President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman( (MBS) famously high-fived each other with blood-stained hands at the G-20 Summit. The two share a habit of disposing of their opponents in particularly gruesome ways, perhaps to set an example. Who will save the world from them?
Not President Trump (pictured in the background). He says that American interests force us to overlook their behavior. (To be fair, previous presidents of both parties have condemned such behavior and then done nothing.)
Not the editorial pages of the Washington Post and The New York Times. Putin and MBS are not swayed by liberal public opinion. Not the editorial pages of The Wall Street Journal, either. These two are not swayed by conservative opinion.
Not Europe. It’s still dependent on Saudi oil and Russian gas.
Certainly not the UN.
Probably not China – unless that’s in China’s interest. And we might not like the result if Russian and Saudi influence is replaced by increased Chinese strength.
Not the US Congress. Bloviating may be effective at home but it’s not much of a force in world affairs.
But Putin and MBS are already being stopped. On Saturday, after the high-five, they shook hands in private to cut oil production in their countries despite the fact (and because of the fact) that both of their economies are completely dependent on oil exports. They had no choice; but they haven’t escaped the trap they’re in. They can either cut production or watch oil prices fall further; in fact, both will happen.
Who did this to them? Who dared to thwart them?
Actually the borough of Frackville wasn’t named after the technology which has dramatically lowered the price of US natural gas and which has made the US practically energy independent and also the largest producer of oil in the world once again. But Pennsylvania in the Frackville neighborhood is where fracking for natural gas first made a difference and “Frackville, US” is quickly diminishing the clout of Putin and MBS.
When oil was over $100/barrel, US frackers in Texas, Oklahoma, and North Dakota deployed their technology at an incredible rate. Saudi Arabia decided to starve them out by letting oil prices fall below $30/barrel. Big mistake. Saudi Arabia was the country that couldn’t afford $30 oil; it had to convince OPEC and Russia to join it in cutting production. Sure enough prices went back up to near $70; but the US frackers went back to work. During the years of low prices they learned to make their technology more efficient. $60 was the new $100. Up went the US rigs; down went prices. Whoops.
There is no out for Putin and MBS. Low prices mean they will eventually be overthrown because of economic collapse in their countries. High prices mean more US production (and others are learning to frack) and lower sales for Russia and Saudi Arabia. Same result.
The US can now laugh at the idea of an “oil embargo”. As we (slowly) build pipelines, we will be able to supply our allies and rivals with oil and natural gas and let them laugh as well. There are no high-fives here for oil-dependent despots.
If Saudi Arabia and Russia interfere in the next US election, they’ll likely favor candidates who propose fracking bans and no more pipelines.
Strange how things work out.
Tom Evslin recently retired as CEO of NG Advantage LLC. He formerly served as Vermont’s Chief Recovery Officer to co-ordinate federal stimulus funds; was Chairman and CEO of ITXC Corp.; conceived, launched, and ran AT&T’s first ISP, AT&T WorldNet Service; and managed server products for Microsoft. His regular blog, Fractals of Change, can be found at blog.tomevslin.com