Putin orders Russian forces to start pulling out of Syria - FT.com
. . . oh, right, "withdrawal." This is the "we don't retreat, we runaway," theory of withdrawal.
Putin has overextended Russia, with active fronts in Ukraine, and Syria, and he still is occupied with problems in Georgia, and Chechnya. On top of those military, and police problems, he is faced with a collapsing Ruble, and a nearly dead economy.
Yeah, sure, it's not collapsing, it's just running away. Whatever, Vlad. So, what's the plan? "Yet there was little sign of any souring of attitudes toward President Vladimir Putin, with people instead blaming global economic trends or a Western plot.
Magomed, a businessman walking along the upmarket Stoleshnikov Lane in central Moscow, said Western countries were deliberately driving the rouble lower. 'But we will defeat them. Russia is too large.'"
The plan is the tried and true dictators friend, "blame the US," or the West, or both for some wackadoo conspiracy to destroy the tin pot dictators currency. This should rally the troops for a while. It really does work well, just look at Cuba, and Venezuela. But it will not help correct the collapse of the Ruble, or the Russian economic collapse. Russia can chart its course following the path of Hugo Chavez in Venezuela. And with oil positioned to stay low for years Putin has nothing left but "blame the US."
Oil prices will move around but the trend is lower, and this will continue. The oil bulls all believe there will be some Saudi/Russian agreement to lower production. But US shale, even after the closing of a large number of wells is still creating a serious surplus of supply over demand. Add to the problem that Iran wants in and will pump whatever they can, and supply will remain high for a very long time.
Other players will soon be adding to supply, like Venezuela. Today Venezuela is handicapped by its government, and it control of its oil industry. It is mid collapse. Once that is completed, and a new government takes full control, there will be a new accord with US and other western oil companies, which will quickly return and help Venezuela pump more oil. Even though oil prices are low, Venezuela needs the foreign hard currency to help purchase necessities like food and toilet paper.
Brazil is also in a state of near collapse with massive inflation, and myriad political scandal ripping the country apart. And like Venezuela it needs hard currency more than it needs oil, even if it must produce oil at a loss.
Asset sales, and privatization will likely occur. Brazil is in dire straits, and the money is necessary to keep things functioning, if only barely. Expect US, and western oil companies to be allowed to develop oil new fields, and to create new efficiencies in new, and old oil fields.
Likewise, Mexico has undergone much change in how it considers its oil output. It used to be the piggy bank of the Mexican federal government, until that resulted is shockingly reduced oil revenues. Changes in Mexican law have occurred and will likely continue to occur to allow US, and western oil companies to enter this market, pump oil, and help the Mexican oil industry create new efficiencies. Crumbling infrastructure, low oil prices, poor management, and worse government make this difficult, and necessary.
MEO Australia goes out on front foot in Cuba oil exploration I would take this seriously, since Cuba is grindingly poor. Once again, the need for hard currency trumps costs to a great extent.
Right now, most oil producing nations need the revenues from oil to meet their budgets. Without these revenues, they are facing serious problems. This means that most of these countries will need to continue to pump oil at the levels they are pumping today, or at greater levels, to help maintain government revenues. Plus, any time oil prices rise, all producers will rush to capitalize on this "boon." Oil supply will remain high for the foreseeable future.
Even India is hot to develop oil.
On the other side of the equation is demand.
China continues to decline.
The mouse that roared . . .
India is now facing increasing headwinds from its banking sector.
India has been considered a light spot in the international economy, but this banking crisis will dampen that, as will the generally moribund world economy.
Europe is in a deeply weakened state with little potential going forwards, and the rest of the world is looking quite weak. Forecasts of world recession are in the air, and, really, it is difficult to argue the contrary position, athough the Peterson Institute for International Economics does so.
We also are facing a new paradigm with increasing AI and automation of everything, even things we never though would be automated, like driving. George Jetson drove his flying car much of the time, although it seemed capable of driving itself. We forget how much less oil we will likely need if parents no longer need to drive children to and from every event, or elderly parents to and from appointments.
The parent driving the child means the parent frequently drives to the event, and then back, then back to the event to pickup the child, and then home. This means four independent trips of equal length. However, with a self driving car, there would only be two trips. Further, it should be easier to carpool children with ride share self drive cars than with human driven cars. After all scheduling is often a problem for the human/parent driver. Add the Uber on demand self drive car, and scheduling conflicts evaporate, as do total miles driven.
The elderly parent also offers efficiencies. Now, the adult child may need to drive many miles to pickup the parent at her home for an appointment. With an Uber like share ride self drive car this long drive to pickup the parent would be unnecessary. While Uber can perform this task today, the cost of the human driver makes this somewhat less likely.
We are likely to see many other cost saving measures. Heavy trucking is likely to build trucks/engine combinations which will be optimized for carrying specific sized freight, I suspect this will be the standard international shipping container. They will be able to travel primarily at night and travel at the optimized fuel per mile speed. Smaller, more efficient engines will become the norm, since shippers will not need to maximize load size to help amortize the operator costs.
Trucks traveling mainly at night should allow the trucks to drive at a stead state speed with fewer stops and starts, which would also reduce daytime driving congestion, reducing fuel use.
Ride sharing, always difficult now, should be much easier, and, if desired by the public, we should see cars specifically designed for ride sharing, perhaps longer vehicles with more doors, and private seats.
The self drive technology also promises fewer collisions so the vehicles can be made lighter, improving fuel economy. Engines would not need to be so large or powerful. If I am not driving, I care more about costs than power.
Myriad other improvements should continue to lead to reduced fuel use, or at least a slowing of the demand curve.
It appears oil will be low priced for a very long time. At least until something unbalances the system to favor demand and lower supply.
Putin is correct to get out of Syria, he is likely too late, and the people of Russia need to brace for the coming Russian economic collapse. Oil dependent economies will be hard hit by this economy for a very long time. Good luck Russia, you are going to need it.