Some videos come pretty easy, and today’s video is one of them. I really like it when new ways of looking at stuff pop into my head. The more I think about it though, there are other aspects to this I should have included. The shift in the oil market here is pretty extraordinary. It’s actually the birth of a sort of “Super OPEC”. It’s also an OPEC that’s a lot more dangerous for its members. With a US president in charge, especially a US president listening to Texas oilmen, military operations become a potent tool of market making.
The world, and the US, used to have a minimal investment in the stability of petro-states. In the long term, these places should be happier without US supported perma-leaders, but the short term looks increasingly grim. As oil demand peaks, the ballooning US petroleum industry will need to be protected. The US can do this by knocking off competitors one by one. This could be an underappreciated aspect of Libya’s permanent oil crisis since 2011. Petro-states on each side of the conflict have no incentive to get their proxies on the same page and producing more. Venezuela is being knocked out. So is Iran. Destabilizing Iraq would be very easy. Saudi Arabia is super shaky. A broader war in the Middle East would be horrible, but it would be pretty great for the new head of OPEC… The US president.
In today’s video I made brief reference to Ilhan Omar and her supposed antisemitism. The most interesting thing about this is that most of the people pushing that story have no idea what she’s actually been accused of. The tweet from 2012, which she has apologized for, mentioned in the video, wouldn’t strike most of the world as antisemitic, but it definitely is according to US standards that I agree with. The controversies over the past few months aren’t antisemitic by any fair definition. She has simply called attention to the fact that US politicians are paid a great deal of money by organizations like AIPAC to privilege Israeli interests over US interests.
A year ago I probably would have been more skeptical of Omar, but the sad fact is that the US congress has proved their allegiance to Israel, over and over. The Omar controversy itself makes this clear, but there are much more concrete actions to point to. I don’t know much about the “Boycott, Divestment and Sanction” or “BDS” campaign against Israel. What I do know is that multiple state legislatures have imposed flagrantly unconstitutional laws that penalize US citizens that refuse to sign anti-BDS pledges. Regardless of the worth or evil of BDS as a program, that’s a straightforward limitation of the first amendment rights of US citizens in a foreign country’s favor. Before this year, I was content to chalk the anti-BDS excesses up to Evangelical Christians in red states who support Israel because they want it to die in the end times that they believe an Israeli state will bring about. The US courts have already ruled versions of these law unconstitutional, and I thought that that slow progress would deal with the issue. Unfortunately not. A bi-partisan group of legislators has mounted an anti-BDS crusade, and is trying to pass national law that allows States to discriminate on the basis of speech and association. That’s outrageous. That’s a clear example of US legislators being bought to put allegiance to Israel over the rights of US citizens. You can read more about this horror here.
Very few of the people who attack Omar have reckoned with this insanity. What’s more, they make assumptions about who she is, and what she believes. Many supposedly serious journalists attempted to pull the “Oh yeah, well why doesn’t she attack Saudi Arabia!?!?!” card. This is ridiculous because she is one of the most consistent voices in Congress against the US-Saudi destruction of Yemen. She is also a supporter of LGBT rights, something else that is ignored in the absurd attacks on her. Our government and media is trying to turn one of the most consistent and heroic opponents of US foreign policy into a racist caricature. It’s pretty awful.
The video I just published put me in a depressing frame of mind. Venezuela is definitely something to be taken seriously. People are dying, and a country is disintegrating. The sanctions that the Trump administration announced today could very well cause mass starvation. But do you ever get the sense that this is all a bad joke? On both sides, we’ve got hardliners who talk a lot about opposing the other country on grand principled grounds. But both sets of awful leaders desperately need each other. This whole kabuki theater does get people killed, but the main point isn’t taking down the dictator, or taking down the imperialists.
The main point is holding on to power. Maduro uses aggression from the US to justify his power. US presidents, Republican and Democratic, use foreign leaders who set themselves up as antagonists to justify our defense expenditure and cover up for our own leaders failures. It’s all a really sad joke. A joke that kills people.
I often talk about the oil price on this channel. That’s what I do with today’s video. But I don’t think I talk about what incredibly good news the death of the oil market is. For the environmentalists this is a bit of a mixed bag, but I think on balance very good. The whole “peak oil” thing has turned out to not be a problem. 30 years ago it was mostly the US, Japan and Europe that were intensively using other people’s petroleum resources. We’ve more than tripled the number of people, and probably more than tripled the amount of consumption. And we’ve all survived. That’s pretty damn cool. The downside of course is that we’re producing more and more carbon. Cheaper oil prices are not a good thing for those worried about global warming in the short term. Oil is cheaper, more of it gets consumed, and more carbon gets dumped into the atmosphere. But it can actually be a good thing in the long term.
Lower oil prices provide the same sort of good news to environmentalists that it does to geopolitics nerds. Bad people have less power. If oil is permanently cheaper, that provides less money to all the people who used to use oil wealth to steer the world. As I keep pointing out, lower oil prices are leading to a collapse in terrorism. It will also lead to a collapse in oil industry influence in the United States and other countries across the world. We can already see it happening. The fact that electric cars have been allowed to go this far is an indicator of how much power the oil industry has already lost. The days when oil execs could confidently march into the government’s most powerful positions almost certainly ended with Rex Tillerson. The Oil industry’s global warming skeptics are still churning out their reports, but they look laughable to everybody now, including the oil executives who pay for them. The oil industry’s decline in prestige will cede the climate change conversation to the scientists and their friends in the environmental lobby almost entirely. Good news all around!
In recent years the focus of the channel has changed. I dive in deep on what’s going on in certain countries like Turkey, Saudi Arabia, Syria or Yemen. This new, in depth approach has been great for the channel, and I think it also makes for much better videos. When something comes up with one of those countries, I usually have a pretty good idea of what I want to say, and I usually have some good, under-covered context to add to the conversation. Writing those scripts rarely takes more than 5 or 6 hours. My research on those countries is constantly on-going, and I don’t have to think too hard to put together something I’m proud of.
This one was different. I don’t claim to be an expert in anything, I only promise to do a better job than any cable news channel. This is super easy with the countries I’ve been covering for years. Venezuela is new for me. For years I’ve wanted to do more Latin America coverage, but I haven’t had the time to do the in depth reading that is necessary. It’s impossible to avoid having an opinion on Venezuela of course, but they are not really “MY” opinions. It’s what I’ve been force fed by other news sources. That made writing this one super tough. I had to try to cut through the layers of bullshit and say something original. The story of what’s really behind Venezuela’s drop in oil production was one I’ve wanted to tell since May, but the framing was super difficult. I just don’t have the necessary context, which I hope I made clear… Today’s video went through multiple drafts over multiple weeks. I hope you think it was worth the wait!
Over the past year Saudi Arabia has experienced a perfect storm of factors in its favor. Asset prices in the US economy and elsewhere have gone nuts. Saudi Arabia is a country that owns a lot of stock, land and everything else, so that’s been very helpful. On the oil market front, the most important front there is for Saudi Arabia, they’ve had unprecedented cooperation on the OPEC production slow-down, and a series of competitors have given up millions of barrels a day in production due to sundry wars and dictatorships.
If Saudi Arabia’s ambitious plans for the future were ever going to work, 2017 would have been the year for it. But as this video shows, some of the key metrics that illustrate the hole Saudi Arabia is in haven’t changed much at all. As I said in last year’s video, and as I repeat in today’s video… Saudi Arabia is still finished.
Back when I started doing this channel full time, I put out a series called “Notes From The Golden Age“. Today’s video, on the defeat of OPEC, is a long delayed addition to the series. In the six minutes of the video itself, I just laid out the facts as I understand them: The fact that OPEC did its level best to raise the price of oil, and they failed. If you want to hear more about why that is, and hear some discussion of the revolution in petroleum affairs we’ve experienced over the past five years, you could do worse than this video here.
Put briefly, oil doesn’t cost what it used to. The origin of this development is probably OPEC itself. That cartel drastically reduced the oil on the market on a couple occasions in the 1970s, driving the price through the roof. Much has, quite rightly, been made of the Shale revolution in the United States. A range of technological advances has made oil extraction easier, cheaper, and viable in places that it wasn’t before. This revolution has made US production competitive with Saudi Arabia again, and caused the plummet in prices that started in mid 2014. But the Shale revolution is only the most dramatic cause.
The plummet in oil prices is the result of a range of reactions to OPEC’s obscene market power. An under-heralded one is energy efficiency. We have finally reached a point where economic growth is decoupling from growth in petrochemical use. Some of this is renewables, but more of it is the very, very unsexy business of making cars and air conditioning units run more efficiently. Another reaction to OPEC was the broadening of the search for petroleum. Coupled with Technological advances, a staggering range of countries now produce significant amounts of oil and gas. OPEC has been beaten. They largely did it to themselves.