Have you ever heard about this on the news?

Geo-TH,In · Jan 5, 2015

Russsia shut off Ukranes gas last fall because of
unpaid bills. Russia makes a deal with the Ukrane
before turn gas back on.
Russia Ukraine gas deal to keep Europe warm

MarkB_MI · Jan 5, 2015

Yes. One of the theories for why the Saudis are dumping oil on the market is to make it difficult for Russia to use its natural gas as a bargaining chip. Russia has threatened to cut gas exports in retaliation for European sanctions. But if Russia can't rely on oil exports for cash, it has little choice but to sell its natural gas.

Geo-TH,In · Jan 5, 2015

Ukrane was freezing without Russia's gas. So Russia wouldn't turn it back on until Ukrane paid it past bill.

Bob Harvey · Jan 5, 2015

Gosh, and all that without (documented/televised) American involvement. Amazing !!!

MarkB_MI · Jan 6, 2015

> Gosh, and all that without (documented/televised) American involvement. Amazing !!!

Who do you think is the biggest funder of the IMF? Who do you think calls the shots at IMF by virtue of being the biggest contributor? The US contributes 18 percent of the IMF's budget, and as a result gets 17 percent of the votes.

John_PA · Jan 6, 2015

But Putin looks so good shirtless on a horse. Let's give him some slack. They might still have some rusty nukes to toss at us.

Geo-TH,In · Jan 6, 2015

Bob,
It makes me wonder who really decides what we see on the news and what's left out.

Sadly after two cops get killed, I haven't seen too much about the protesters on the tube.

LAA · Jan 6, 2015

Where did you get the idea that the Saudis are dumping oil on the market?, they cut production by 1/2 million BPD several months ago and are still at a multi year low of 9.5 million BPD. Saudi Arabia has long been more focused on maintaining market share and leadership in OPEC than in the price. I still work in Saudi as I have for many years and the rig count and activity levels are at an all time high in an effort to maintain production and replace reserves at least at current production levels. The Saudi industry is right where the US industry was in the early 90's, the easy pickings have been plucked, for the next several years it will be a scramble to apply the current and improved technology developed in the USA both in exploration and reservoir management. The current oil glut or increased supply is courtesy of good old American ingenuity and capital investment, the American consumer is currently getting a price break thanks to the boys in Houston, not Dhahran.

ss55 · Jan 6, 2015

Newspapers, news magazines and on-line news sites cover a lot more news in more detail than TV news possibly can. Russia's quarrels with Ukraine and the gas pipeline to Western Europe have been regular topics in the international news section of larger newspapers.

Russia has been building a large gas pipeline to supply natural gas to western Europe far beyond the Ukraine. Within the last month Putin cancelled the partially completed line due to low gas prices, I'm not up-to-date on the details.

MarkB_MI · Jan 6, 2015

OK, technically the Saudis aren't dumping. The legal definition of "dumping" is to sell a product at a price that's less than its cost of production. The Saudis aren't "dumping" because their cost of production is less than that of just about any other country. That said, I'm not so sure other oil exporting countries that are seeing their oil revenues drop to zero because of low prices would make such a distinction.

How about this: in the future, instead of saying "the Saudis are dumping oil", I'll say "the Saudis are selling oil at a price below what many of their fellow OPEC members can profitably produce it". That's a lot of typing, but if that's what it takes to make you and the other lawyers happy, so be it.

LAA · Jan 6, 2015

Uh, what does semantics have to do with facts? I will type this very slowly, the Saudis have not increased their production in the wake of falling crude prices, in fact, their production is below their historical benchmark and they are withholding approximtely 3 million BPD that they could be producing. In other words, they are only producing at approximately 75% capacity although their economy, is essentially one big welfare state solely dependent on oil revenues. As for the rest of OPEC, save your crocodile tears, the heirs of Chavez, Boola and Quadafi don't deserve them, their various external_linkesque, socialist utopian experiments have all proven miserable, cruel failures and their populaces are paying in deprivation now and will continue to do so for the forseeable future.

Rollie NE PA · Jan 6, 2015

On Monday Saudi Arabia reportedly cut its European and US export prices in order to maintain market share.

I would say this is pretty close to dumping their oil.

Spook · Jan 6, 2015

(quoted from post at 20:06:32 01/05/15) Yes. One of the theories for why the Saudis are dumping oil on the market is to make it difficult for Russia to use its natural gas as a bargaining chip. Russia has threatened to cut gas exports in retaliation for European sanctions. But if Russia can't rely on oil exports for cash, it has little choice but to sell its natural gas.

I read that the euros are setting up facilities for LNG. I believe Estonia has already got a terminal in place. That way they can import ng from the us, the north sea, the middle east, or the us. That will take Putin's leverage away.

LAA · Jan 6, 2015

Cutting prices is a far cry from increasing production, as previously stated the Saudi strategy has long revolved around maintaining market share using that market share to maintain the lead in OPEC, in addition, they need the revenue. I can sell my calves for half the market price and all that will happen is someone will get a good deal, there can be no down market pressure on any commodity in the absence of over supply or diminshed demand, or both, it is not coincidental that both of these forces are presently being felt in the oil markets.

john in la · Jan 6, 2015

LAA
I will agree with you that Cutting prices is a far cry from increasing production.

But if you were the worlds largest supplier of calves; You usually held back calves when the market went slack to keep prices up; and then at the right moment when some big buyers were cutting buying of calves; kept shipping calves with a price tag of 50%; you would influence the market enough to drive calf prices down.

China and others are cutting oil imports creating somewhat of a glut in the market.

USA is pumping more oil than ever with a government export ban on crude oil.
The Saudi price cut is selective; so they are selling oil to USA buyers at a reduced rate.
Saudi Arabia in the past would have cut production to keep the price up but they did not do that this time so there is now a real glut of cheap oil in the USA.

Not really dumping oil on the market.
More so refusing to artificially keep the price high by limiting supply.

MarkB_MI · Jan 7, 2015

You're ignoring the historical and current role of Saudi Arabia in manipulating world oil prices. It has always been the Saudis who have cut production when other OPEC members weren't happy with prices. And it's the Saudis who have stepped up production when production is disrupted elsewhere.

Although their share of world oil production isn't what it once was, they still remain in a unique position to control oil prices:
1. They're basically tied with the US and Russia as the leading oil producing country.
2. Unlike the US, they consume almost none of their own oil.
3. Unlike Russia and most of the other major oil exporters, they don't really need their oil revenues; they can afford to basically give away their oil. Welfare state or not, they have enough cash and investment income to do without oil income for a long time.

Believe it or not, if the Saudis wanted to bring in more revenue, they'd cut production and let prices rise so they're making more per barrel. It's costing them money to drive prices this low.

LAA · Jan 7, 2015

It is absolutely incorrect to say they do not need the revenue, they have an economy based on oil, period, the government takes roughly 80 percent of revenues annually and leaves 20 percent for continuing operations. Of course they control OPEC, they are the largest producer but I can assure you all decisions favor themselves. As I have stated several times their strategy is one of maintaining market share, they are not interested in the lowest possible price but also they are not looking for the highest possible price either because they know the world economy can not absorb those price shocks. The notion that Saudi could break or seriously cripple the U.S. oil industry is frankly ludicrous, The US industry is dynamic in a way the the Saudi industry has never been and never will be. Producers and Drillers in the US can ramp up or down in short order and have done so many times over the years, that is the difference between state controlled behemoths and free enterprise. The current oil supply situation was born and bred in the USA.

LAA · Jan 7, 2015

John,

The whole point I have been trying to make is that the current happy situation of lower fuel prices would not have occurred were it not for the success of the risk taking, free market entrepreneurs who make up the majority of the U.S. oil industry. There would not be any reason for Saudi to even consider cutting production if it were not for the U.S. boom of the last several years which has resulted in actually overtaking Saudi as the leading producer. Of course, wells are being shut in all over the USA as I type, but, those same wells will flow again and more will be drilled right beside them as soon as the price goes back up.

MarkB_MI · Jan 7, 2015

If US oil producers are responsible for the current oil glut, those same entrepreneurs seriously miscalculated. For investors in US petroleum exploration, fifty dollar oil is their worst nightmare.

john in la · Jan 7, 2015

which has resulted in actually overtaking Saudi as the leading producer

That statement is a little misleading.

Yes USA is #1 producer of oil products now; but only if you include crude oil, condensate, natural gas liquids and biofuels.

If you only talk crude oil; the USA is still #3.

LAA · Jan 7, 2015

The US oil industry created the extra supply, the current low price is due to weak demand which is a result of a world economy in shambles, all of the psued socialist chickens in europe, south america, the UK and asia minor are coming home to roost. The US economy has been propped up almost exclusively by the energy sector these last 6 years, there would have been absolutely zero net economic growth in the 6 years of the current federal dictatorship if it were not for the energy sector, the recent gains in manufacturing were made possible by cheaper fuels, mainly natural gas. If oil hits the projected $20.00 per barrel mark the US economy will follow the worlds lead and nose dive.

LAA · Jan 7, 2015

No, that statement is not in the least misleading because all countries production are computed in the same way, they don't count Jack Daniels and Budwieser but they do count The total oil production which includes production of crude oil (including lease condensate), natural gas plant liquids, and other wet gas liquids, and refinery processing gain. Don't forget that Saudi is the largest refiner in the region and supplies most of the diesel and jet fuel in the region, plus every drop of other fuel it takes to run a country with zero hydroelectric capacity and zero coal or nuclear power generation so they do consume a substantial amount of their own production, roughly 25% in fact and that is steadily increasing. They do claim excess, currently shut in capacity of roughly 3 million BPD.

Have you ever heard about this on the news?

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