You have to appreciate history for it tells no lies and whether we like it or not, it tends to repeat itself. Last month I recalled how the Saudis ramped up production 30 years ago with the backing of the Reagan administration in order to wreck the Soviet economy though it also did long-term damage to the U.S. oil industry. With crude prices in the $55 range (as of Dec. 18), motorists are delighted but nerves are on edge in Texas and other regions where the economies depend on oil and gas production. Now the Saudis are at it again. They are loath to cut production, preferring to play a game of chicken with the U.S. producers who have flooded the market with shale-driven crude. The Saudis have patience born from past experiences and knowing they can survive on $40-50 oil while most U.S. producers cannot, especially those involved in unconventional and costlier sources like shale.
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