This is the common problem for cartels: everyone has inventive to cheat on the deals made. By selling a little more than your share you get more money, while because everyone else is following along the prices are higher. (see also prisoners dilemma)
So if the other side overpumped by x1 amount then you pump an extra x1 the next turn / year (maybe multiplied some reference production factor as they don't all have the same absolute limits).
As long as fossil fuels remain one of the cheapest easiest to scale ways to make power, there’s a similar incentive to cheat. If everyone else cuts emissions and you don’t, your margins are higher and you can undercut them. Global reductions require an all-cooperate scenario.
Developing nations have the strongest incentive to cheat since they need those margins to catch up.
Which is why I think little progress will be made until other sources are actually cheaper. Until then it’s beyond us politically. We can’t get all nations across the world to simultaneously cooperate at that scale.
Furthermore, it also reduces the drain on the (often very fragile, for thirld world countries) foreign reserves, especially relevant when the oil prices fluctuate wildly.
If your solar panels are old and you don't have money to replace them, you get slightly less electricity. If you are out of gasoline/diesel and you have no money to buy it, you have a big, big, problem.
https://chatgpt.com/share/69f0d6a3-3f2c-83e8-a944-094d84e155...
This is an initial but big crack in shaking up global oil markets in a way that meaningfully shifts global power dynamics.
We’re rolling back CAFE standards too.
We aren't mindless zombies buying whatever we see on TV. I'm old enough to remember when Japanese small cars practically took over the market in the 70s and 80s due to gas price shocks. It can happen again.
Larger vehicles are more comfortable, safe, and practical (for anyone who doesn't need to worry about parking issues). It doesn't take advertising to convince consumers about that, it's just reality.
Ditto with the Sentra and the Versa.
This is my point exactly.
Tall grilles are a purely aesthetic choice. We could create safety standards for pedestrian impacts and end this inane trend. And still drive trucks!
The profit margins on larger trucks are higher precisely because that's what consumers want. No one is forcing them to buy those vehicles.
The last refinery to be built in the US opened in the 1970s. Since then, refineries have closed. None of the owners of refineries will sell them because of SuperFund legislation. It is the same reason that when a gas station is sold, the fuel tanks are dug up and replaced. This way, there's no way to claim that the previous owner left hazardous material to be cleaned up. SuperFund laws say that every previous owner is liable for the cost of cleanup. It doesn't matter how long ago the property was sold.
In short, the US cannot functionally be independent on fossil fuels even if we extracted every drop of oil within our borders--because we literally cannot use all of it, and most of it would be wasted just sitting around.
Europe, or China, or India could not though.
India has geography for solar, and the human/industrial capability for nuclear.
Southern Europe can go solar as well.
Northern Europe has it tougher (except Norway, with its abundant hydro). Nuclear could work. Or long range DC cables from South Europe or North Africa (if ever Europe helps them to put their act together - not easy or fast, but definitely in their best interest).
If foreign oil supply were cut from China or India, they'd be in a much bigger trouble.
Of course who knows how to end of oil will happen. Best case is a switch to renewables (or fission...) in which case there will be more than enough expensive oil for a few rich people to drive expensive gas cars if they want to. There are lots of other options as well, only time will tell.
(and a nod here to the replies who suggest this was never actually said)
However just because they are trying doesn't mean they will succeed. Their attempts at diversification still seem very reliant on oil money, and its far from clear that they will eventually be able to stand on their own.
There are current Land Rovers with market positioning suggesting they're "better" than Mercedes, and there are historic Land Rovers which were arguably not much better than camels.
Camels are cool still.
Economic: it weakens OPEC’s pricing power in a way you might not see right away if Hormuz is closed, but it could really change the supply picture once things reopen
That is just UAE pressure to make sure they get their dollar swap deal: https://www.reuters.com/world/middle-east/trump-says-currenc...
The Saudis did it to Biden in 2023, the UAE sees the opportunity to do it to Trump now.
OPEC cartel membership didnt gain it access to Hormuz, and the US petrodollar promise to protect UAE states from aggression in exchange for trade in USD could not be upheld.
Well the war is still ongoing, and Iran's regime is already feeling the pain of the blockade [1]. Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either. The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something. Who exactly does the UAE need protection from? Iran? China's ally?
I swear I read this same story over and over again. There's always just an accusation "thing happened, here's how the US is now in a state of being screwed" and there's just never any follow-up or perhaps imagination that the US could just do something too. Hypersonic missiles? US Navy is done for, no possible counter. Iran has drones? Boom. US is done for no way they can spend Patriot missile money on $30,000 Iranian drones. Nope, nothing anyone can do at all. Iran "closes the Straight", well the US can't do anything. Now they are "embarrassed" and "slammed".
> OPEC cartel membership didnt gain it access to Hormuz
What does this mean?
[1] https://www.wsj.com/world/middle-east/iran-is-flooded-with-s...
It is an admission that US protection was always a paper tiger. Perhaps in the 1960s it meant something, but Iran has shattered the illusion that Washington has any credible defense of the country.
> The US can just say, well fine you can sell your oil in Yuan. But we'll just blockade the Straight and seize oil priced in Yuan or something.
The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
> Who exactly does the UAE need protection from? Iran? China's ally?
the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
> there's just never any follow-up or perhaps imagination that the US could just do something too.
This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace. All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change. Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks. We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
sigh No, it's not. There are 3 aircraft carriers parked in the region, plus US air bases. Iran launched over 2500 missiles at the UAE alone. The US destroyed much of Iran's military, the only thing they have left is the ability to launch missiles and drones at ships or do terrorist style attacks.
But if you want to suggest that the US is a paper tiger here, that just makes everyone a paper tiger. Nobody can stop Iran. Ok.
> The UAE primarily sells its oil to China, which is its largest export partner, followed by countries like India and Japan. the United States cannot do this without not only obliterating energy markets for an ally, but strengthening alliances between china and india. It is likely that should the US attempt such a move, China would respond with retaliatory technology tariffs and a reduction of agricultural trade.
Then we would react with export controls, additional weapons shipments to allies in the region, work with Japan and South Korea to start weapons programs, blockade Chinese trade, there's a million things we can do too.
> the UAE did not "need protection" from any regional military threat until the United States used regional peace talks as cover to launch a surprise attack against Iran. the UAE would still likely be an OPEC member state had the US not unilaterally chosen to obliterate global energy markets for no consistent or clearly defined reason.
And yet, UAE wants the US in the region and in UAE soil. Iran launched over 2500 missiles at the UAE, including civilian targets. Not sure your comment here reflects reality.
> This conflict was well defined as geopolitical suicide for nearly forty years; its what kept the peace.
Things change. US is the #1 energy producing country in the world in terms of oil, gas, &c. We're less dependent on the Middle East, plus we've basically secured the Venezuelan oil supply. Seems to me that what was once geopolitical suicide is no longer the case. We're here today, and life in the US just goes on as normal.
> All simulations and tabletop exercises predicted such an incursion would send global energy markets into panic, trade markets into recession, and produce no meaningful advancement of either regional security or regime change.
TBD
> Iran is backed by powerful allies and has shown numerous times it can meet each US escalation with yet more regional attacks.
Yes, Iran, who is supplying Russia with drones and such for its war against Ukraine is an ally, as is China.
> We have tried escalation and failed, burned through a decade of advanced missiles fighting cheap drones, and have no defined objective politically or militarily for this conflict.
We have not burned through a decade of advanced missiles fighting cheap drones. We can build our own cheap drones and are working on scaling production, and just because you don't understand the political or military objective doesn't mean that there isn't one, however poorly or well-thought it may be.
The US has very much escalated and sits now at the top of the escalation ladder. Iran has been trying to get the US to the negotiating table due to the blockade. Iran can launch its missiles as it likes to at civilian targets in the Gulf. We + allies will just get better at shooting them down. Who cares? If Iran wants to try to escalate we'll just escalate further, blow up more stuff, keep the oil from flowing if we decide. It doesn't really hurt us much.
Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it. Even if the Straight opened today, harm already happened and will continue to happen for months. And I dont think it will open today.
The war did not had to start at all and is causing considerable harm already. Iran feeling pain does not mean surrounding states were protected - instead they were put into harms way.
> Pricing oil in Yuan because, I guess, the US is somehow not protecting the UAE doesn't make sense because China won't be there to protect them either.
At this point, China is more predictable and crucially, more likely to keep their word. Not exactly entirely predictable and not exactly truth teller, but the difference here is huge.
They were always in harm's way. The war could have waited, and Iran could have doubled or tripled its missile stockpile and then they really would have been in harm's way. You're falling in to the same trap I mentioned "country does X, end of analysis".
> Well, Iran closed the Straight and the world is facing biggest oil crises since 90ties. US was in fact incapable to prevent it.
Any country is incapable of preventing it then. Iran could always just mine the straight and threaten to launch missiles and go hide in the mountains. If Iran wasn't doing all of these awful things in the region, none of this would be happening.
[1] Not a 2nd Amendment criticism, I’m a strong supporter. More so the folks who load up on ammo and “cool” gear and all that stuff.
On the backside I’m sure there will be lots of fun back door deals around all those interceptors and future anti drone technologies. Today though the US has been the impetus of a lot of the current issues.
defecting from the cartel, a tale as old as time
I have read this headline dozens of times in the previous 30 years.
Kuwait was “saved” by the US. The Iraq invasion was approved by the GCC, partly as payback for Kuwait, and anyways Iraq is not part of the GCC. The Qatar blockade was self-inflicted (and extremely stupid).
In 2019 Qatar left OPEC, but nobody cared because oil is less than 10% of their national fossil fuel output, which was about 2% of OPEC's oil output.
2) Thus far, the UAE has been prevented from maximizing its revenues due to OPEC/OPEC+ production caps which is no longer acceptable due to global needs. It can now chart its own independent course by ramping up production and earn hard currency which can be its leverage against an uncertain future.
3) Discontent with OPEC/OPEC+ and its members since the current conflict has made it clear that nobody will come to its aid when the chips are down (other than the US). It is "every man for himself" now and thus UAE has decided to chart its own independent path.
This is very welcome news and i hope other OPEC/OPEC+ members will also follow suit in their own national interests.
Where does the article say that? It says this is expected to lower the price of oil.
It also says that, because the price of oil is currently unstable, the impact will be difficult to see:
> Mazrouei said the move, in which the UAE will also leave the OPEC+ grouping, would not have a huge impact on the market because of the situation in the strait.
But it doesn't say anywhere that there's uncertainty over in which direction this moves the price of oil. The uncertainty is over what the price of oil will be.
I can't see how it is actually a win for Trump. OPEC has mostly been a big partner with the US. They are the ones that have mandated using the dollar as the baseline currency for buying and selling OPEC oil.
The UAE's exit almost certainly signals they are planning on selling oil in other currencies (probably the Chinese yuan). It's also a sign of the UAE wanting out of the partnership it's enjoyed with the US and it's allies.
Has anyone ever quantified the benefit the U.S. supposedly gets from dollar denominated oil? How does that compare to the cost to the U.S. of paying cartel pricing for oil? Given that the U.S. is a huge oil consumer, surely the cost to it of cartel pricing in oil is huge.
It's kind of unfair.
If they can recoup some of those losses selling outside the system in Chinese currency, (or even in US currency), I have to imagine that would provide some ameliorative relief. It won't make them whole. They've got a lot of problems right now. But I mean, at least it starts them filling back in the giant hole that everyone else dug for them.
I mean, I don’t even know if I mean this sarcastically anymore, but are we sure that Trump and the US’ interests are aligned? I think something can be a win for Trump and a loss for the USA.
Whether he finds the overall effects positive or negative is a different question.