The Germans are coming
Senior Member
I spent alot of time during the last few days reading through various articles in the economist, der spiegel, die zeit and other papers on the subject.
You should not underestimate the effect that a drop in oil price can have!
Remember that one of the big reasons for the collapse of the soviet union was a drop in oil price that renderd the soviet state owned petrolium industry worthless.
So far the biggest loser from what I read will be Venezuela. Venezuelas petrolium industry is state owned and it`s income makes up the lion share of the nations GDP. But for the nations budget to balanced through the petrolium industry income, oil prices would have to rise to a very unlikely 200 US$ per barrel. As a result of the OPEC announcement the government of Venezuela has already announced that it will be raising taxes and cuting public spending. The upcoming years will be very harsh for Venezuela and I do not see the Venezuelan government getting an additional term if the petrolium industry remains in expensive state ownership.
Iran has already announced that because of the OPEC decision it`s GDP will shrink by 20%. To be fair, Iran is sued to anctions and financial restrictions by now, but in such a situation they will probably try to kling on to as many financial assets as they have. This blow will certainly be felt by the Iranian government and it will be interesting to see how they will react to it. Either it will soften their positions in negotiations or it will result in them becoming even less reasonable under pressure.
Russia has an economy that is dangerously dependant on oil exports. 70% of the nations exports are oil and gas, and with the petrolium industry being state owned 50% of the Russian budget comes from oil revenues. So this could be a big blow to the Russian government. The Russian government is currently gambling that with the upcoming winter and a increased demand for oil, a recession could be avoided during the winter and provide the time to find a solution. But that is a big gamble and if no solution is found during the winter, investment will gradualy pull out of Russia during that winter and recession could be unavoidable by spring.
In the US the states of Pennsylvania, North Dakota, Oklahoma and Texas will lose alot through this recent development. All these states have recently seen the rise of a fraking industry, but with fraking being an expensive process, alot of these buisnesses will face problems in the near future. It could be possible that these states will suffer from job loss that could go into the thousands and some of these states might also lose outside investment.
Nigeria will also suffer alot from these recent developments. The petrolium industry is also a big part of the nations economy and could potentialy reset the recent rise of a new middle class in the country. Combine that with the wide spread corruption and the threat of islamist fascism in the north and you get a rather toxic meltingpot of horrible things.
Canada will probably suffer from the same problems as the US with it`s fledgling petrolium industry losing value.
Brazil and Mexico will also suffer through this. Brazil has only just started finding big oil reserves and creating it`s own petrolium industry, might see this new industry on which so many hope were lying renderd useless. And Mexico will now probably have no choice but to privatise it`s petrolium industry.
In Europe several countries that import most of their oil such as France, Spain, Italy and Germany will benefit from this development. But other such as the UK and Poland who invested into a petrolium industry of their own will suffer similar negative effects as the US and Canada have (especialy Scotland will face problems).
On a national level the biggest winners are India, China and Japan. But especialy Japan, who produce absolutly no oil and are dependant on expensive foreign imports of it. And they needed this boost the most, considering the current state of their economy.
Of course on an individual level many private citizens will rejoice and many buisnesses relying on transportation will potentialy grow.
But in total I am just utterly disgusted by this behavior by a small group of Arab assholes formin a cartel and making a decision that completly disrupt the healthy competition within what would be a free market.
Some analysts say that they are doing this mainly to screw with Iran.
But the analasys that I agreed with most is that they are scared by the rise of foreign self sufficient petrolium industries after 9/11, which are the result of a distrust of the Arab oil monopoly. And with this move they are merely trying to crush that comptition and reasert themselves as the dominant power and their monopoly in this field.
You should not underestimate the effect that a drop in oil price can have!
Remember that one of the big reasons for the collapse of the soviet union was a drop in oil price that renderd the soviet state owned petrolium industry worthless.
So far the biggest loser from what I read will be Venezuela. Venezuelas petrolium industry is state owned and it`s income makes up the lion share of the nations GDP. But for the nations budget to balanced through the petrolium industry income, oil prices would have to rise to a very unlikely 200 US$ per barrel. As a result of the OPEC announcement the government of Venezuela has already announced that it will be raising taxes and cuting public spending. The upcoming years will be very harsh for Venezuela and I do not see the Venezuelan government getting an additional term if the petrolium industry remains in expensive state ownership.
Iran has already announced that because of the OPEC decision it`s GDP will shrink by 20%. To be fair, Iran is sued to anctions and financial restrictions by now, but in such a situation they will probably try to kling on to as many financial assets as they have. This blow will certainly be felt by the Iranian government and it will be interesting to see how they will react to it. Either it will soften their positions in negotiations or it will result in them becoming even less reasonable under pressure.
Russia has an economy that is dangerously dependant on oil exports. 70% of the nations exports are oil and gas, and with the petrolium industry being state owned 50% of the Russian budget comes from oil revenues. So this could be a big blow to the Russian government. The Russian government is currently gambling that with the upcoming winter and a increased demand for oil, a recession could be avoided during the winter and provide the time to find a solution. But that is a big gamble and if no solution is found during the winter, investment will gradualy pull out of Russia during that winter and recession could be unavoidable by spring.
In the US the states of Pennsylvania, North Dakota, Oklahoma and Texas will lose alot through this recent development. All these states have recently seen the rise of a fraking industry, but with fraking being an expensive process, alot of these buisnesses will face problems in the near future. It could be possible that these states will suffer from job loss that could go into the thousands and some of these states might also lose outside investment.
Nigeria will also suffer alot from these recent developments. The petrolium industry is also a big part of the nations economy and could potentialy reset the recent rise of a new middle class in the country. Combine that with the wide spread corruption and the threat of islamist fascism in the north and you get a rather toxic meltingpot of horrible things.
Canada will probably suffer from the same problems as the US with it`s fledgling petrolium industry losing value.
Brazil and Mexico will also suffer through this. Brazil has only just started finding big oil reserves and creating it`s own petrolium industry, might see this new industry on which so many hope were lying renderd useless. And Mexico will now probably have no choice but to privatise it`s petrolium industry.
In Europe several countries that import most of their oil such as France, Spain, Italy and Germany will benefit from this development. But other such as the UK and Poland who invested into a petrolium industry of their own will suffer similar negative effects as the US and Canada have (especialy Scotland will face problems).
On a national level the biggest winners are India, China and Japan. But especialy Japan, who produce absolutly no oil and are dependant on expensive foreign imports of it. And they needed this boost the most, considering the current state of their economy.
Of course on an individual level many private citizens will rejoice and many buisnesses relying on transportation will potentialy grow.
But in total I am just utterly disgusted by this behavior by a small group of Arab assholes formin a cartel and making a decision that completly disrupt the healthy competition within what would be a free market.
Some analysts say that they are doing this mainly to screw with Iran.
But the analasys that I agreed with most is that they are scared by the rise of foreign self sufficient petrolium industries after 9/11, which are the result of a distrust of the Arab oil monopoly. And with this move they are merely trying to crush that comptition and reasert themselves as the dominant power and their monopoly in this field.
