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Who won the oil price war?

7/20/2016

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Who Really Won The Oil Price War?

This depends upon whether one looks short, or long term. Short term it is indeed a tie. Long term it is a route. 
​
​More after the break.
Predicting events is fraught with problems. However, all things being equal, there is little hope that the House of Saud survives these changes absent some serious intervention by fate, or an idiotic US President. The current price of oil is insufficient for the House of Saud to continue operating the country as it has in the past. While it has a very large amount of wealth including wealth in oil, this wealth is finite. This means that it will run out unless replenished. So, either oil prices must rebound, or Saudi must create a real economy in the kingdom. The other alternative is to simply cut the people off from the wealth, but this would require they return to the desert, and they are not going to do that, they do not have the skills, nor temperament.

I have written before on the fact that there is very little hope that the kingdom can create a real economy, at least not one run by Saudi's. I cannot see how they will be able to create a real economy run by others, and still have enough profit to continue the Saudi people in the lifestyle they are accustom to living. 

This means Saudi's are slowly sliding into an ever reducing lifestyle. Eric Hoffer in the True Believer notes that this will spawn anger, and frustration, which will create the basis for mass movements which will be dangerous, and unpredictable. While the royal family has been successful at diverting these mass movements from attacking the House of Saud, mostly by deflecting them onto Israel, the US, and the West. This will be difficult to continue since it is clear the current oil price decline is not do to any of those actors.

(While the Neocons fulminate about Iranian terrorism, International Terrorism is Salafi/Wahhabi, and comes out of the compact between the Wahhabi and the House of Saud. Modern terrorism is Saudi in root, not Iranian.)

However, I do not underestimate the idiocy of the people of the region or their willingness to believe patently foolish things. 

One hope for the House of Saud is that the existential wars of Islamic Reformation which the House will be fighting with the Shia, and especially Iran will divert the people from blaming the House of Saud, and instead will blame Iran. Perhaps this will work. 

Regardless, Iran has a real economy, and will work to strengthen that economy, the House of Saud has nothing like it. Oil prices will effect them equally, so it will be the real economy which provides advantage. 

Iran will continue to probe Sunni strengths, and disrupt Saudi allies. This will be something of a war of attrition. It will require response by Saudi, and they will likely fail in these responses. Militarily, the House is incompetent. The Iranians are somewhat more competent. Over time this will reduce the House of Saud wealth, and diminish its ability to respond. The Shia are small, but seem likely to prosecute war more formidably than the Saudi.

I do not give the House of Saud more than a 50/50 chance of continued existence over the next decade. I do not give them more than a 25% chance over the next two decades. 

Tick, Tock House of Saud, Tick, Tock.

More reading:

After all the House of Saud is not running the place for the locals

It makes sense with God being a trinity, that Satan would be . . . 
​

Here at the End of History there is but a single path to trod . . . ​

Saudi Arabia will not create a new vibrant economy
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