Lifting US Oil Export Ban: Big Foreign Policy Win!

Many people think that lifting the US oil export ban was a hollow victory for Republicans in the Omnibus spending bill this year.  It looks hollow now, but it’s a big foreign policy win for the future.

Three of our most dangerous enemies, Russia, Iran and ISIS, finance their military and terrorist operations with oil sales.  Russia and Iran need a crude oil price of about $100 a barrel to maintain spending at current levels.  ISIS needs about $80 a barrel to be able to sell its smuggled oil at an attractive discount.  With European benchmark crude selling for about $37 a barrel, all three are really hurting financially.

In the US, most oil production uses ever improving fracking technology. Fracking injects a solution of water, sand and secret ingredients under pressure to fracture rock formations that contain oil and natural gas.  Fracking technology can ramp up production much more quickly than ordinary drilling.  When the price of oil is low, you stop injecting.  When the price goes up, you resume injecting.  Break even for US fracking operations is somewhere between $45 and $60 a barrel.

Lifting the US oil export ban means that Russia, Iran and ISIS will not see an oil price above $60 in the next 5-10 years.  They will be financially incapable of continuing their aggressive violent strategies.  The last time oil prices were this low, inflation in Russia topped 80% a year, Russia defaulted on its government bonds and Boris Yeltsin was forced out of power.  Prolonged financial difficulty may destabilize three of our most dangerous enemies, based on a concession the Democrats didn’t think was worth anything.

Putin at a "Goodfellas" Moment?

I am hoping that Putin is approaching a "Goodfellas" moment with his oligarchs. Putin's Ukrainian adventures have brought unwanted heat from the West on the enterprises of kleptocratic Russia. All of Russia's big companies have a lot of short term debt they will find almost impossible to refinance due to sanctions and falling oil and natural gas prices. If the oligarch's companies can't refinance, they will default on the loans and won't be able to do business in the West because any assets they have there or send there will be attached to pay what they owe. It's even possible that the oligarchs' personal assets could be seized to pay their companies' debts as part of future sanctions. In 1999, the corruption charges against the government threatened the oligarchs and Putin's Chechen War helped them avoid trouble. This time, the sanctions and falling oil and natural gas prices threaten the oligarchs, and the Ukraine War made things worse. Analyzing it like a crime family would, the oligarchs may decide it's time for Putin to end up floating in the Volga river. 

Liberals Take Undeserved Credit for Cheap Oil

Liberals are trying to take credit for falling oil and natural gas prices, which is ludicrous.  Fracking in the US and Saudi Arabian oil production policy are the main causes of big moves in energy prices.  The initial falling prices of oil and natural gas came from fracking, which Liberals strongly oppose and have outlawed in New York and California. If the Keystone Pipeline had been built and if it was legal to export crude oil from the US, the price of oil would be even lower. Liberals oppose both of those actions in the name of preventing global warming. The other contributing factor to crashing oil prices is Saudi Arabia's conclusion that the Chicago Machine Prodigy in Chief will not stop the Iranians from building nuclear weapons. They decided to maintain Saudi oil production at current levels to crash the price and bankrupt the Iranian mullahs. For the Saudis, damage to Russia was a nice side benefit, as the Russians sell weapons and reactors to Iran. Which of these actions did our Dear Leader have any positive contribution towards? I grant that the "Reset" with Russia and the endless nuclear negotiations with Iran caused the Saudis to conclude they had to act alone. Do you think that was the intended consequence when the Smartest President Ever made those moves?