Some Top Stories Actually Mean Something To Us
"Top Stories" touted in the media each day frankly don't mean much - most of the time. For example, how many times have you heard the radio or TV news begin with these two words: "President Obama..."? And when you fill in the rest, does the story really have that big of an impact - indeed any impact - on your life? Sure, there may be exceptions. But they're rare. The fact is, on any given day, the President doesn't really say or do anything of any great importance, at least as it effects you and me. Unless I'm missing something.
But a few stories do impact us. And here's one of the latest:
Over a year ago (maybe it was two?), one of the paid sources of intelligent analysis we use, Bert Dohmen, boldly stated that oil would plunge when it was in the 90s and everyone was talking about it shooting higher on increasing demand and reduced supply. In true contrarian style, Dohmen asserted that demand would fall as the global economy slowed (which most said was not happening at the time), and that supply would not only remain steady, but increase as the oil-producing nations like Saudi Arabia would sustain production, even increase it, despite falling prices. His logic was crystal clear: Countries who depend primarily on oil revenues could not afford to see revenues fall. So if the price was going down, they'd have to step up production and sell more. Not only that, but he identified what became the Saudi's strategy (as they are the primary example of a country that relies on oil sales) to continue pumping, thereby effectively exacerbating a falling oil price, the result of which would be knock out producers like the U.S. as the price of oil declined to the point where it was no longer profitable to produce it.
And sure enough it all came true, which impacted you and me as we paid less for gas and heating fuel.
But Dohmen's prescience didn't stop there. He predicted that OPEC would fall apart and no longer control the price of oil (see headline above) and that the Saudi Royal family, which has ruled the country since World War I, would lose its grip on the country's power levers. While that's not yet a done deal, we suggest that the stories of a "re-structuring" of the Saudi economy perpetrated by the Royals likely indicates fear on the part of the ruling family based on oil revenues declining in the face of promises made by the rulers to their minions - which promises have until now kept the masses in check. Unless other sources of revenue materialize, the family will not have the cash to dole out to support what is essentially a super-welfare state. And while the idea of diversifying out of oil theoretically makes sense, we wonder what exactly the Saudis have to offer in the form of products and services (besides oil) that would interest potential buyers?
OPEC's collapse may result in a market-based price for oil, rather than one determined by a cabal of producers. The result could be good or bad in the short-term, but in the long run things would likely be better for us all as natural market forces rather than an unnatural monopoly would determine prices in response to actual supply and demand.
On the other hand, who knows what we might expect were the Saudi Royals fall from grace. Another "failed state" to add to the growing number in the Middle East? And if history is our guide, the U.S. government may feel compelled to increase its already troublesome presence in that unfortunate region of the world. Do we really need more of our American blood and treasure expended on tribes of people who don't get along, never have gotten along, and likely never will, save through some Divine intervention?
But a few stories do impact us. And here's one of the latest:
"Opec Has Practically Stopped Existing"
Over a year ago (maybe it was two?), one of the paid sources of intelligent analysis we use, Bert Dohmen, boldly stated that oil would plunge when it was in the 90s and everyone was talking about it shooting higher on increasing demand and reduced supply. In true contrarian style, Dohmen asserted that demand would fall as the global economy slowed (which most said was not happening at the time), and that supply would not only remain steady, but increase as the oil-producing nations like Saudi Arabia would sustain production, even increase it, despite falling prices. His logic was crystal clear: Countries who depend primarily on oil revenues could not afford to see revenues fall. So if the price was going down, they'd have to step up production and sell more. Not only that, but he identified what became the Saudi's strategy (as they are the primary example of a country that relies on oil sales) to continue pumping, thereby effectively exacerbating a falling oil price, the result of which would be knock out producers like the U.S. as the price of oil declined to the point where it was no longer profitable to produce it.
And sure enough it all came true, which impacted you and me as we paid less for gas and heating fuel.
But Dohmen's prescience didn't stop there. He predicted that OPEC would fall apart and no longer control the price of oil (see headline above) and that the Saudi Royal family, which has ruled the country since World War I, would lose its grip on the country's power levers. While that's not yet a done deal, we suggest that the stories of a "re-structuring" of the Saudi economy perpetrated by the Royals likely indicates fear on the part of the ruling family based on oil revenues declining in the face of promises made by the rulers to their minions - which promises have until now kept the masses in check. Unless other sources of revenue materialize, the family will not have the cash to dole out to support what is essentially a super-welfare state. And while the idea of diversifying out of oil theoretically makes sense, we wonder what exactly the Saudis have to offer in the form of products and services (besides oil) that would interest potential buyers?
OPEC's collapse may result in a market-based price for oil, rather than one determined by a cabal of producers. The result could be good or bad in the short-term, but in the long run things would likely be better for us all as natural market forces rather than an unnatural monopoly would determine prices in response to actual supply and demand.
On the other hand, who knows what we might expect were the Saudi Royals fall from grace. Another "failed state" to add to the growing number in the Middle East? And if history is our guide, the U.S. government may feel compelled to increase its already troublesome presence in that unfortunate region of the world. Do we really need more of our American blood and treasure expended on tribes of people who don't get along, never have gotten along, and likely never will, save through some Divine intervention?
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