Saudi Arabia may go broke before the US oil industry buckles

Bigus

From an article in the telegraph

Bit of schadenfreude here, would make for an interesting Middle East , not before its time too.

http://www.telegraph.co.uk/finance/oilprices/11768136/Saudi-Arabia-may-go-broke-before-the-US-oil-industry-buckles.html

"Saudi Citizens pay no tax on income, interest, or stock dividends. Subsidized petrol costs twelve cents a litre at the pump. Electricity is given away for 1.3 cents a kilowatt-hour. Spending on patronage exploded after the Arab Spring as the kingdom sought to smother dissent.
The International Monetary Fund estimates that the budget deficit will reach 20pc of GDP this year, or roughly $140bn. The 'fiscal break-even price' is $106."

The_Valeyard

I'm sure the USA will bail them out..........or have they been bailing out the USA?


Edit: also, f*ck Saudi Arabia with their princes and State sponsored terrorism.

endacl

Saudi produces nothing but oil and human misery. Not a sustainable model.

Nodin

endacl wrote: »

Saudi produces nothing but oil and human misery. Not a sustainable model.

There was a chipper near me like that. Lasted for years though.

kowloon

Nodin wrote: »

There was a chipper near me like that. Lasted for years though.

That's because they keep reusing the same oil.

Wasn't there a Saudi billionaire who said something like, (fixing with proper quote)

"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel”

Son Of A Vidic

The_Valeyard wrote: »

also, f*ck Saudi Arabia with their princes and State sponsored terrorism.

Unfortunately Saudi sponsored terrorism will persist, as long as Uncle Sam and the West are only too glad to look the other way.

RichardCeann

The sooner they go broke and are no longer able to finance the spread of Wahhabism in the west the better.

BoJack Horseman

so, a government that levies almost zero taxes is shy of a shilling or two.

what are the odds!

nokia69

The_Valeyard wrote: »

I'm sure the USA will bail them out..........or have they been bailing out the USA?


Edit: also, f*ck Saudi Arabia with their princes and State sponsored terrorism.

I watch the republican primary debates during the week and they were all attacking Iran and the nuclear deal, not one of them said a word about the saudis, who are behind most of the islamic terrorism all over the world

and no one said a word about Bush who is loved by the saudi royals

Billy86

nokia69 wrote: »

I watch the republican primary debates during the week and they were all attacking Iran and the nuclear deal, not one of them said a word about the saudis, who are behind most of the islamic terrorism all over the world

and no one said a word about Bush who is loved by the saudi royals

They know better than to bite the hand that feeds. Ironically, it's the same reason that the Zionists just a little to the northwest of the Saudi's are also allowed to go about doing whatever they want. Just a cycle of bad people mixing with bad people.

bnt

The_Valeyard wrote: »

I'm sure the USA will bail them out..........or have they been bailing out the USA?

Not on purpose, perhaps, but they are:

At present, the surplus petrodollars of the world's top oil exporter are mostly invested abroad by the Saudi Arabian Monetary Agency (SAMA), its central bank, which had net foreign assets worth 2.75 trillion riyals ($733 billion) in October.

Most of that money is believed to be in low-risk U.S. dollar assets such as U.S. Treasury bonds and bank accounts, which tend to earn low returns compared to the more aggressive, higher-risk investments favored by some other rich oil exporters.

Buying a US Treasury bond = lending money to the US Treasury, which uses the money to support the Dollar.

nokia69

the Saudis are also keeping prices low to punish Vlad for his support for Assad

Antar Bolaeisk

Don't forget about the huge unemployment in the country and even those who are employed are primarily employed by the government with only a small percentage working in the private sector.

darkpagandeath

Good, Maybe then they will stop funding... Something something.

ToxicPaddy

The Saudis like the Chinese have purchased massive amount of foreign debt to subsidise themselves when things go bang.

According to various articles published, they are pulling oil out of the ground for less than $30 a barrel and its currently selling for $50+ a barrel so they are fine.

When the US started passing laws allowing fracking for oil, they were saying they would be self sufficient in 10-15 years for oil, that's some feat considering they apparently used 8 million barrels a day to run their economy, according to an article in Bloomberg I read a while back.

However fracking costs more than $50 a barrel to get out of the ground apparently. The main reason OPEC countries are refusing to reduce production is that they want to kill all of these operations off before they start.

Brazil has the 5th or 6th largest oil reserves off its coast but it's at deep sea levels and costs a small fortune to retrieve, not cost effective at the moment.

Russia is crippled financially at the moment due to sanctions and the main buyer of their oil and gas, China slowing down. They have even turned to courting India in hope but that probably won't happen. Plus add to that Putins ego to refuse to give in to Europe about sanctions and he will drive Russia back to the dark ages to save face.

OPEC controls a large portion of the worlds oil production, Saudi Arabia control OPEC so unless their oil runs out soon. I can't honestly see the Saudis being in any sort of financial trouble soon. If they do, they will simple reduce subsidies and quash any revolt by those who try to protest against it.

The wealthy will not say a word as they can afford to take a hit and they know what side their bread is buttered on. Plus with thousands of palaces around the country for all extended members of the royal family, I'm sure their spending will be reeled in and that alone will save stupid amounts of money.

TallGlass

The West should be pushing now to move to more sustainable methods. Keeping people rich is not an excuse, oil will run out. We should be using oil to our advantage so we can get the sustainable model up and running before the lights literally go out when the oil runs out.

Oat23

Deleted User wrote: »

Wasn't there a Saudi billionaire who said something like, (fixing with proper quote)

That was Rashid bin saeed Al Maktoum who was the emir of Dubai until he died in 1990.

He had similar concerns for Dubai as to what is going on in Saudi Arabia though. He was worried Dubai was too dependent on the oil discovered in the 60's and spent the last two decades of his life working to develop the place so it would survive when it runs out.

darkpagandeath

TallGlass wrote: »

The West should be pushing now to move to more sustainable methods. Keeping people rich is not an excuse, oil will run out. We should be using oil to our advantage so we can get the sustainable model up and running before the lights literally go out when the oil runs out.

we had 50 years of oil 20 years ago...

QuinDixie

let them return to goat herding

TallGlass

darkpagandeath wrote: »

we had 50 years of oil 20 years ago...

So that still leaves 30 years. Care to explain your post or just leave it at the maths equasion your after leaving for everyone.

Madd Finn

ToxicPaddy wrote: »

According to various articles published, they are pulling oil out of the ground for less than $30 a barrel and its currently selling for $50+ a barrel so they are fine.

When the US started passing laws allowing fracking for oil, they were saying they would be self sufficient in 10-15 years for oil, .....
However fracking costs more than $50 a barrel to get out of the ground apparently. The main reason OPEC countries are refusing to reduce production is that they want to kill all of these operations off before they start.


OPEC controls a large portion of the worlds oil production, Saudi Arabia control OPEC so unless their oil runs out soon. I can't honestly see the Saudis being in any sort of financial trouble soon.

There's an interesting chart in an earlier thread on a similar topic that illustrates some of the points you're making about the relative cost of different extraction techniques.
Click here
http://www.boards.ie/vbulletin/showpost.php?p=93722356&postcount=8

darkpagandeath

TallGlass wrote: »

So that still leaves 30 years. Care to explain your post or just leave it at the maths equasion your after leaving for everyone.

It was a figure tossed out to scare everyone about oil running out. They have absolutely no idea when oil will run out they keep just spouting about 50 years.

smurgen

Horrible country.was living with an Indian chaps who's father was a doctor there for years.he said the place was like a prison for them and they were subjected to daily racial abuse by the locals.the sooner they don't have a pot to piss in the better.they're poisonous.

nokia69

ToxicPaddy wrote: »

The Saudis like the Chinese have purchased massive amount of foreign debt to subsidise themselves when things go bang.

According to various articles published, they are pulling oil out of the ground for less than $30 a barrel and its currently selling for $50+ a barrel so they are fine.

When the US started passing laws allowing fracking for oil, they were saying they would be self sufficient in 10-15 years for oil, that's some feat considering they apparently used 8 million barrels a day to run their economy, according to an article in Bloomberg I read a while back.

However fracking costs more than $50 a barrel to get out of the ground apparently. The main reason OPEC countries are refusing to reduce production is that they want to kill all of these operations off before they start.

Brazil has the 5th or 6th largest oil reserves off its coast but it's at deep sea levels and costs a small fortune to retrieve, not cost effective at the moment.

Russia is crippled financially at the moment due to sanctions and the main buyer of their oil and gas, China slowing down. They have even turned to courting India in hope but that probably won't happen. Plus add to that Putins ego to refuse to give in to Europe about sanctions and he will drive Russia back to the dark ages to save face.

OPEC controls a large portion of the worlds oil production, Saudi Arabia control OPEC so unless their oil runs out soon. I can't honestly see the Saudis being in any sort of financial trouble soon. If they do, they will simple reduce subsidies and quash any revolt by those who try to protest against it.

The wealthy will not say a word as they can afford to take a hit and they know what side their bread is buttered on. Plus with thousands of palaces around the country for all extended members of the royal family, I'm sure their spending will be reeled in and that alone will save stupid amounts of money.

it depends on the field but saudi production costs are a lot lower than $30 a barrel, so yes the saudis are still selling oil at a profit, so are most of OPEC and Russia BTW, but thats not the issue

to balance the national budget the saudis need higher prices, they have a young growing population who expect to be kept in the style that they have become accustomed to, they also want to fund ISIS and the war in Yemen, all of these things are hard to do with oil below $100

Brazil are nowhere near the 5th or 6th largest reserves and Russia is NOT going back to the dark ages LOL

the Saudis however are in serious trouble IMO, Yemen is the future of the arab world, there is a massive war on the way to the middle east, its not going to be pretty

darkpagandeath

nokia69 wrote: »

it depends on the field but saudi production costs are a lot lower than $30 a barrel, so yes the saudis are still selling oil at a profit, so are most of OPEC and Russia BTW, but thats not the issue

to balance the national budget the saudis need higher prices, they have a young growing population who expect to be kept in the style that they have become accustomed to, they also want to fund ISIS and the war in Yemen, all of these things are hard to do with oil below $100

Brazil are nowhere near the 5th or 6th largest reserves and Russia is NOT going back to the dark ages LOL

the Saudis however are in serious trouble IMO, Yemen is the future of the arab world, there is a massive war on the way to the middle east, its not going to be pretty

:pac:

PolaroidPizza

This whole post started with an article from the telegraph. Keep in mind that tge telegraph owners (barclays brothers) are in a heated battle with some saudis in a billion euro hotel deal at the minute....

darkpagandeath

PolaroidPizza wrote: »

This whole post started with an article from the telegraph. Keep in mind that tge telegraph owners (barclays brothers) are in a heated battle with some saudis in a billion euro hotel deal at the minute....

What has that got to do with Oil ?

enfant terrible

darkpagandeath wrote: »

It was a figure tossed out to scare everyone about oil running out. They have absolutely no idea when oil will run out they keep just spouting about 50 years.

I saw a documentary that said we will soon reach "peak oil" and the world economy will collapse

Also overpopulation, climate change and finally a super volcano will completely destroy the human race.

LDN_Irish

smurgen wrote: »

Horrible country.was living with an Indian chaps who's father was a doctor there for years.he said the place was like a prison for them and they were subjected to daily racial abuse by the locals.the sooner they don't have a pot to piss in the better.they're poisonous.

My dad had a Pakistani fella in his taxi over in London recently enough, the chap had just moved to London and they were chatting. He was saying how much he loved London and how it's amazing to be able to walk around whenever you wanted and people are so friendly. (Sidenote: how ****ing unfriendly do the people have to be where you were before to think London is really friendly!?) My dad asked him did he have any concerns about racism and he said no matter what happened it could never be worse than where he was before which turned out to be you guessed it! Saudi Arabia! He said you have to literally walk along in the road if there are Arabs walking towards you because they will kick you in to the road it they feel you haven't adequately acknowledged their place above you in the hierarchy.

Big time anecdote of course, not even told to me but to my father but I found it interesting.

ToxicPaddy

Madd Finn wrote: »

There's an interesting chart in an earlier thread on a similar topic that illustrates some of the points you're making about the relative cost of different extraction techniques.
Click here
http://www.boards.ie/vbulletin/showpost.php?p=93722356&postcount=8

Yeah a lot of people think "oh it costs x amount to pull oil from a well and sure they all do it the same way" which is very far from the truth.

Iran and Iraq have some of the biggest oil deposits in the world, yet political turmoil, sanctions, lack of investment, technologies involved etc all affect the cost of getting a barrel of oil from the ground.

Plus there are different types of crude, for instance sweet crude favoured for European petrol as European fuel is generally more refined and the less carbon found in the oil means it's easier and less costly to meet the standards required so more profile. Libya is one of the main producers of crude oil so the troubles there really hit the cost of fuel in Europe.

Saudi and much of middle eastern oil is at shallower depts so it's easier to extract.

Statoil makes a huge amount of money from its patents from technology to extract oil from deep sea locations as it spends vast sums developing this technology.

It's a very diverse industry and they wealth involved and profit margins are astronomical!