Obama’s, Saudi Arabia’s beheading of U.S. oil will exact a heavy toll
by John Myers
The price of oil is sinking faster than the Titanic. The influence on it is Saudi Arabia, which has opened up the spigots, forcing down the price of oil to $50 per barrel compared to $110 last summer. The big winner in the crude sweepstakes is Saudi Arabia, which is increasing its world market share. The big losers are U.S. petroleum and shale oil producers who can no longer turn a profit. And the man with the sword in his hands is President Barack Obama.
Obama opposed U.S. petroleum drilling even before he took office. Yet he eagerly bows to the Saudi monarch, the ailing King Abdullah. Obama has provided enormous military hardware to the Saudis even as Saudi Arabia continues to fund Sunni terrorists, including the Islamic State (ISIS). Equally startling is that Obama has set the stage for a commodity price collapse, which could cause the worst economic crisis in America since the Great Depression.
Oil insiders believe that the credit Obama has received for the stunning rebound in U.S. petroleum production is contemptible. While the president did promise to open up new areas for exploration, he also clamped down on the offshore drilling following the BP oil spill in April 2010. Obama suspended offshore drilling leases and authorized an investigation of 29 oil rigs in the Gulf. Later, his administration ordered a six-month offshore drilling moratorium enforced by the U.S. Department of the Interior. That ended only when a federal judge lifted the moratorium, finding it too broad, arbitrary and unjustified.
A Forbes headline in March 2012 declared, “President Obama Has An Oil Problem.” The writer, Robert Bradly Jr., wrote: “In addition to dragging its feet on existing oil sources, the Obama administration has taken blatantly anti-oil actions.”
At the same time, the Obama administration has provided enormous support to Riyadh. In 2010, the Obama administration pulled off the largest arms deal ever. It was a $60.5 billion sale to Saudi Arabia of weapons with offensive capabilities.
Now with Obama’s blessing, Saudi overproduction of crude is in full swing. Last year, petroleum prices underwent their second largest annual decline in history. That has been great news for American drivers. But the cost of Saudi oil dominance cannot simply be measured at the gas pump. ConocoPhillips, a major player in the U.S. shale industry, has announced that it will “defer significant investment” in U.S. shale oil until returns look more promising. That isn’t likely until oil prices recover to more than $65 per barrel.
Deflation: The coming collapse of commodity prices
The global impact of crashing crude is what worries me most. Last month, Goldman Sachs reported nearly $1 trillion in investments in future oil projects will not happen at today’s prices. That was after looking at what was to be the development of 400 of the world’s largest planned oil and gas fields, not including U.S. shale projects. Factor those, and thousands of good-paying American jobs will disappear.
Obama is playing a dangerous game conspiring with Saudi Arabia. If crude prices continue to fall, as I believe they will, to below $40 per barrel, it will have a crippling impact on the commodity markets. We are almost certain to see Obama’s trickle “down” economics to do far more than just cripple the budding U.S. oil shale industry. I predict that in 2015 every resource industry from agriculture to mining is going to begin a serious decline that may last until the end of this decade.
Last year, billionaire and Obama confidante Warren Buffet was purchasing up wind farms. Buffet is shrewd. In five years, wind farms may be the only farms worth owning. I witnessed it before in the early 1980s when crashing oil prices crippled not only oil-dependent states like Texas and Alaska but also farm and mining states like Nebraska, Iowa and Idaho.
I saw the farming crisis firsthand when I was 22 and writing for a cattle magazine. I already had a general understanding of the boon years of the 1970s and the enormous correction that was occurring then, in the early ’80s, because my uncle owned a 2,000-acre mixed farm. He was lucky to sell out near the top, but many of our family’s friends who knew of no other way of life were bankrupted.
During those first years as a young writer, I would sometimes be driving through farm country. I saw the devastation.
According to Neil E. Harl, an Iowa State economics professor, more than three percent of the 2.4 million farmers in the U.S. left the farm each year in the early 1980s. In 1985, the U.S. Department of Agriculture reported net farm income fell by nearly one-third during the first half of that decade. As farm commodity values declined, farmland values plunged. And that broke the backs of tens of thousands of farmers and ranchers.
Saudi Arabia and Barack Obama: A sinister alliance?
At my next job as an investment writer, I saw the same havoc in the mining industry. The Idaho Silver Valley, which had provided so many jobs to miners in the ’70s, was abandoned in the ’80s. Those families that stayed on were mostly impoverished as mine upon mine shut down. Today, the region — including surrounding cities like Spokane, Washington, and Great Falls, Montana — is a remnant of what it was during the boon in the ’70s.
It seems Obama is providing too much to Saudi Arabia where Christianity is illegal and where weekly beheadings draw large audiences. Even more disturbing is that Saudi Arabia is the world’s largest financial backer of the worst jihadist groups, including ISIS. WikiLeaks disclosed a 2009 State Department communication by then-Secretary of State Hillary Clinton which read, “[D]onors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide.”
So even as Obama promises to fight Islamic extremism, he is backing the very kingdom that is backing the crazies who want to kill Americans. Others agree, including Larry Klayman, whose article was published last Saturday by WND:
Indeed, under the “leadership” of our “Black-Muslim in Chief” — who favors all things African and Islamic over the rest of us — it is likely that the nation and the world is about to explode at any moment. Things have simply been simmering along for too long for this not to occur at some point.
Obama continues to put America more at risk each passing month. His close relationship with Saudi Arabia should alone have him impeached but of course he is almost untouchable because of his heritage and his powerful friends in and out of government. As we begin 2015, the nation faces an impending deflationary collapse.
Yours in good times and bad,