There Would Be No Iranian Nuclear Talks If Not For Fracking 236
Hugh Pickens DOT Com writes "Matthew Philips writes at Bloomberg that US Secretary of State John Kerry landed in Geneva on Friday to begin negotiations with Iran over its nuclear weapons program and there is sudden optimism that a deal is in the offing. But the simple fact is that Iran would not be coming to the negotiating table without the US oil boom. Over the last two years, the US has increased its crude production by about 2 million barrels a day. According to a recent report from the Congressional Research Service (pdf), Iran's oil exports have been cut in half since 2011 (PDF), from 2.5 million barrels per day to a bit more than 1 million today. As a result, Iran has had to halt an equal amount of production. 'I think it's pretty clear that without the U.S. shale revolution, it never would have been possible to put this kind of embargo on Iran,' says Julius Walker. 'Without US production gains, I think we'd be looking at $150 a barrel.' Instead, international prices have hovered around $110, and are less than $100 in the US. According to data from Bloomberg, the combined carrying capacity of oil tankers leaving Iranian ports last month dropped 22 percent from September. 'They're having a very hard time finding buyers,' says Walker. If a deal gets done, the trick will be to ease Iranian oil back onto the broader market without disrupting prices. If not managed properly, flooding the market with Iranian crude could carry its own negative consequences by suddenly making fracked oil in the US unprofitable."
read the fucking summary (Score:3, Informative)
'I think it's pretty clear that without the U.S. shale revolution, it never would have been possible to put this kind of embargo on Iran,'
Re:Interesting argument (Score:5, Informative)
It's a global market - oil gets shipped all around the world via tanker. If the US buys less oil, that means the sellers have more oil to sell, which they in turn sell to someone else (Probably China, they have huge demand), who in turn then doesn't buy from Iran. It's all interconnected.
Re:Interesting argument (Score:4, Informative)
Which doesn't matter for a global fungible commodity. Think of the oil and gas markets as giant buckets with streams of inputs from various sources and streams of outputs to other places. Direct inputs and outputs don't matter, just the net inputs and outputs.
Re:Interesting argument (Score:5, Informative)
US consumption of oil is way down (Score:2, Informative)
Increased supply is only part of the equation.
US oil consumption has dropped down to mid 1990's level: http://www.eia.gov/countries/country-data.cfm?fips=US#pet [eia.gov]
The trend of declining oil consumption should continue due to factors such as:
- continued underemployment
- aging population
- urbanization
- improved vehicle fuel efficiency
Also, Iran knows that if Republicans come back to power, Israel will be able to dupe the US into attacking Iran. It is prudent for Iran to negotiate a deal with an administration that is capable of negotiating (and isn't Israel's puppet).
Re:Bull (Score:4, Informative)
(due to the US being a net exporter of oil)
You have a strange [eia.gov] notion of "net exporter".
And if you think it's too old data because of the shale oil "booming" the EIA also provides data for 2013 [eia.gov].
Re:read the fucking summary (Score:5, Informative)
The 'fucking summary' is wrong, though. Iranian oil makes up a very tiny fraction of US imports.
It is not about how much US imports from Iran. It's the ability to shut down Iranian oil imports without having an effect on global oil prices, because US is now able to make up the difference. Just trying to be clear on what TFA 'claims', since, not being an oil industry expert, I have no clue whether it is true or not.
US is a net importer (Score:4, Informative)
Very incomplete article (Score:4, Informative)
Re:read the fucking summary (Score:5, Informative)
The 'fucking summary' is wrong, though. Iranian oil makes up a very tiny fraction of US imports.
You should look up the word fungible [wikipedia.org]. It makes little difference whether Iran sells direct to the USA or not. If Iran sells instead to Europe and China, and they participate in the sanctions, then they will have to buy elsewhere. Likewise, fracking in America means Americans import less, leaving more oil for others. There is only one world market for oil.
Re:What was the point of the embargo again? (Score:5, Informative)
Wat?
I can't believe I just read that. If you don't remember these things, all it means is you need to revise your 20th century history again.
Let's review. Israel, in its extremely short life so far, has managed to obtain a global reputation for being insanely aggressive and warlike. The very creation of it led immediately to war with its new neighbours. Israel not only has nukes, but also created the Mossad, which openly assassinates people it doesn't like. Its leaders routinely threaten to attack or invade Iran if Israel's "friends" even think about being the slightest bit reasonable or diplomatic. Fear of what the completely crazy Israeli leadership might do if diplomacy fails is one of the reasons the rest of the world has implemented sanctions - it's seen as marginally preferable to Israel starting all out war in the middle east, which we know they wouldn't hesitate to do.
Pakistan and India have been at each others throats since the moment India became independent from the British Empire. The Partition was the rest of one of the most bloody civil wars in recent history. Since then both India and Pakistan have managed to obtain nukes, and their constant fighting over Kashmir is rated one of the most likely triggers for nuclear war. Each side routinely accuses the other of sponsoring terrorist attacks.
Of all the countries in the world you could have picked to try and make Iran look bad, you could not have chosen worse. Iran, despite the incredible amounts of shit they have had dumped on them in recent times, is not at all likely to invade a neighbour or randomly start a war in the middle east. I know this runs counter to US and Israeli propaganda, but there's no evidence at all that this is even slightly likely to happen - the Iranian leader has even said that war is un-Islamic, and he's really big on not doing things that are un-Islamic. Contrast this to the Israeli leaders who talk about war all the time.
BTW the story is crap. It's been obvious for ages that the sanctions have been put in place because America is Israeli's bitch and Europe is America's bitch. They aren't going to be removed, ever, because the people who control the sanctions regime are motivated by power, and only power. See how the moment it looked like there might be progress in Geneva the American's were running to Israel to re-assure them that the sanctions weren't going to be lifted no matter what happens (and that's despite them being struck down as illegal in European courts).