Home » Posts tagged 'oil speculators'
Tag Archives: oil speculators
by John Brian Shannon | February 18, 2015
During the Cold War it was widely known that the Western forces (except for the Swiss and the Swedes who were politically neutral) could hold the Warsaw Pact countries for only one week before they would need to ‘go nuclear’ against the invading Soviet Army.
Therefore, no matter how bravely the Western European armies, air forces and navies fought and no matter how bravely the U.S. and Canadian forces fought, the numerical superiority of Warsaw Pact (especially in tanks, troops and war matériel) meant that they would completely overwhelm Western Europe in a week.
Which is why the Western powers reserved the right to employ ‘First Strike’ capability (the right to use nuclear weapons as the first option in any conflict against Warsaw Pact nations) in the case that Western Europe was invaded. Logical, but harsh. (It kept the peace for decades, it must be stated)
After the Cold War ended, it was discovered that the Warsaw Pact powers would have won the conventional war even more quickly than we had realized due to other factors that were then-unknown to us.
The West would’ve lost in 3 days and we would’ve been caught ‘flat-footed’ and completely overrun. Yes, a complete rout in the conventional war.
If it really came down to it, that same situation could still play out in Europe in our century, as Russia still enjoys huge numerical superiority in tanks, military personnel, and other war-making capabilities.
In order to not lose all of Europe, we would need to go nuclear on Day 3 of a concerted attack, or we would lose the whole thing.
Which would invite an overwhelming response. Obviously. Let’s not pretend otherwise.
There is no military solution in Ukraine
Anyone who thinks otherwise, needs to go to War College for 10 years because they are not basing their decisions on the above-noted reality. Which can bite you.
The strongest defence against a Russian takeover of Europe is a strong and united society, one that is impenetrable and indivisible.
Such a society presents a major problem for any invader. With no means to divide and conquer, it means an extended conflict, à la the French Resistance of WWII. No invader wants that, whether political leaders who must deal with the political fallout of rising bodycounts on TV every night for months or years, or military leaders who recognize the devastating effect it has on overall troop morale, affecting their troops based thousands of miles away. See Vietnam War. See also, Soviet/Afghanistan War.
A bickering, splintered European society, and involving ourselves militarily in Ukraine could raise the temptation level of Russian military leaders to a place that we should always avoid.
All that is needed to empower the Russian military to gain undue and increased influence in the Duma and in the office of the Russian president, is a for social disorder to spread in Europe and a few European governments to fall in rapid succession.
As we saw in Russia, circa 1991, kinetic energy can quickly become a dynamic force
We know that Russia’s strong suit is the ability to wage conventional war in Europe.
We know that the Ukrainian separatists/pro-autonomy forces strength lies in their ability to hold their present ground — and at the very worst retreat into Russian territory for days, weeks, or months, to re-enter Ukraine elsewhere and fight from that location. It’s a huge border. There is no way to police it.
We know that Europe’s strong suit is Soft Power.
Why would we ‘fight’ Ukrainian separatists/pro-autonomy forces (who apparently, receive military and intelligence assistance from Russia) with our weakest hand (our conventional military forces) which happens to be Russia’s strongest hand?
Why not ‘fight’ Ukrainian separatists/pro-autonomy forces/Russian assistance with Soft Power — our strongest hand?
For one example of sending Russia a ‘Soft Power message’ — understand what lower oil prices have done to the Russian economy
That use of Soft Power happened (over the space of a decade) because both President George W. Bush and President Barack Obama decided to ramp-up North American oil production to record levels, resulting in a massive glut of oil which has worked to dramatically lower global oil prices.
Which policy netted a number of results. Gasoline prices for Americans dropped considerably and are still dropping, which boosted the U.S. economy. Due to the huge increase in American petroleum production affecting the global oil supply, global oil prices are still falling. America’s foreign oil imports dropped significantly. By 2017 at the latest, the U.S. will be a net petroleum exporter. Europe’s moribund economy began to improve almost instantly as the oil price fell. Russia’s huge oil exports suddenly became a huge liability for them and growth in the Russian economy has ground to a halt. All of that has happened via the use of Soft Power. Impressive.
Russia needs their oil to sell above $110. per barrel in order for it to be profitable
Unlike Canada where the tar sands oil (classed as #4 sour crude) needs to be priced at over $56./bbl to be profitable, and Saudi crude oil needs to be priced over $7./bbl (classed as #1 sweet crude, if there’s any of that ‘easy to extract and easy to refine’ oil left) and $22./bbl (classed as #2 or #3 medium crude) to be sold at a profit.
It’s the oil speculators (who live mostly in America and Russia, collectively known as the 1%) who profit on anything over and above production costs — whether we are talking oil or any other commodity. But you knew that.
There was no real 1% prior to high oil prices, nor was there a huge, profitable, and growing export market for Russian oil.
Ergo, the high oil prices of recent years are largely responsible for the creation of the 1% in both America and Russia, and the creation of the huge Russian oil export market.
In any potential war, or in cases of serious sabre-rattling, we need to look at who benefits — and ‘work it back’ from there
Oil prices always rise in during periods of convincing sabre-rattling or outright war, and both the oil price rise and any war that might result could ultimately impact many people.
In the case of Ukraine, the people who will benefit from any determined sabre-rattling or outright conflict there, will be relatively small numbers of people (the 1%) most of whom live in America and Russia.
I guess it’s up to citizen oversight to ensure that this situation doesn’t get out of hand.
- The Saudi project, part two (The Economist)