Looks like the global recession, falling oil prices, and the world’s lack of funds to pay oil extortion money may contribute to the end of the world’s worst cartel. And here’s why:
Saudi Arabia needs oil prices of less than $30 a barrel to balance its government budget, according to Merrill Lynch & Co. estimates. The United Arab Emirates requires $40 a barrel and Qatar $55.
Iran, with double the population of Saudi Arabia, has a breakeven point of about $100 a barrel, according to Edward Morse, managing director and chief economist at Louis Capital Markets LP in New York. In Venezuela, where President Hugo Chavez’s government is spending oil revenue on social programs, the figure is about $120, he said.
Oil options trading shows the probability that crude will fall below $50 a barrel by June has more than doubled in 10 days, Deutsche Bank AG said in an Oct. 17 report. There is a 9 percent likelihood that June 2009 crude oil contracts will expire below $50, up from 4 percent, Deutsche said.
There is squabbling among the sheiks, and this can only be good news for the world’s working stiffs. And then there were these grand old times:
Eleven years ago, OPEC members bickered about output quotas as oil slid 28 percent in 10 months amid the onset of the Asian financial crisis. At a meeting in Jakarta in November 1997, they raised quotas, ignoring the turmoil that slowed Asian economies and cut oil demand. Prices fell another 44 percent by December 1998 to below $11 a barrel.
Time to get us to alternative fuels.
For those people out there insisting that cheap gas will get Americans back to their gas-guzzling ways: No, it won’t. I was gassing up on Sunday and chatting with the gentleman in the SUV next to me about the low gas prices. “It won’t last,” he said. That’s the attitude that most people have. We’re happy for the relief, but know we have to change our driving habits. The elites don’t understand that Americans aren’t as stupid as they think.
In the meantime, enjoy the falling gas prices. It’s down to $2.25 in Richmond, and still falling.
I can only hope prices go down. AND that we Americans have learned from our errors. All we need is a decade to make the leap, give us that and the Arab countries will be back to below third world countries in 20 years…
And it’s hard to afford the TnT to kill Jews when you can’t even afford food.