Oil prices and world politics
January 17th 2007 03:11
Good news with regard to oil prices:
Just a year ago, gas prices (which track with oil prices) were creeping higher and higher. Now, just a year later, the prices have dropped to a much more reasonable level.
Why are oil prices so much lower now?
Besides being palatable to consumers who are (unfortunately) dependent on the use of oil and gasoline, there is another significant benefit when oil prices start falling. The two loudest anti-American voices on the world stage are Admadinejad from Iran and Chavez from Venezuela. In the past year, they have been using their country's oil revenues to fuel their anti-American agendas. Iran has been funding sectarian violence in Iraq and they have been funding Hezbollah and Hamas. Chavez from Venezuela has been trying to woo others to his anti-American platform by handing out huge sums of money to neighboring countries. The higher oil prices went, the more trouble Iran and Venezuela could stir up.
It's hardly surprising, then, that Admadinejad and Chavez have been hurt by the falling oil prices. Both of their countries are members of OPEC and both leaders have been pushing for production cuts in hopes of driving the price of crude back up. Both countries also have serious domestic problems to deal with and the shortfall in oil revenue will greatly impact their ability to cause trouble for America and to cause further trouble in the broader Middle East.
With that in mind, it's great news that Saudi Arabia is refusing to cut oil production. I'm not too surprised by this, though. While Saudi Arabia (a majority Sunni Muslim country) is not, in my opinion, a very good friend of the US, they are certainly concerned by the growing influence of Iran (a majority Shiite country) in the Middle East. If Saudi Arabia allows OPEC to cut production, prices would probably again increase and Iran would have that much more money to cause problems.
Hopefully, Saudi Arabia will continue to be willing to forgo increased oil revenues lest they start again padding the pockets of Iran, the neighborhood thug. It will be good for all oil consumers, and bad for Iran and Venezuela. And that would be good for America.
Oil prices dropped below $52 a barrel to new 19-month lows Tuesday on a report that OPEC powerhouse Saudi Arabia said further production cuts aren’t necessary right now.
Just a year ago, gas prices (which track with oil prices) were creeping higher and higher. Now, just a year later, the prices have dropped to a much more reasonable level.
Why are oil prices so much lower now?
Crude oil has fallen more than 16 percent this year in a sell-off triggered by a historically warm winter in the Northern United States and sustained by large funds taking short positions in the market, or bets that prices will fall.
Besides being palatable to consumers who are (unfortunately) dependent on the use of oil and gasoline, there is another significant benefit when oil prices start falling. The two loudest anti-American voices on the world stage are Admadinejad from Iran and Chavez from Venezuela. In the past year, they have been using their country's oil revenues to fuel their anti-American agendas. Iran has been funding sectarian violence in Iraq and they have been funding Hezbollah and Hamas. Chavez from Venezuela has been trying to woo others to his anti-American platform by handing out huge sums of money to neighboring countries. The higher oil prices went, the more trouble Iran and Venezuela could stir up.
It's hardly surprising, then, that Admadinejad and Chavez have been hurt by the falling oil prices. Both of their countries are members of OPEC and both leaders have been pushing for production cuts in hopes of driving the price of crude back up. Both countries also have serious domestic problems to deal with and the shortfall in oil revenue will greatly impact their ability to cause trouble for America and to cause further trouble in the broader Middle East.
With that in mind, it's great news that Saudi Arabia is refusing to cut oil production. I'm not too surprised by this, though. While Saudi Arabia (a majority Sunni Muslim country) is not, in my opinion, a very good friend of the US, they are certainly concerned by the growing influence of Iran (a majority Shiite country) in the Middle East. If Saudi Arabia allows OPEC to cut production, prices would probably again increase and Iran would have that much more money to cause problems.
Hopefully, Saudi Arabia will continue to be willing to forgo increased oil revenues lest they start again padding the pockets of Iran, the neighborhood thug. It will be good for all oil consumers, and bad for Iran and Venezuela. And that would be good for America.
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