to transform their economies to reduce their dependence on oil revenue.
A further decline in the price of oil could have major geopolitical repercussions. A price of $60 a barrel would create severe problems for Russia in particular. President Vladimir Putin would no longer be able to maintain the transfer programs that currently sustain his popular support. There would be similar consequences in Iran and Venezuela.
It is not clear whether these countries’ current regimes could survive a substantial and sustained future decline in oil prices. By contrast, it is obvious that oil-importing countries would benefit greatly ”“ as they already are.
As usual, the “smart” people just don’t get it. The Saudis are intentionally driving down the price of oil to thwart the Russians and in an attempt to keep Iran from getting a nuc. These two things are intertwined. I can’t stand Bill Clinton, but his energy policies are what finally destroyed the hard liner Commie hangers on in the early 1990s. Remember when gas was 90 cents a gallon? The Saudis, unlike Obama aren’t stupid. They know Amwerican foreign policy is a failure, so they are going to do what Obama won’t/can’t. Why, you ask. Because if Iran has a nuc, they will have to either have one of there own or rely on Israel to,protect them. The ladder in unthinkable for them, and the immediate, short term cost of pushing down oil prices is much cheaper than having to build their own nuc. They are also collaterally helping the American economy, which seems perfectly normal as our “President” still bows at the waist to the Saudi King.