I note that Donald Trump has been going around to talk shows blatting his new line about oil prices. Basically, what he says is:
OPEC is ripping off the American customer.
He could fix it by sending one of “25 businessmen” to Saudi Arabia.
Basically, the way he’d fix it would be to tell Saudi Arabia that the USA would not protect them anymore unless they provided cheap oil.
Hey, hair boy. Shut up.
OPEC provides only a fraction of the oil the U.S. consumes. You’re not even going to the right country, numbnuts.
Something’s worth what it’s worth. Oil prices are up because that’s what oil costs. Why are Arabs not allowed to sell their property for a decent price?
If it’s so easy to get cheap oil by withdrawing military support, why do we need one of your unnamed businesspeople to go tell them that?
[voiceover] If you’d like a chance to be one of those businessmen, call the number at the bottom of your screen for audition dates and locations. The Donald will narrow down the group over three months with a series of challenges, and one lucky winner will receive an all-expenses-paid trip to beautiful Saudi Arabia! [/vo]
The Donald is a fool. It’s not just OPEC to blame. Building energy infurstucture is way more complicated than renovating a shitty casino in Atlantic City (which the Donald isn’t even that good at) We will see Aramco punching more holes in the desert in time, but it doesn’t happen over night.
Most likely outcome of this clever plan? Word gets out that the US is threatening a major realignment of its military and foreign policy in the worlds major oil producing region at a time when oil prices are at record highs and markets are nervous because of Rita. Result: market panics, prices jump another $10 per barrel.
Donald’s hair, bravado, young girlfriends, shameless self-promotiom and outsize ego may obscure the fact that he is actually quite good at his craft.
By most accounts, (even among his critics) he has a tremondous command of the RE industry, an uncanny ability to understand the market, and a superior attention to detail. The Trump Organization is a first slass RE developer.
Of course, he’s not perfect. He’s been in scrapes with his lenders over the years, and his forays into gaming have been mixed at best.
It’s quite possible to be both a brilliant Real Estate developer/analyst, while being utterly stupid about macro economics. This appears to describe Donald Trump.
His biggest problem is his ego. It’s a valuable to skill to know what you don’t know, and The Donald seems to be lacking that quality.
Well, we’re all stupid about one thing or another. (or another…) (FTR, I’m not a fan of The Donald)
And it would be a good thing to know one’s limitations…
Still, I’ not convinced that Donald is utterly stupid about macro economics. (especially given the dubious claims in the OP) For all we know, he’s a genuis.
He’s not a genius if he thinks that oil prices are held artificially high by the OPEC cartel. While this might have been true 30 years ago when OPEC had a larger percentage of world oil production and had all kinds of excess capacity, it’s not so true any more. OPEC is near max production right now, and their ability to control world oil prices is very, very limited - made even more so by the fact that western analysts have a pretty good understanding of just how much oil is below the ground in the Middle East, and so if they try to restrict production that just lowers the futures price on the assumption that less oil now means more later.
Isn’t it pretty obvious? He was just playing the American moral righteousness and superiority card viz. that if oil prices are high, it’s because those decadent royal Aa-rab scum are profiting at the expense of honest, moral Americans alongwith a mention slipped in that they wouldn’t last for 24 hours if the US went after their ass. He was talking to an American audience, so the foreigners are conveniently made the enemy. I find it hard to believe, that Trump doesn’t have a pretty good general idea of how the oil markets work.
I’m left unconvinced. To begin with, I haven’t seen a comprehensive (read: non sound bite) cite of his complete thoughts on the matter, or his real understanding of the subject. The OP certainly didn’t provide it.
I’m even more dubious of the SDMB denizens ability to either a) understand the economics (including the geo-politics) of the oil industry, or; b) be able to competently critique The Donald’s views.
For my part, I’ve had a subscription to the WSJ, Forbes, Fortune, Business Week, The Financial Times and [for a time] Barron’s for 25 years and I can’t say that I understand the economics of the oil industry. I get my news from the BBC and I’m reasonably well read.
If I had to bet on The Donald or the SDMB Oil Industry Brain Trust, my money’s on The Donald.
I’d be interested in getting some cites/education on the subject. Here is my understanding fro all that reading:
Saudia Arabia is the largest oil producer [by far] in the largest oil cartel in the world.
Historically SA has been the leading voice/arbiter in OPEC and had tremondous influence in setting production and quotas. They effectively punished wayward members by ramping up production, there by driving down prices. (Effectively rendering pointless overproducing)
While worlwide demand is up, (in part to Chia’s growing demand) OPEC is still procing the majority of the world’s oil, and SA has more proven reserves than any nation on earth. They remain by far the most influential oil producer in the world. The world oil market is one market. Whether we get our oil from SA, or Africa or South America, changes in production (by any means–whether be design or by other factors) by any [significant] oil producer would drive up prices for every buyer. (even if those buyers didn’t buy from that producer!)
And so I don’t buy your rationale (but I’m certainly up to being reeducated ) that “the futures markets” would correct any reduction. In the last year oil prices didn’t need actual reductions in productions for futures prices to sky rocket. Just the threat—the possibility— of interuptions has caused prices to rise. The politcal problems/strikes in Venezuela, attacks in Iraq etc have caused prices to gyrate. Heck, prices for refined gasoline rose immediately, based on the prospect of refinery interuptions in the US Gulf Coast.
Many (most?) successful business persons are hopelessly naive about politics (think: Ross Perot) and I suspect The Donald is clueless about the political practicalities of such an idea. But conceptually…I don’t know.
I don’t know what the Donald knows. But I doubt (from what I read in the OP) the OP is any better informed…
Actually, I did provide it. That is Trump’s entire stated position on the matter. If he has something else up his sleeve he’d best start stating it or else he’s going to continue to look like a fool.
We’re all very impressed with your allegedly brainy reading habits.
The United States does not get most of its oil from OPEC nations. That is not merely an opinion, nor is it something you need tremendous insight into the petroleum industry to understand. It is an absolute, unvarnished fact.
That the petroleum industry is somewhat complicated is kind of the central point here, which you’ve missed. It’s TRUMP who claims that the issue is a simple matter of threatening Saudi Arabia with destruction. It’s Trump who doesn’t seem to be accounting for the fact that it’s not as simple as “The Ay-rabs pump all the oil and we should be able to buy it for cheap.” It’s Trump who’s playing on national chauvinism, and it’s Trump who does not grasp the fact that the United States needs to be looking at something other than achieving $1.50/gallon gas in perpetuity.
Trump is presenting the solution as: “Threaten the ragheads and make them give us cheap gas.” He’s full of shit.
