1 T he Prize : the E pic Que st fo r Oil, Mo ne y & Po we - PowerPoint PPT Presentation

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T he Prize : the E pic Que st fo r Oil, Mo ne y & Po we r 2 De lta T a b le Oc to b e r, 2015

Glo b a l Oilpa tc h Ve te ra n 3  “T he failure o f so many to c o nside r the po ssib ility that o il pric e s mig ht de c line , le t alo ne pre pare fo r suc h an e ve ntuality, sug g e sts an o b livio usne ss to b o th e c o no mic s and histo ry. Afte r all, the re ’ s lo ts o f c he ap o il le ft in the g ro und to disc o ve r.”  J.C. Ande rso n, Ve te ra n o ilpa tc h e xe c utive

Ro le o f Oil in Wo rld Affa irs 4  Oil is c e ntral to se c urity, prospe rity and c ivilization today and is c e ntral to globalization :  T he rise a nd de ve lo pme nt o f c a pita lism a nd mode r n busine ss = o il is the wo rld’ s b ig g e st, mo st pe rva sive b usine ss;  Oil is a c ommodity intima te ly inte rtwine d with na tio na l a te g ie s, g loba l politic s a nd powe r ; str  Oil e sta b lishe d the hydr bon e c onomy a nd the oc a r bon ma n ; a nd hydr oc a r  E onme nta lism ha s c ha lle ng e d pe tro le um a s a nvir g o o d symb o l o f huma n pro g re ss.

Pre mise 5  T he c anvas is g lo b a l.  T he sto ry o f o il is a c hro nic le o f e pic e ve nts.  Oil c o nc e rns itse lf with powe r , impe rso na l fo rc e s o f e c onomic s a nd te c hnology .  T he stra te g ic g a me o f o il is playe d b y c unning b usine ssme n a nd po litic ia ns.

Pro duc ts Ma de fro m a Ba rre l 6 o f Crude Oil

F unda me nta ls o f Oil Pric e 7  Pr ise – g lo b a l supplie s a re tig ht a nd c o untrie s ic e s r ne e d o il to ke e p e c o no mie s mo ving .  Pr ic e s fall – o ve r-pro duc tio n o f c rude a nd the wo rld is slo shing in o il.

L o w Oil Pric e -- I mpa c t o n 8 I ndustry  Re ve nue s fa ll so ma na g e me nt hunke rs do wn into surviva l mo de .  Budg e ts a re c ut imme dia te ly.  Pro je c ts a re e ithe r po stpo ne d o r c a nc e lle d.

Pe o ple Assume d Pe tro le um 9 Wo uld b e Che a p  Globalization (1990-2009) c a use d the wo rld e c o no my to a lmo st triple in size .  9/ 11 ha ppe ne d a nd tra nsfo rme d inte rna tio na l re la tio ns:  Gulf Wa r I I a nd the o ve rthro w o f Sa dda m Husse in; a nd  Out-a nd-o ut wa r b e twe e n Muslim Sunnis a nd Shia s.  Sur ge in oil de mand a nd industry ha d to pla y c a tc h- up to b ring ne w o il o n-stre a m.

Pric e Hig hs o f 2007-2008 10 $30/ b b l to $145/ b b l  Dra ma tic inc re a se to c o st o f b ring ing ne w o il a nd g a s into pro duc tio n.  Appre he nsio n tha t de ma nd b y China a nd I ndia wo uld b uy a ll e xc e ss o il a nd c re a te a no the r sho rta g e .  Supply a nd de ma nd, g e o po litic s, c o sts, fina nc ia l ma rke ts, e xpe c ta tio ns a nd spe c ula tio n to drive pric e s upwa rds.

Pric e Co lla pse o f 2014-2016 11 $108/ b b l to $27/ b b l  De ma nd we a ke ne d .  T rillio ns o f do lla rs sto ppe d flo wing fro m o il-impo rting c o untrie s to o il-e xpo rting c o untrie s.  Sa udi Ara b ia wa nts to re g a in ma rke t sha re .

12 Sa udi Ara b ia  Pr e side nt Nixon’s de al with House of Saud:  U.S. pro vide milita ry pro te c tio n to Sa udi Ara b ia a nd its o ilfie lds;  U.S. se ll Sa udis a ny we a po ns the y ne e de d;  U.S. g ua ra nte e pro te c tio n fro m I sra e l a nd I ra n; a nd  U.S. g ua ra nte e Ho use o f Sa ud a s rule rs in pe rpe tuity.  Saudi’s de al with U.S.:  All o il sa le s in $US; a nd  All surplus $ wo uld b e inve ste d in US T re a sury b ills.

Pe tro -Do lla r’ s Glo b a l I mpa c t 13  Wo rld’ s de ma nd fo r U.S. $ wo uld so a r with inc re a sing de ma nd fo r o il.  U.S. F e de ra l Re se rve c o uld print $$ to b uy a ll o il its c itize ns wa nte d .  T he pe tro do lla r a llo we d the U.S. to e xplo it (c ritic s sa y a b use ) the do lla r’ s sta tus a s the wo rld’ s re se rve c urre nc y.

Sa udi Ara b ia F o rc e s Oil 14 Pric e s Do wn  Goal: win b a c k ma rke t sha re + punish Russia , I SI S a nd U.S. sha le pro duc e rs.  Cur oduc tion: 10.5 millio n b b l/ da y. r e nt pr  High- r ate gy: ha s a n e stima te d $550 b illio n wa r isk str c he st o f fo re ig n re se rve s (wa s $750 b illio n Q4, 2015);  E isks: funding pro xy wa r with I ra n in Ye me n, xte r nal r Syria a nd I ra q + b a ttling Al-Qa e da a nd I SI S within its b o rde rs.

Will Sa udi Ara b ia Co lla pse 15 So o n?  Se pt. 22, 2015 Sa udi Princ e Aziz I b n Sa ud c irc ula te d a le tte r to the ro ya l fa mily:  I t c a lle d fo r a “c ha ng e in le a de rship to fe nd o ff the king do m’ s c o lla pse .”  K ing do m o n b rink o f a “pe rfe c t sto rm:”  Burning thro ug h mo ne y re se rve s a t a n unsusta ina b le ra te ;  L a unc he d a n unwinna b le wa r with Ye me n; a nd  F ina nc e d I SI S to e nd Shia re g ime in I ra n.

I ra q & 16 Syria  GW Bush surg e in I ra q c re a te d c a lm.  Ob a ma withdre w a nd Shia PM No uri Al-Ma liki insta lle d a nd pe rse c ute d Sunni mino rity.  Re vo lt b y Sunni in Syria de sta b ilize d b o th Syria a nd I ra q .  U.S. insiste d pe a c e ne g o tia tio ns must b e a b o ut Pre side nt Ba she r Al-Assa d’ s de pa rture .  I ra q turne d a b lind e ye to Russia :  F lying tra nspo rt pla ne s o ve r a irspa c e ;  De live ring we a po ns to Syria ; a nd  Sha ring inte llig e nc e (witho ut U.S. kno wle dg e ).

17 I ra n  July, 2015 Nuc le a r o il de a l inke d (w/ U.S., Russia , China , Brita in, F ra nc e a nd Ge rma ny):  L ift e c o no mic sa nc tio ns wo rth $150 b illio n in e xc ha ng e fo r I AE A to mo nito r fa c ilitie s a nd sc rutinize nuc le a r pro g ra m.  Spring ,2016 30-50 millio n b b l I ra nia n c rude so ld o n o pe n ma rke t.  L o ng -te rm c o uld e xpo rt 3-4 millio n b b l/ d.

Russia 18  Putin wa nts to de sta b ilize pe tro -do lla r.  2009 Russia pumps 11 millio n b b l/ d a nd e xpo rts 8 millio n b b l/ d = $1 b illio n/ da y into K re mlin c o ffe rs.  2014 Me g a -de a ls in o the r c urre nc y:  Ma y – Russia / China = $400 b illio n na tura l g a s de a l to supply 38 b illio n c ub ic me tre s/ da y fo r 30 ye a rs pa id in Yuan;  Aug ust – Russia / I ndia = $40 b illio n g a s pipe line pa id in Rub le s ; a nd  Se pte mb e r – Russia / I ra n = 500,000 b b l/ d o f I ra nia n c rude fo r Russia n e q uipme nt & we a po ns pa id in Rub le s .

Co mmo n E c o no mic Spa c e 19 (CE S)  Russia a sse mb ling c o untrie s into a fre e -tra de zo ne to c o o rdina te e c o no mic + se c urity.  Cha lle ng e OPE C, E U a nd NAF T A.  Unio n inc lude s: Russia , K a za khsta n, Be la rus.  Russia c o urting :  F o rme r So vie t sa te llite s -- T a jikista n, K yrg yzsta n, Arme nia , Aze rb a ija n, Mo ldo va , T urkme nista n, Uzb e kista n;  F o rme r Co mmunist – China ;  Shia c o untrie s – I ra n a nd Pa kista n; a nd  Wa nts: Afric a , L a tin Ame ric a , Ge rma ny e tc .

Russia + Syria + I ra q 20  Putin suppo rts Pre side nt Ba sha r Al-Assa d.  Putin wo rking with I ra n to de fe a t Sunnis.  Putin wo rking with I sra e l to pre ve nt nuc le a r wa r.

Al-Qa e da 21  I nte rne t me ssa g e se nt b y ma ste rmind o f 9/ 11  “T he first se me ste r c o mme nc e s in 3 we e ks. 2 hig h sc ho o ls a nd 2 unive rsitie s. T his summe r will b e sure ly ho t. 19 c e rtific a te s fo r priva te e duc a tio n a nd 4 e xa ms. Re g a rds to the pro fe sso r. Go o d b ye .”  So lve the riddle .

U.S. I nte llig e nc e Wa rne d o f 22 Al-Qa e da Atta c ks  F e b . 26, 1993 Bo mb e d Wo rld T ra de  1995-1996 Ma ste r pla n fo r 9/ 11 disc o ve re d  F e b . 1998 Bin L a de n issue d fatwa a g a inst U.S.  De c . 4, 1998 Pre side ntia l b rie fing to Bill Clinto n

Al-Qa e da Org a niza tio n 23  Co re o rg a niza tio n to pla n, re c ruit a nd tra in te rro rists to strike U.S., We ste rn a nd I sra e li ta rg e ts;. Va ng ua rd to o rg a nize a nd c o o rdina te jiha dist g ro ups a g a inst Muslims.  I nspira tio n fo r lo ne -wo lf te rro rists.  Bra nd na me re pre se nting suc c e ssful vio le nc e .  Ba se fo r c o nq ue st fro m Afg ha nista n in the na me o f g lo b a l jiha d.

I sla mic Sta te o f I ra q a nd 24 Syria (I SI S)  Yo uT ub e vide o o f Ame ric a n Ja me s F o le y.  Al-Qa e da te rro rist o f I ra q a nd Syria use d DVDs a s c a lling c a rds – “g re a te st hits.”  Bin L a de n re pulse d so e xpe lle d the m fro m Al-Qa e da .  No w c a lle d I SI S.

Stro ng e st Jihadist Gro up in 25 Wo rld Histo ry  Wo rld’ s ric he st te rro rist g ro up ($2 b illio n in c a sh/ a sse ts)  Co ntro ls mo re fire po we r & te rrito ry tha n a ny te rro rist g ro up in histo ry  Se ize d 40 kg o f ra dio a c tive ura nium = dirty b o mb s  July 14, 2014 L e a de r Ab u Ba kr Al-Ba g hda di pro c la ime d a c a lipha te whic h ha s two so urc e s o f re ve nue s:  Sa le s fro m o il fie lds in Syria a nd I ra q ; a nd  Sa le s o f a ntiq uitie s fro m lo o te d histo ric a l site s.