Yep. That’s the lede the author buries at the very bottom:
Iran needs oil to stay expensive for as long as possible. Every month of high prices is another month of high interest rates on America’s $40 trillion debt.
America only needs oil to stay expensive for a while. As long as rival suppliers are knocked offline, the world signs long contracts with Texas, Alaska and Venezuela (via America). Once those customers are locked in, America no longer needs expensive oil.
This analysis may or may not be what is driving the Trump administration, but it seems flawed to me in two ways.
One, RN Venezuela produces only 1M bpd. My understanding is that even before the natural disasters it would optimistically be 5-10 years and dozens of billions of dollars’ investment before Venezuela’s neglected infrastructure is up to ~5M bpd (its peak was 3M in 1997). Compare the effect of that many bpd on the market, vs say the ~7M that got knocked off when the Saudi East–West Pipeline got knocked out in a drone strike recently.
Venezuela is not a significant source of oil for a decade or more.
Two, for Texas and Alaska, my understanding (based on no more than half-remembered episodes of What’s Going On With Shipping, BBC, and Zeihan) is that there are a number of bottlenecks that are all individually solvable but again on the scale of a decade-ish and dozens-to-hundreds of billions: more ships need to be built dedicated to the needs of these routes, more port facilities on both ends, changes in refining plants for different feedstocks.
Plus ofc it’s more expensive for Asian allies to ship their oil halfway around the world. And they were caught flat-footed as USA failed to be good allies and coordinate a fucking war strategy.
This was a much better article than I expected.
Key take away:
… yeah but also the worlds oil supply imploding is likely going to pay off big time for the US and its massive oil production
Yep. That’s the lede the author buries at the very bottom:
This analysis may or may not be what is driving the Trump administration, but it seems flawed to me in two ways.
One, RN Venezuela produces only 1M bpd. My understanding is that even before the natural disasters it would optimistically be 5-10 years and dozens of billions of dollars’ investment before Venezuela’s neglected infrastructure is up to ~5M bpd (its peak was 3M in 1997). Compare the effect of that many bpd on the market, vs say the ~7M that got knocked off when the Saudi East–West Pipeline got knocked out in a drone strike recently.
Venezuela is not a significant source of oil for a decade or more.
Two, for Texas and Alaska, my understanding (based on no more than half-remembered episodes of What’s Going On With Shipping, BBC, and Zeihan) is that there are a number of bottlenecks that are all individually solvable but again on the scale of a decade-ish and dozens-to-hundreds of billions: more ships need to be built dedicated to the needs of these routes, more port facilities on both ends, changes in refining plants for different feedstocks.
Plus ofc it’s more expensive for Asian allies to ship their oil halfway around the world. And they were caught flat-footed as USA failed to be good allies and coordinate a fucking war strategy.
Interesting arguments