By Bill Shaw
MUCH LOWER THAN YOU THINK...
For the past month, most of the world has been hunkered down inside their homes in response to the deadly COVID-19. Folks are glued to their televisions as they wait to hear news signaling a slow return to something resembling “normal.”
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he no longer holds all the leverage to control global oil prices. Between 2014 and 2016, the Saudis flooded the world with oil in an attempt to crash prices. Thanks to the advent of hydraulic fracturing, the U.S. had become a major world oil producer in only five years. Realizing the threat to its empire, the Saudi Arabia opened up the taps – forcing oil prices below $30 in an effort to drive American shale drillers out of business. The tactic did cause a lot of pain in the shale patch. More than 50 companies filed for bankruptcy between the start of 2015 and the spring of 2016 (when prices began rising again). But most of the pain was temporary... Many companies were able to secure loans to weather the storm and simply kept pumping at a loss. And the best companies found cheaper ways to extract oil. By the fall of 2018, the U.S. had become the world’s
Meanwhile, the economic losses are incalculable... As schools and businesses remain closed, millions of people are losing their jobs. Many businesses will never reopen. This unprecedented disruption to our economy has some politicians describing the battle with COVID-19 as a “war.” So far, it appears that most people are taking the situation seriously and heeding the calls to stay indoors. Many countries appear to be turning the corner on getting a grasp on the outbreak. But with the world reeling from financial chaos, there is another ongoing “war”... the oil-price war between Saudi Arabia and Russia, the biggest producers of the world’s most important commodity. This isn’t the first time that Saudi Arabia has triggered a massive sell-off in oil. Saudi Crown Prince Mohammed bin Salman (“MbS”) apparently still hasn’t learned that
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