The Putin Stimulus: $30 Oil Will Be Great for the Global Economy

The world should be mailing thank-you letters to Moscow right about now

$30 dollar oil will be great for the global economy (and in turn, a good global economy is good for oil). At a time when the global economy is visibly losing steam, when we’re overdue for another business cycle recession, and when nobody seems to have an answer, Moscow delivered what nobody else could — a massive economic boost for the whole world.

Sure there will be losers, chief among them US shale and the Saudis who need far higher prices to make their budgets work.

But then as a whole, the US shale has always been a loss-making enterprise for America. The scaling-down of shale is not bearish for the US at all. It’s bullish. If Putin can make Americans stop throwing more good money down the shale pit that’s not a bad thing, that’s a giant favor to the US and the health of its economy right there.

To say nothing of the effect of cheap energy itself. Personally I don’t think even $30 oil will be enough to avert a crash but if anything could, it would be that.

Similar story with the Saudis, if they have less money to throw around backing Salafists and bribing Washington, that’s not a bad thing. That’s a great thing for the world.

Some of Russia’s friends like Venezuela and Iran will be hurt as well, but ironically the fact the US has already cut down their imports to a fraction of their capacity means they have a lot less left to lose.

It certainly will kill the Trump administration’s fantasy of the US displacing Russia as the energy supplier to Europe.

Finally, unlike money printing, Putin’s cheap oil stimulus is not redistributive and is not inflationary. And unlike a low-interest rate stimulus, it doesn’t throw economic calculation off balance by falsifying the price of credit and conjuring up a false abundance of real-world capital.

For three years Russia went along with OPECE energy price-fixing because it represented the quickest way to replenish its FX reserves. Those reserves have now been rebuilt. In the meantime, Russia developed a number of new oil fields but couldn’t move on with exploiting them which made its effort rather pointless.

This is a classical win-win. Rather than looking to squeeze every last dime from the consumers in the short term, the oil producers will be helping them to thrive which in turn will make sure the demand keeps growing.

  1. GAguidestones says

    If 500 million is the goal, a lot more bodies need to lose their soul. GD globalist.+

  2. Daniel Bjorndahl says

    excellent writing

  3. bazcanada says

    The cost of producing a single barrel of Brent crude oil came in at around $42 for Russian onshore projects, and $44 for offshore projects. Putin is kaput.

  4. bazcanada says

    bulshit told here. Now most russian babies will sell their bodies at cheap rate per spank in house and abrod to survive under cruel regime of Putin. Putin is economically kaput. In russian says PIZDECH Shale oil is privately own and they didn’t make much money. Saudi has trillion dollar investment in the west and they will do ok with even 20$/B.This is an unexpected and irrational decision,” Lukoil board member Leonid Fedun told Moscow-based web site The Bell. “Russia will lose $100-$150 million a day as a result.”The cost of producing a single barrel of Brent crude oil came in at around $42 for Russian onshore projects, and $44 for offshore projects.

  5. Mary E says

    Again, Russia saves the day! Amazing that as much as the US badmouths Russia, it is obvious that Russia is NOT the bad guy – the US is! And yes, I agree with the article’s author that Russia is owed a big thank you…..a debt of gratitude! Win-Win is what Russia is all about in its international dealings….the US is all about I Win-You Lose….
    Many thanks to Vladimir Putin.

  6. James Willy says

    These parasites still wont give us a break at the pumps. Gas is still over 5 buck a gallon up here or as true-doe likes to screw us 1.25 per litre of this 89 octane garbage. A vehicle don’t go far on 89 octane. In the 50s and 60s it was 98 octane and went much, much further per fill up. Hope the whole system crashes down now. I am fed up with it all.

    1. Garry Compton says

      I pay around 2.20 a gallon { converted } in RU. but we don’t have to drive very far and can walk to all village markets , or just take the bus to the next big town {10 kilometers away} for 15 to 20 rubles if you want.

      1. James Willy says

        Wish I lived there away from this shiiithole country. I really hate it here.

        1. Garry Compton says

          I was doin Construction management in Ukraine for a Ukie /Russian Co. in Crimea after the 2007 Depression and found it to be an interesting place. I came back to hang out, and kinda base out of here – retired and traveling when I can afford it – going around RU and been to SE Asia too. Bucket type list but it takes time to save up , then go. It’s cheap here to live.

    2. UkraineTiger says

      Likewise, over it. Lets just get this over with and start again.

    3. Robert Mcconnell says

      Holy shit you poor bastards! We have 98 in Aotearoa, can’t beat more bang for the buck.

      1. James Willy says

        Best they offer in this shiithole country is 91 octane. About ten percent higher priced then so called *regular* 89 gas. Been that way since 80s or 90s not sure exactly when 98 went away.

  7. thomas malthaus says

    The RCB and Russia’s National Wealth Fund can absorb $25-30 spot oil.

    1. Garry Compton says

      I wonder how long this will last and if Americans, will come to the conclusion , that they should be paying about a buck a gallon instead of they have been paying. Last week 1 dollar = 65 rub – today 1 dollar = 74.8 rub. so the manipulators are at it again.

      1. thomas malthaus says

        On another site, someone in Colorado said he was paying $2 a gallon. In my state, taxes comprise about 33 percent toward a gallon of petrol.

        I think it’s accurate to say general price inflation isn’t a short-term worry. Long-term employment and a credit freeze are concerns.

        1. itchyvet says

          O.M.G. I wish you Americans would stop whinging and whinning about the cost of petrol. Come to Australia and you’ll discover what it’s like to be right royaly ripped off on that front. Plus more than half of what we pay goes straight into the Government’s pockets. They slug us EXCISE tax on the Petrol, then slug us again with a GST tax on our purchase, thus TAXING us TWICE. B.T.W. we pay by the litre of which there are 4.5 litres in a gallon. Currently I’m paying $1.80 per litre, which equates to $7.70 Aust, per gallon. What makes it worse, our dollar is today worth only 64 Cents U.S.

          1. thomas malthaus says

            What’s keeping you in Australia?

      2. JustPassingThrough says

        1 dollar = 65 rub – today 1 dollar = 74.8 rub.

        what does RU buy from the US?

        1. Garry Compton says

          Not much , but everyone in RU that has dollars – will be turning over some and maybe the RF will cashin some dollars from more rubles lol Currency converters have their own market and it’s surprisingly – busy at times.

          1. JustPassingThrough says

            i remember that some years ago, Putin told the Russian people to get out of $$’s.
            Many of them didn’t including the oligarchy.
            And then came the U.S. sanctions and confications.
            I think the lesson was learned.
            Same thing happened with the RE biz if memory serves.

            1. Garry Compton says

              Many Russians { in the 90s } and folks from other countries , remember their banks folding and losing all their savings. That’s why they still hang onto dollars or at least a few hundred , here and there. There was a big dollar trader market in Ukraine when I lived there – quite a few folks were traders { dollars, euros, greev. and rubl. } in the large market places. It has died down because of the shit economy tho.

        2. Mary E says

          No good reason. But the US has bought oil from Russia – and re-sold it on the international market! Americans have been subsidizing the oil companies for generations! Why?!?
          The oil companies are charging a fortune in the US for their gas –
          so are making their fortunes off Americans in two ways! Outrageous…

          1. JustPassingThrough says

            No free lunch.
            Someone has to pay for all the “spreading Democracy wars.”

            It’s the patriotic thing to do.

        3. UkraineTiger says

          The USD is falling against most currencies. Has been for a while. Not the AUD of course, lackies.

          1. JustPassingThrough says

            The land of OZ has a lot of problems, it seems.

    2. bazcanada says

      RT today is liar channel like was Goborit and Pokajibhaet Moscow during communist era. Lies and lies. Only idiots watch Russia today. This Putin’s personal TV station.

      1. thomas malthaus says

        What MSM channels do you watch?

  8. cechas vodobenikov says

    oil markets r volatile; whereas natural gas contracts involve several years typically—during the previous 24 hours the price of high quality crude (not low quality amerikan shale) increased 7.5% to more than $36
    of course US corporations retain their obscene profits, regardless

  9. JustPassingThrough says

    30$/b oil may mean tabula rasa time.

  10. Jesus says

    US’ debt driven economy will start collapsing as a domino when some of that debt defaults. Bank exposure to the fracking industry is hundreds of billions, possibly close to a trillion.
    Fracking allowed US to add several millions of barrels of light crude to their overall production, stabilizing the erosion of the petrodollar.
    With frackers on the brink of being out of business, and a significant reduction of their extracted oil, Russia and KSA have more control of world markets pushing US aside.

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