The international price of crude oil dropped nearly five dollars a barrel during the last few days, largely because of one’s country’s decision to not curtail oil production. That country, of course, is Saudi Arabia, the world’s largest producer of oil and possessor of the largest reserves of oil.
What the intentions of the Saud royal family are (make no mistake, the kingdom of Saudi Arabia is a wholly-owned Saud family subsidiary) the impacts are obvious.
First, the international price of oil products and eventually all energy products will/have fallen. In other words, they remind the world that they are the arbiters of many of our costs of living.
Second, Saudi Arabia is undercutting Iran, Syria and the Islamic State, who depend on high-priced oil to fund their state terrorism, thereby doing us a favor in two ways. Russia, the world’s third largest producer, also budgets assuming $100 a barrel prices, not below $70. In other words, they are punishing those who threaten them internationally without having to fire a bullet.
Third, by lowering everyone’s energy costs, the Saudis make oil exploration and alternate energy development less rewarding. Costly oil discovery and recovery plans may be abandoned in the face of uncertain returns. In other words, they keep us addicted to their oil.
So, we don’t know what they are doing, but their turning open the oil spigot ripples through the lives of all of us. After using their oil power to lift prices for forty years, they are using it to depress prices.
Perhaps we should pay attention.