Sierra Club Says Saudis Their ‘Best Ally’ in Fighting Keystone

House of Saud

[The new Best Friends of the Sierra Club. Eco-Fascists, anyone?]

Sounds kind of strange to you?

It sounded kind of strange to me.

Although, it would be a “given” that the Sierra Club would oppose Keystone XL pipeline, which would help to make the US even more independent from Blood Oil and Conflict Oil directly from the Middle East and other trouble nations.

From the WashingtonFreeBeacon.com:

Sierra Club: Saudi Arabia ‘Our Best Ally’ in Keystone Fight

by Lachlan Markay

Leading environmentalist group heaps praise on Arab monarchy’s attempt to undermine U.S. oil production.

Saudi Arabia’s efforts to “drown” American energy producers make the oil-rich theocracy a crucial ally of the environmentalist movement, according to a leading green group.

The House of Saud, the kingdom’s royal family, is “our best ally in the fight against Keystone XL,” according to Paul Rauber, the senior editor of Sierra, the bi-monthly magazine published by the Sierra Club, a leading environmentalist group.

President Barack Obama has threatened to veto legislation expediting approval of the pipeline. However, Rauber said that the government of Saudi Arabia has done more to scuttle Keystone.

“Environmentalists are depending on President Barack Obama’s veto pen to block the project—at least until the State Department issues its final ruling in the matter,” Rauber wrote. “But we have another, even more potent ally in the fight: the House of Saud.”

As a leading member of the Organization of Petroleum Exporting Countries (OPEC), Saudi Arabia has strongly opposed cuts in production that would buoy the plummeting price of crude oil.

The idea is to make oil so cheap that American producers can’t extract it economically. The current surge in U.S. oil production is a result of expensive extraction techniques—hydraulic fracturing and horizontal drilling—that could be cost-prohibitive if oil prices fall much further.

According to Rauber, OPEC’s efforts may also render the Keystone pipeline moot by forcing prices too low for the expensive refining process of heavy Canadian “oil sands” crude.

We already know that Russia, Iran and Venezuela are claiming that the drop in global oil prices are the result of a vast American conspiracy.  Russia, Iran and Venezuela depend mightily on the profits from oil sales and need it to keep their countries functioning and keep their current leaders in power.  Gwynne Dyer in Hurriet of Turkey calls this strategy “fiendishly clever” on the part of the US.

There’s one problem.  Russia, Iran and Venezuela aren’t glimpsing the big picture.  And Saudi Arabia is big enough, wealthy enough and canny enough to play the Long Game.

The Long Game is this: Saudi Arabia hasn’t slowed oil production on its end for a very important reason.  The US is now the world’s leading producer of oil and could become even bigger.  Fracking was the difference.  But to make fracking possible, oil has to come in at roughly $85 a barrel in order to make the investment worthy.  Fracking is complicated and expensive.

All Saudi Arabia has to do, to keep a chokehold on fracking, is not turn the faucet off or down.  Keep up production.  Oil falls below $85 and fracking becomes unprofitable for companies in the US.  Workers have already been laid off and some wells shut down.

The winner?  Saudi Arabia.  They can afford to sit while a few billion dollars percolate.

And?  Oh yeah.  That cheap oil?

Gonna go up again.  Mark my words.

In the meantime: a tip of the fedora to the good, old Sierra Club.

Fucktards.

BZ

 

OPEC: attempting to kill US shale oil

From AP.org:

OPEC keeps oil output on hold despite low prices

by George Jahn

VIENNA (AP) — Reflecting its lessening oil clout, OPEC decided Thursday to keep its output target on hold and sit out falling crude prices that will likely spiral even lower as a result.

Oil prices fell sharply on the news. Even though the decision was largely expected, it showed the once-powerful cartel is losing the power to push up markets to its own advantage.

For the first time in years, expect even cheaper oil prices.  However:

By opposing an output cut, Saudi Arabia appears to be hoping to drive prices below the level at which shale oil production is economical. Experts say shale oil production turns too costly at the $60 a barrel level.

This is OPEC attempting to shut down oil shale production and protecting their own production interests in the Middle East.  From Bloomberg.com:

OPEC Policy Ensures U.S. Shale Crash, Russian Tycoon Says

by Will Kennedy and Jillian Ward

OPEC policy on crude production will ensure a crash in the U.S. shale industry, a Russian oil tycoon said.

The Organization of Petroleum Exporting Countries kept output targets unchanged at a meeting in Vienna today even after this year’s slump in the oil price caused by surging supply from U.S shale fields.

American producers risk becoming victims of their own success. At today’s prices of just over $70 a barrel, drilling is close to becoming unprofitable for some explorers, Leonid Fedun, vice president and board member at OAO Lukoil (LKOD), said in an interview in London.

A short-sighted administration — such as Obama’s — would and will make hay out of this news in a renewed attempt to ensure Keystone XL does not pass.  But of course this situation is no guarantor that energy prices couldn’t rise back and the nation be in another desperate situation with regard to energy, as “alternative energy” is not yet of sufficient stature to be viable and reliable.

Accounting for about a third of OPEC output, the Saudis can weather lower prices because their coffers are well-padded and its production costs are relatively low.

But poorer OPEC members like Venezuela and Nigeria need levels close to $100 or above to fund national budgets. Saudi rival Iran is suffering, too, with the price drop adding to huge revenue losses due to sanctions on its crude sales imposed over its nuclear program.

“I think you’re going to see additional tension between the OPEC ranks,” said Jamie Webster, senior director of crude oil markets at IHS consultants.

Enjoy gas prices whilst you can.

BZ

 

Saudis offer Russia secret oil deal if it drops Syria

Kerry has said: “the bombing begins Thursday.”

Here is an important headline from Tuesday, from the UK Telegraph:

Saudi Arabia has secretly offered Russia a sweeping deal to control the global oil market and safeguard Russia’s gas contracts, if the Kremlin backs away from the Assad regime in Syria.

The strategic jitters pushed Brent crude prices to a five-month high of $112 a barrel. “We are only one incident away from a serious oil spike. The market is a lot tighter than people think,” said Chris Skrebowski, editor of Petroleum Review.

Leaked transcripts of a closed-door meeting between Russia’s Vladimir Putin and Saudi Prince Bandar bin Sultan shed an extraordinary light on the hard-nosed Realpolitik of the two sides.

That said, where does it leave the United States?  Hanging precariously?  Promises of oil contracts denied?  Broken?

Or does Saudi Arabia fear Russia — and its potential response — more than it fears the United States?

President Putin has long been pushing for a global gas cartel, issuing the `Moscow Declaration’ last to month “defend suppliers and resist unfair pressure”. This would entail beefing up the Gas Exporting Countries Forum (GECF), a talking shop. 

Apparently, a clear Russian intervention if the US and/or other countries involve themselves in Syria.

The Putin-Bandar meeting was stormy, replete with warnings of a “dramatic turn” in Syria. Mr Putin was unmoved by the Saudi offer, though western pressure has escalated since then. “Our stance on Assad will never change. We believe that the Syrian regime is the best speaker on behalf of the Syrian people, and not those liver eaters,” he said, referring to footage showing a Jihadist rebel eating the heart and liver of a Syrian soldier.

Prince Bandar in turn warned that there can be “no escape from the military option” if Russia declines the olive branch. Events are unfolding exactly as he foretold.

Are you listening, Mr Obama?

BZ