(Before It's News)
By Douglas V. Gibbs
If we are dependent upon foreign oil, telling them to screw off might be a dangerous move. But, the Trump White House that starts doing its thing after January 20, 2017 plans to open up domestic oil production at a record pace. . . which means we can tell Saudi Arabia that they can stick their oil where the sun doesn't shine.
The Saudis are getting nervous, because Trump has said a number of times he plans to block all oil imports from Saudi Arabia. He has indicated he plans to ensure U.S. energy independence from “our foes and the oil cartels,” while also creating “complete American energy independence.”
Saudi Arabia’s oil minister says that Trump is all bark, but no bite. Khalid Al-Falih, also the chairman of Aramco, said
in an interview
that “at his heart President-elect Trump will see the benefits [of Saudi oil imports] and I think the oil industry will also be advising him accordingly that blocking trade in any product is not healthy.”
“The U.S. is sort of the flag-bearer for capitalism and free markets,” Al-Falih added. “The U.S. continues to be a very important part of a global industry that is interconnected, that is dealing with a fungible commodity which is crude oil. So having equalization through free trade is very healthy for oil,” he said.
The United States has already been enjoying a shale oil boom, which has made it the third largest global crude oil producer, but was hurt when prices dropped.
The drop in prices has hurt Russia, Venezuela and Saudi Arabia, as well. As oil prices have plunged from $115/barrel in mid-summer 2014 and are now hovering in the mid $40s range, Saudi Arabia has run record budget deficits of $98 billion last year and an $87 billion deficit is expected this year.
In the end, it's a game of chicken. Who will flinch first?
Trump did not reach the level he has reached as a businessman as a result of weakness Saudi Arabia has never dealt with someone like Trump before. This is going to be interesting to watch.