Why is Saudi Arabia still thought a “vital ally” for the US?


"The Saudi royal family has been alarmed by Washington’s move toward a rapprochement with Iran as it seeks an agreement to limit Tehran’s nuclear program. The Saudis were also angered by Obama’s decision to hold back from using military force against Syria – another regional adversary – over its use of chemical weapons. The president was accompanied by secretary of state John Kerry and other senior officials. A White House statement after the two hours of talks said Obama had reiterated the significance Washington placed on its “strong” ties with the world's largest oil exporter."  Guardian


 We really do not need Saudi Arabia any longer.

The family owned and run corporation called Saudi Arabia has been useful to the United States since the 1950s, but The Kingdom's relationship to the US has always been transactional in nature rather than an alliance that committed SA to do anything for the US that it did not wish to do.   To this day there are no documents of alliance, only arrangments for meetings, sales, training, etc.   The relationship has always been an odd thing.  SA has no civil law other than some elements ofthe Swiss commercial code.  There is no civil constitution.  "The Qur'an is our constitution."  Sharia law of the most severe sort is the official law code.  Amputations for theft are routine.  No religions other than Islam are allowed.  There are no civil rights other than those found in Qur'an and Hadith.  such appurtenances of civilized life as tourist visas do not exist.  It was always an awkward "partnership" for the United States except for the money made by US exporters re-cycling petro dollars to the US.  Saudi armed forces are largely a static display of military equipment useful only for internal security. 

On the other hand, Saudi petroleum was for a long time necessary to the Western World, Japan and parts unknown,  Saudi fear of godless communism made the country a useful tool in resisting Soviet penetration of the Middle East.   Saudi Arabia also contributed a lot of money to US covert actions that the US Congress would have refused to fund.

All that is gone now.  The US is rapidly emerging as what is likely to be the largest producer of petroleum products in the world.  Saudi oil and LNG are still useful but not vital.  There is no Soviet Union.

What Saudi Arabia wants from the US now is obedience and assistance in its long term project for Sunni triumphalism under Saudi domination throughout the Islamic World.  In Iran, Turkey, Syria, Lebanon, Jordan, Afghanistan, etc., the program is the same everywhere.

Is Obama dumb enough to accept such a role for the US?  I doubt it.  The level of his resistance to Saudi, Israeli and R2P/neocon excess is sometimes impressive.  pl  


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68 Responses to Why is Saudi Arabia still thought a “vital ally” for the US?

  1. Green Zone Cafe says:

    I come out of retirement to laud you on this piece, Colonel.
    I would like to see the redacted portions on the 9/11 Commission report.
    The Saudis are the ones financing the extreme version of Islam around the world. From Nigeria to Indonesia.

  2. Norbert M Salamon says:

    I thank you for an impressive post.
    No the US does not need Saudi Arabia, unfortunately the US does not seem to have either the means or the will to put stop to the financing of terror – seeing that the US encouraged this to fight the Soviets in Afghanistan.
    This is known as the blowback for half-baked ideas.
    There is a technical error, most often lauded by people too full of their ignorance and by the political class, to wit, the USA will be the world’s leader in hydrocarbon production. This is impossible on technical grounds, on one hand, and on financial grounds on the other hand.
    The Bakken and Eagle Ford plays [the only ones actually producing oil any decent amount] resemble the Red Queen syndrome – keep running faster and faster to stay on the same spot. Even Forbes magazine denied the politicians’ thesis.
    It is possible that the US will become somewhat more independent [cut back use -partially due to economic hardship by a large % of population], it is possible that there will be marginal improvement in total produced form fracking [while the traditional fields deplete at 4-6 per annum] but these issues will not help the US to surpass either Saudi Arabia or Russian Federation.
    The idea that more can be produced is true, if the price is high enough – unfortunately the National Economy can not survive anything much above 110-120 price.

  3. SA has deeply penetrated elites in Washington and Wall Street! You can guess how?

  4. elkern says:

    I think we still need their oil, though there are other suppliers now. The Fracking Boom is bringing up lots of gas, not oil; gas is good for heating, cooking, and generating electricity, but it doesn’t run (most of) our
    cars & trucks.
    Please don’t misconstrue this as support for a cozy relationship with the KSA – may they rot in whatever Hell they think the rest of us are headed for.

  5. jerseycityjoan says:

    About the oil —
    I’d rather run through theirs (and that of other countries) and keep ours in reserve. Plus fracking may turn out to be too hard on the environment and adjacent communities to continue. Then what? I am very unthrilled about the prospect of substituting Russian natural gas for ours on a massive scale, too.
    We still do not have anything near a universal cheap and safe substitute for oil, and I am not sure when we will or even if we will. [Your recent fusion posts were quite the eye opener for me. I did not realize that one of the “technological challenges” was the ability to reach the temperature of a sun here on Earth.]
    In any case, it is interesting that our “allies” Saudi Arabia and Israel have no actual commitments to us. I did not know there were no “documents of alliance” between us and Saudi Arabia.

  6. Augustin L says:

    Why ? The saudis own 8 % of the US economy and they can collapse the petro-dollar system should they pursue a different economic architecture to settle trade with eurasian partners. The pact of Quincy was clear… The western elites strategy is now similar to the one pursued in the latter days of the Byzantine empire: manage the decline and rule over the rubble. The only thing holding the anglo-american empire is the 16 aircraft carrier group…

  7. walter says:

    I concur with Green Zone Cafe, this piece really clarified the role and motivations of Saudi Arabia and our relationship with them for me. Thank u so much for this. Every day I am excited to read your blog and the comments section because I get the unvarnished, behind-the-propaganda reality of whats going on in the world. I do not always agree but that is to be expected.
    Regarding GZC contention that SA finances extreme Islam around the world, certainly our government knows this. What would have to occur for USA to take action against Saudi Arabia? What scenario would constitute an “enough is enough” moment for the USA to change our relationship with SA?
    What do u think SAs role/motivation in 911 was, if any?
    Why do u think Saudi leadership is so interested in Sunni hegemony? They are comfortable, rich, and presumably safe the way things are now. Why push the envelope and take risks? Iran does not seem to be expansionist; I think they just want to be safe from Sunni, Israeli, Western aggression.

  8. The Virginian says:

    The Saudis fear that any return of Iran from pariah status plus a cohesive Iraq with increased exports will undermine its post-1979 role as the swing producer. This is overlaid onto a deep fear of Shi’ism and a genuine belief that the West is morally and ethically corrupt. The bombings in 2003 in the Kingdom saw some wake-up to the reality of blowback from Saudi support of Salafist militants. But funding continued, a mix of wealth Saudi royals plus government funds channeled through various organizations. The total lack of correlation between Saudi interests and its support for Sunni extremism will continue to threaten Riyadh, and Western interests. Obama should wield a different approach – tell Abdullah to cease and desist, or be left to the winds of change. That said, Saudi crude will continue to be key to markets for some time to come, even with the North American shale revolution. But not enough to give the Saudis space to pursue things that are against US interests. Saudi (and Emirati) policy in Egypt might require a bit more nuance, as their views on the Ikhwan are more aligned with what the international community (should) be pursuing. As James Baker said, stability should not be a bad word. I’m more worried about Saudi links into Syria, Pakistan, Lebanon, Africa, etc.

  9. guslinton says:

    What I find most disturbing about the Saudis is that they are using their powerful financial weapon to promote radical Islam.
    1) In January I was in Oman, where I met a Muslim from Thailand who is working to build an Omani financed mosque there. He said that the Wahhabis, who have 3 tv channels in Thailand, are giving his project more opposition than the Buddhists.
    2) Volunteering at my county prison I’ve learned that Wahhabism seems to dominate the entire US prison system. http://www.islamicpluralism.org/documents/black-america-prisons-radical-islam.pdf
    Although the Wahhabism of the Muslim inmates I have met seems harmless and non-political, it is disturbing to see so many young offenders entering a sect of Islam that is radically un-Islamic.

  10. Amir says:

    No one is falling for this masquerade of President Hopey-Changey anymore: Listen to deafening sound of clapping. Presser in The Hague, this Tuesday.
    He is untrustworthy and about all “allies” have concluded that.

  11. turcopolier says:

    If they collapse the petrodollar system would that not devalue their monetized and other assets in the US? pl

  12. turcopolier says:

    How long do you think it will be until the automotive industry starts to convert to gas driven vehicles? pl

  13. Fred says:

    Augustin L,
    Nationalize Saudi assets. The royal family can go back to living in the Nejd. Surely we’ve got enough laws on the books about asset seizures of those sponsoring terrorist organizations to make that legal.

  14. confusedponderer says:

    I have always wondered how McCain, just as if he never lost the US elections, toured the world to visit the scum of the earth – various Jihadis, rank criminals, Ukrainian neo-nazis but to name a few – and pronounce to them US support, just as if he was conducting his own foreign policy.
    The salient point here is that it is as it seemed.
    McCain is chairman of IRI, the International republican Institute, funded courtesy of the US taxpayer through NED, and he IS conducting his own foreign policy, which runs counter to that of the elected president, Obama.
    The US has outsourced some part of their foreign policy to private bodies and nominal NGOs like NED and IRI.
    The result is essentially a loss of control over what that foreign policy is by the executive branch proper. These organisations answer to their board, and the board is appointed. As far as foreign policy goes, theirs is unaccountable to the electorate.
    In essence, an expedient way to circumvent troublesome legal limitations that forbade the CIA to wage regime change is by now a threat to the ability of the executive branch to control and execute US foreign policy.
    A perilous circumstance, give the apparent inclination of the likes of McCain and Nuland to toy with the prospect of thermonuclear war.
    Since it isn’t much better with old Prometheans like Brezinski, it isn’t purely a D vs. R issue.

  15. Norbert M Salamon says:

    It will take along time. Old cars will need approx. $3000.00 + for conversion, while new cars need stellite Valve seats and more expensive valves [too much heat no lubrication from gas].
    The other point is that Gas in storage is at 10 year minimum. Another cold winter, and problems of summer gas injection, and the will be rationing of gas for electrical generation.

  16. Babak Makkinejad says:

    I assume you are discussing compressed natural gas – CNG?
    It does not have the chemical energy density of gasoline and thus the CNG-powered vehicles will not have the range of gasoline-powered vehicles.
    They also corrode fuel lines…

  17. turcopolier says:

    Do you not think that if the price differential is there that new technology will emerge? pl

  18. Babak Makkinejad says:

    They are interested not in Sunni hegemony but rather a subset of Sunni sect – the Wahabis.
    The Wahabis are the “Protestants” of Islam, with scant respect for either Tradition, or Learning, or Reason.

  19. turcopolier says:

    The Saudis assume that once in control they can force other Sunnis into accepting the Wahhabi way. that is what they have repeatedly attempted. pl

  20. turcopolier says:

    This would seem to disagree with the idea that fracking only produces gas. http://en.wikipedia.org/wiki/Tight_oil pl

  21. Babak Makkinejad says:

    I do not know – you might be able to dry the gas but not much can be done about its lower stored chemical energy.
    On the other hand, the conversion of natural gas to Liquefied Natural Gas – something that is actually in liquid form – might be a better alternative.
    But that process of going from natural gas to LNG is also rather expensive; Qatar is doing it but I am not sure if they are breaking even.
    US will need to tap into the gas fields of Mobile Bay, I should imagine, to reduce the costs.
    Pakistan is the country that has gone the furthest in using CNG in its vehicles and I think Iran – due to sanctions – is now almost on the same par with Pakistan in that regard.
    I am sure if issues with CNG are resolved in US, Iran would be interested in licensing that technology.

  22. Babak Makkinejad says:

    They are in control in Saudi Arabia and have not been able to make a dent in the religious (madhab) composition of the peninsula. There is no social trust in Saudi Arabia among the adherents of various madhabs as far as I know.

  23. turcopolier says:

    No Sunni mathab other than the Hanbali is tolerated in SA. the Hanbali mathab lies at the center of Wahhabism. There are 12er Shia in the Eastern Province but as you know they are not a “mathab.” Sufis are also not tolerated in the kingdom. pl

  24. jon says:

    Col. Lang, I know people in Germany who have converted their car to run on CNG. It cost about $1,000 euros, but their fuel costs have declined by about a third. There is pretty good infrastructure for service and fueling, but it’s probably only available at about one tenth of gas stations. It works fine, but fill ups take much longer, and they have much shorter range. People have been doing LPG conversions in the US for decades, though mostly trucks.
    BMW has invested heavily for more than a decade in hydrogen power, but they have encountered tremendous difficulties, which limits practical application.

  25. turcopolier says:

    Thanks, but I think that BMW has invested in hydrogen fuel cells, quite different. pl

  26. turcopolier says:

    The ARAMCO has been producing and exporting LNG for a long time. pl

  27. Norbert M Salamon says:

    Here in Canada some oil exploration companies converted their pick-ups to CNG – as they had Methane. Unfortunately the maintenance was too high, the number of mechanics who knew enough about CNG engines was abysmally too small; so they sold their CNG and dual fuel [Gasoline/CNG] trucks and went with diesel.

  28. Babak Makkinejad says:

    What I meant was that they could not convert their own population into Wahabi Islam during the past 80 years and I do not believe that they can do any better in the wider Muslim world.
    The Wahabis, and others of their ilk, do serve a purpose in that their intolerant literalism causes many Muslims to reconsider what Islam is.
    They are a negative example.

  29. jon says:

    I am eagerly awaiting the fruits of the Saudi’s efforts to resolve the Palestinian dilemma with their BFFs, the Israelis. (sarcasm)
    I think that Saudi support of Wahabi evangelism has been much more counterproductive, dangerous and destabilizing than all of the regime change efforts of the US in the Middle East (outside of Iraq and Afghanistan). The salafis that have been created and supported are generally hostile to the cultures they work in. In Iraq, that led to the Anbar Sunni’s rising up against the, leading to the success of the US ‘Surge’.
    Salafi extremism is also a large factor in Assad’s remaining in power. Bandar’s threat to Putin was particularly ill-judged. But I doubt that the Saudis consider themselves to be the Tartars guarantors.
    It is crucial for the Saudi economy that the price of oil stay as high as practical. A continued embargo of Iranian oil is essential. I wonder how the State Department parses the world price of oil, recycling pretrodollars in the US in investment vehicles, and sales of military hardware?

  30. Charles I says:

    Canadian energy and pipeline co.s have found a new eagerness to have LNG transhipment facilities on both coasts while the European Russian sourcing fears are at the top of the latest prospectus. The switch from oil to gas will be resisted until it does in a car on one tank what gas does now. So it’ll free up a lot of oil to refine for driving.
    So new gas will delay any pressure for an immediate switch from the massive gasoline infrastructure we have now, unless it could be rolled out all at once, with an assured refill once I get the he cottage, or Grand Canyon or wherever I set out to.
    Problem solved for another few decades while we beggar those pesky russkies, though I expect my tin-foil coifed descendants will be spouting about peak gas in due course.

  31. jon says:

    Col., BMW has also done extensive development on piston engines converted to run on hydrogen. Low energy density, remarkably high storage pressures, and the tendency of hydrogen to persistently leak through the walls of any storage vessel, cripple Hydrogen’s viability regardless of powerplant. The energy required to isolate hydrogen, and then to compress it sufficiently, are additional stumbling blocks.

  32. Fred says:

    excellent points. The sales rates of CNG vehicles in a tiny fraction of gasoline vehicles also. Then there’s the problem of fueling stations – which is also a problem with all electrical platforms.

  33. turcopolier says:

    “that they could not convert their own population into Wahabi Islam during the past 80 years” If you mean that the 100% of Saudi Sunnis who are subject to the Hanbali law and Wahhabi ulema are not fully “on board” with that, then I can say nothing. This not the kind of conversation that a foreign diplomat (me) can have with the locals. pl

  34. Bandolero says:

    There are hard-to-solve-problems with CNG, indeed. But maybe some US technicians could go to a technologically advanced country to learn how these problems were solved? Look here:
    I think in reality there is a different problem with CNG in the US. Building needed CNG infrastructure is a huge investment, and it pays off only if there is enough cheap gas for years to come, and some experts dispute that fracking will still produce lot’s of gas in a couple of years. Fracked gas fields might dry quite quick.

  35. Extract from wiki:
    “The Bricker Amendment is the collective name of a number of proposed amendments to the United States Constitution considered by the United States Senate in the 1950s. Each of these amendments would have placed restrictions on the scope and ratification of treaties and executive agreements entered into by the United States and are named for their sponsor, Senator John W. Bricker of Ohio, a conservative Republican.
    Non-interventionism, the view that the United States should not become embroiled in foreign conflicts and world politics, has always been an element in American politics but was especially strong in the years following World War I. American entry into World War II temporarily suppressed non-interventionist sentiments, but they returned in the post-war years in response to America’s new international role, particularly as a reaction to the new United Nations and its affiliated international organizations. Some feared the loss of American sovereignty to these transnational agencies, because of the Soviet Union’s role in the spread of international Communism and the Cold War.
    Frank E. Holman, president of the American Bar Association (ABA), called attention to state and Federal court decisions, notably Missouri v. Holland, which he claimed could give international treaties and agreements precedence over the United States Constitution and could be used by foreigners to threaten American liberties. Senator Bricker was influenced by the ABA’s work and first introduced a constitutional amendment in 1951. With substantial popular support and the election of a Republican President and Congress in the elections of 1952, Bricker’s plan seemed destined to be sent to the individual states for ratification.
    The best-known version of the Bricker Amendment, considered by the Senate in 1953–54, declared that no treaty could be made by the United States that conflicted with the Constitution, was self-executing without the passage of separate enabling legislation through Congress, or which granted Congress legislative powers beyond those specified in the Constitution. It also limited the president’s power to enter into executive agreements with foreign powers.
    Bricker’s proposal attracted broad bipartisan support and was a focal point of intra-party conflict between the administration of president Dwight D. Eisenhower and the Old Right faction of conservative Republican senators. Despite the initial support, the Bricker Amendment was blocked through the intervention of President Eisenhower and failed in the Senate by a single vote in 1954. Three years later the Supreme Court of the United States explicitly ruled in Reid v. Covert that the Bill of Rights cannot be abrogated by agreements with foreign powers. Nevertheless, Senator Bricker’s ideas still have supporters, and new versions of his amendment have been reintroduced in Congress periodically.”

  36. turcopolier says:

    “if there is enough cheap gas for years to come, and some experts dispute that fracking will still produce lot’s of gas in a couple of years.”
    Dream on!. pl

  37. Babak Makkinejad says:

    You probably have been more polite than the locals deserved.

  38. Fred says:

    The new car market in the US is projected to be 16 million vehicles. CNG engines will have just about the same market share as Tesla’s. None of the automakers are going to invest significantly in cng while their competitors don’t. In addition to that the public is not exactly lining up around the block at local dealers demanding them.

  39. turcopolier says:

    We nevertheless offered the Saudis alliance in the 80’s. I was party to the negotiations. they declined quite firmly. pl

  40. Norbert M Salamon says:

    The Iranian oil is not an issue for SA.
    Without the fracking 1Millin+ barrels in USA the world total oil production would be at the 2005 levels. The annual world wide depletion is around 3-4 million barrels per day. It is very close to PEAK Production of oil, notwithstanding such dirty products as the Canadian Tar Sands [and some from Venezuela, which has the world’s greatest recoverable resource of oil in the Orinoco area as per US geographical Survey].
    If the US with the others versus Iran do not resolve the issues, and let her production increase, the price of oil is going way up, until the next depression, when the price will drop, and so will production – as the marginal cost of new oil is above $80 per barrel and rising!.

  41. Norbert M Salamon says:

    It might work to a small extent to send Canadian Gas to Europe, however the CB gas is going wet to Japan, Korea et al where the prices are high and unloading facilities already.
    Conversely Russia is increasing sales to China et al .A few days ago Zerohedge had a large presentation by Gazprom indicating most of its business in pictures etc. future developments etc.
    It is also a important part of diversification so they are not dependent so much on EU market.

  42. optimax says:

    The US liquifies natural gas. The railroads ship LNG in tank cars all the time and some of it is shipped overseas.

  43. Augustin L says:

    @ Col Lang,
    The current dollar world reserve currency system is one where the entropy accelerates exponentially as it builds. The system will collapse wheter the Saudis reallocate most of their assets or not. For 60+ years the saudis were somewhat satisfied with the Quincy arrangement. Now some princes within this feudal monarchy realize it is a losing proposition to keep the majority of their assets in worthless virtual financial instruments. Especially when the ”free trade” representatives of the republic have clearly signified to the petro-monarchs and other dollar holders that they will not be permitted to buy strategic hard assets. To go to FRED’s point the sybaritic saudis realize they are subjecting themselves to future outright seizure via the SWIFT system should things go sour between partners like they have with(Russia, Syria, Lybia, Iran,etc) Not to be outdone reactionary representatives of the republic blinded by their sheer idiocy and antiquated austrian ideologies continue to ask for a reduction of what they call deficits. Unknown to both these factions they are accelerating the collapse of an already unstable, unsustainable system and don’t seem to understand what is the primary function of a world reserve currency: to provide liquidity and ”facilitate” the economic activity of the world. Early on, strategists of the empire like Herman Kahn fully understood what this ”exhorbitant priviledge” meant and what were some of the paradoxes (like the ”Triffin dilemma” whereby the treasury has to produce larger and larger deficits to supply liquidity and the concomitant destruction of the industrial home base) inherent to such a financial architecture. The GCC is one among many players who see the writing on the wall. The question is now, who will be left holding the worthless bag of paper when the music stops ? Nothing is underlying the value of these virtual dollars besides 16 aircraft carriers… The repulic will be better off after the reset, the question is will the union endure the coming upheaval ?
    Quod Erat Demonstrandum, Q.E.D.

  44. Bobo says:

    LNG production/Distribution/Consumption is moving into high gear hear in the US. There are a number of small plants in the production stage that will take Natural Gas via pipelines and cool it to produce LNG. Three examples are: Coa Cola in Puerto Rico will be taking ISO tanktainers of LNG shipped from the US and use it for their electrical generation power to cut their energy costs in half. Sea Star is building a ship in California to be powered by LNG to be utilized running from the SE US to the Caibbean commencing late 2015 to comply with EPA fuel requirements. Other shipping companies have committed to building similar powered ships. UPS now is in the pilot stage of utilizing LNG to fuel their trucks.
    This is a no brainer to cut energy costs and within ten years you will see it fueling cars on the road. The only thing to stop this movement is for SA to gut the price of oil and even then that will not offset the present need for worldwide need for clean fuels.

  45. Former11B says:

    As discussed previously I work in Gas and Oil Exploration. No one even tries do drill for natural gas exclusively anymore. The Eagleford Shale is about oil or what is called condensate. That is the heavier elements that liquify at atmosphere.It is however lower in BTU energy potential. But these plays are really starting to thin out. The return on energy investment is getting worse and worse. There is another big play starting in Mississippi called the Tuscaloosa Marine Shale. Much deeper, much harder to drill. Completely unproven but that is what the operators contractors and service companies are hanging their hats on. The unspoken feeling is that the Eagleford Shale is played out and all that’s left is mopping up. Anecdotal evidence, but from the pointy end of the industry. Take it for what it is worth.

  46. Lee says:

    NS, isn’t it somewhat irrelevant that the US is a major producer of crude or products given that we are the largest consumer? Seems to me our boom of expensive tight oil is being burned up in an infrastructure built on $20/b oil and when the boom goes bust we’ll be back to square one ” surprised” that we can’t afford to buy as much as before from the worlds shrinking supply of exports. A supply that will primarily come from OPEC.

  47. Lee says:

    NS, I don’t have any sense (ok that could start a joke), that tight oil is a net positive for our economy as much as it reflects our technical assets in O&G industry to get the oil once the price was high enough and credit markets able to fund it. It seems to me like we got a higher credit limit on the national gas credit card, if that metaphor is apt, but our ability to pay off the card is no better.
    Continued production of tight oil requires higher oil prices which will reduce overall consumption through economic decline but steady oil prices and a slight bump in interest rates will bring the tight oil bust sooner. Does that make sense?

  48. Charles 1 says:

    My point is that the gas “revolution” is really only going to delay any real automobile changeover by freeing up more oil to burn.

  49. Charles 1 says:

    Whatever was in it for the U.S.? Iran?

  50. Babak Makkinejad says:

    Two questions:
    MRW claims that, empirically, there is unlimited appetite for US Government bonds among foreigners; which means that US Government funding, and indeed the dollar, can be indefinitely sustained.
    How would you respond to MRW’s claim?
    Secondly, Saudis may be unhappy with holding US dollar holdings but what other alternative do they have?
    [They cannot invest their money on the Arabian peninsula – the capacity is not there – and they are not going to invest that money in places that the have a fear of confiscation or loss – India, Pakistan, Africa, and elsewhere.]

  51. Babak Makkinejad says:

    I think you still have to deal with the fact that LNG delivers only 60% of energy that equivalent volume of diesel does. And I think LNG has to be kept cool – not feasible as a substitute fuel for ground transportation.

  52. Norbert M Salamon says:

    you, Sir, hit the nail on the head!

  53. Bobo says:

    The need for a larger tank is a drawback. Do not understand the technology but it seems if the tank is turned over (re-filled) frequently (less than 21 days) cooling is not needed.

  54. Norbert M Salamon says:

    Neither can you park an LNG?CNG powered vehicle in a garage or underground parkade, the fire/explosion hazard is too great..
    I have observed the remains of such an event in Whitehorse, YT. Matchsticks is a good description.

  55. Bandolero says:

    I don’t claim that I know the real amount of recoverable shale gas. But I understand that it is a highly politicized issue of science. For whatever a scientific conclusion is worth there are huge economic and geopolitical consequences, from investment decisions over Gazprom gas prices up to mideast geo politics and so on, and I understand, that this is the reason for a heavily politicized science in this field.
    To see one of the better and easy to understand arguments made for the point that shale gas seems to be a “buuble boom”, see for example this article:
    I don’t wonder, the point is made in Slate, a paper quite Israel-friendly, with many people on board who want the US to stay in the mideast with a larger footprint for quite different reasons than energy security. I find it nontheless quite difficult to evaluate where the truth is.
    However, I find it logical to assume, that the US automotive and energy industry didn’t yet make huge investments in the CNG fuel station infrastructure neccessary for driving cars with cheap CNG, may be connected to uncertainty about how much shale gas there will be in years to come.

  56. r whitman says:

    One fact left out of the discussion of engines running on CNG or LNG is that gasoline driven engines are continuously improving their MPG/HP performance. This is continuing process and is not likely to stop soon.
    Recent papers published in chemical journals hold out hope that the current platinum based catalytic converters could be replaced with a new system that would allow for “lean burn” technology to be used in higher horsepower auto engines which would be a breakthrough on the MPG front.
    The gasoline people are not going to fade into oblivion easily.

  57. different clue says:

    I have read the Saudis are investing a lot of money in vast broadacre land-grabs in Africa and maybe elsewhere, to have a captive foodsource.

  58. Jack says:

    If there is unlimited appetite for treasury bonds then I have two questions. 1. Why then did the meeting Fed have to purchase trillions of treasury bonds with made out of thin air money? 2. Why would treasury bond rates ever rise?
    Treasury bonds may be relatively better than many other government bonds but why would any sane investor lend to a profligate US government at these low yields? Return free risk!

  59. Babak Makkinejad says:

    I think your questions are best addressed to MRW.
    The last question I think I can answer reliably: there is no other Sovereign bond that they trust as much as that of US.
    The aim might be to keep the principal intact rather than collecting interest.
    Swiss Franc may not be available in sufficient volume.
    And British bonds are for some reason are not trusted.

  60. Lee says:

    Gasoline people won’t fade into oblivion but they and their children will find it cheaper to drive less or not at all than to spend a lot of money in new vehicle technology to save a little money in fuel.
    The time for material changes in vehicle design to be effective in the post 2003 oil price environment was 20yrs ago. What we’re doing now is like saving for retirement starting at 55yrs old. In the 15 yrs it’ll take to turn over half the 150million vehicles on the road will be 15yrs that China will be gobbling up world oil exports we can’t afford, 15yrs of depletion in central and South American exports, etc.

  61. Jack says:

    There is no doubt that the treasury bond market is unmatched in size and depth. However it is not risk free. There is interest rate risk and growing political risk. The US acts capriciously seizing assets for political reasons as we saw recently with Russia. Note that the majority of marketable treasury bonds are held by domestic insurance and pension funds.
    Investors typically are like generals fighting the last war. Interest rates have declined for decades, central banks have pursued easy money and asset markets have been bailed out repeatedly. Most investors and prognosticators look at the current situation and rationalize theories looking in the rear view mirror.
    We will find out soon enough as the interest rate cycle turns the real appetite for treasury bonds.
    We will find out how big

  62. r whitman says:

    Oil is in surplus right now and is expected to be that way for some time. You can buy Dec 2022 futures of WTI for $77.83/bbl. The only thing that will drive up the price is geopolitical action, not worldwide scarcity.

  63. Mark Logan says:

    More detail on the UPS project. After 10 years of experimentation upon their rigs running between Nevada and CA, they have pulled the trigger for 700 long-haul 80% LNG/20% diesel trucks and started in on setting up stations all the way to Memphis.
    The economic pressure on long-haulers to convert just as soon as the infrastructure is available will be high.

  64. Imagine says:

    Bioengineering is currently building bacteria that excrete rocket fuel, at something like $20/gallon in mid-sized batches. When we need gasoline badly enough to make it happen, the new technology will come. It’s mostly a matter of latent demand–how serious is the country/entrepreneurs to make it happen. It will come when it’s needed.

  65. Lee says:

    I’m not familiar with derivatives as predictors of price. If oil actually goes that low it’s after some heinous demand destruction because high prices are needed to get the next level of resources as the cheap ones are in decline. Also Saudi Arabia needs $100 oil to fund their programs. Replacing one barrel of $20/b oil with one barrel of $100 oil is a clue something is going on regardless if you describe supply as scarce or in surplus. The demand side in the world continued as production slowed down in 2005. Misc. geopolitical factors can drive shorterm volatility, more so when rate of supply growth slows down, but the reason oil is $100 and not $40 isn’t geopolitical, it’s supply and demand. Looking at Chinas auto sales I don’t see demand decreasing.

  66. Charles 1 says:

    Theoretically, rates have to rise like any pyramid scheme, or currency be devalued, or both, but so long as the reserve currency status maintains, all that really matters is liquidity, and it doesn’t matter who buys them, as long as they are booked every time they are printed, in whatever increasing amounts, at whatever rates.
    Low rates are obviously going to be maintained so long a necessary to sustain the rentier equity dividend economy at acceptable rates of return, until the devaluation, inflation and reduction in discretionary spending makes that strategy no longer profitable.
    Recent reporting of extended “low growth” – some are predicting 2 decades of this – indicates the low rate high market support strategy is foreseen to be sustainable for some time until the business case for turning off middle/borrowing/consuming classes’ liquidity is confirmed.
    By that time, the socializing deleveraging of global capital debt onto impoverished individuals, er, taxpayers, wholly dependent on central banks(effectively privatized by the massive bond issues to their creditors) for liquidity will be basically completed, and the acute oligarchical/political consolidation on top of the powerless atomized masses can commence.

  67. Charles I! In agree with your description of how the economic tide in the USA will play! Recently revealed the majority of US banks t no consumer main profit center is overdraft fees. Consumers substituting high cost of overdrafts for fact that few consumer loans occurring.
    Regulatory capture almost complete!

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