I suppose embargoes on the oil (now owned by the government, now a big source of revenue) is what caused this to a large degree?
There are no embargoes on Venezuelan oil. I know this sounds insane, but the US has not embargoed Venezuelan oil, and in fact we buy a tremendous amount of oil from what Washington calls the enemy state of Venezuela.
The oil price collapsed, and this in part caused this horrible problem in Venezuela for a variety of reasons.
Venezuela is not alone. All oil producing states are suffering from the oil price crash, and furthermore all of Latin America is in a bad recession.
Incidentally the oil price crash itself was engineered by John Kerry and Joe Biden along with the Saudi royalty as a project to radically ramp up Saudi oil production in order to crash the world oil price as a way to destroy:
- Russia – Paybacks for Russia out of US fury over the Ukraine situation.
- Iran – Mostly a Saudi concern. The Saudis have always considered Iran to be their worst enemy, but the feeling is not mutual. I think the Iranians would just like to get along with Saudi Arabia and other Sunni states.
- Venezuela – Regime change Venezuela is a long term US project.
I am not sure what we offered the Saudis in return, I think maybe helping them with the Syrian regime change project. Also I think we might have given them a lot of weaponry.
The Saudis had their own reasons for doing this. They not only have huge oil reserves, but at the time, they were sitting on a huge pile of cash reserves in their Treasury. They figured they could ride out the price crash via dipping into cash reserves, which incidentally will be totally depleted in a couple of years.
However, the Saudis had a devious project in mind. Even though the plan was hatched with the Americans, bear in mind that capitalist countries generally have no allies, as the remainder of the paragraph will demonstrate. A major Saudi project was to crash the price of oil and hence ruin the US oil shale or fracking industry, which the Saudis see as serious competition. Fracked oil costs a lot to produce, and the Saudis have some of the lowest production costs in the world. By crashing the oil price, the Saudis could effectively bankrupt the US fracking industry, which is exactly what it happening right now.
The Saudis are morons though for doing that, as their own economy is getting screwed hard by the oil price crash.
0 thoughts on “What Caused the Oil Price Crash?”
I wish I could feel bad about it. But low oil prices heavily benefit me. I have go to school and I can’t afford an apartment, so it’s an hour and a half a day to get to university, often 5 days a week.
You are one of the few commentators to get this right, even thought its actually pretty obvious. The same thing was done in the 1980s.
I grew up following what the U.S. was doing with regards to Cuba.
The economy was so ridiculously service heavy, and resources all around were scarce (government issued money was worthless, etc., it’s all true),
because no one internationally was really buying their sugar. It was a “Banana Republic” they were doomed not to go the way of a Korea or China, an self-oriented industrial powerhouse, so they went downhill.
but it all could have been solved had Cuba had kept it’s sugar selling economy the same, the currency would have been stronger, and basically all the problems (including Black market) would have been eliminated.
the sole economic problem was generally shortage of necessities, because supplies were short. They were simply on the wrong side of the zero sum game, no one would buy things from them, the economy was not backed up by anything.
Healthcare is awesome, but it was just “inflation” to an extent, that caused the need for a Black market.
I also would like to see an actual IQ test from Cuba. The Lynn study extrapolated based on income, he did not actually test.
I feel somewhat sorry for Venezuela as they are poor. But fuck the Saudis.
If we have an oil price crash, why isn’t gas back to under $1/gallon?
There’s more supply than demand. Saudis refused to cut supply because to do so would only mean that more frackers and other unconventional sources would come in and replace those cuts with their own supplies. So a Saudi supply cut wouldn’t cause prices to go up, it would only cause the Saudis to lose market share.
There’s no grand geopolitical strategy at work here. It’s supply and demand.
The technology for solar cars would be the best thing. Who will be the genius to invent it,and if they already have, then whose keeping it secret?