The next time you’re having a bad day, just imagine how much worse it would be if you were running the show — and things were still falling apart.
Well, that’s how OPEC is feeling right about now…
Now, I’m not suggesting you go out and give to your nearest OPEC charity. We do that to a certain extent whenever we fill up our gas tanks.
Keep in mind, more than four million barrels of petroleum products from the 12-member oil cartel hit U.S. ports every day.
So there’s no question OPEC’s members hold the strings connected to the world’s oil supply. They control 80% of the world’s proven oil reserves and account for 41% of total oil and NGL supply (click table at right to enlarge).
And yet, things couldn’t be worse for them…
Crisis Mode: No Peace for Saudi Sheiks
At this point, it’s virtually impossible to avoid news of the turmoil raging in the Middle East.
And most recently, the upheaval is coming from a country that isn’t even a member of OPEC.
On the surface, Syria is a minor player in the global oil industry, producing a mere 50,000 barrels of oil per day. (To give you some perspective, Williams County in North Dakota pumps out more than 129,000 bbls per day.)
But just because Syria isn’t a member of OPEC, that doesn’t mean it’s not a thorn in the organization’s side.
Potential supply disruption isn’t necessarily from the loss of Syrian production, but rather from the proximity of the recent unrest to the crude oil trade route. And as you know, any instability in the region will cause a spike in oil prices.
Toss in more threats to the Suez Canal — through which a million and a half barrels of petroleum products flow each day — from the geopolitical storm in nearby Egypt (a number of oil companies in Egypt are considering a pullout as we speak), and you have a recipe for a crude oil price spike…
A hefty price tag on every barrel of oil it sells is just another occasion we’ll be forced to watch OPEC celebrate, especially the Saudis. Remember, Saudi Arabia dominates OPEC production, pumping more oil on a daily basis than Iran, Iraq, and the UAE combined.
So what are Saudi oil sheiks willing to pay so that violence in Syria doesn’t escalate and spill into neighboring OPEC members, putting a damper on their payday?
As it turns out, they’re turning to Putin for help.
Desperate Times Call for Desperate Measures
Believe me, asking for Russian cooperation is quite painful for the Saudis.
Within the last few years, Russia has managed to one-up Saudi Arabia’s oil production (that’s not an easy feat, mind you), with the Russian Federation boosting its liquids production to nearly 11 million barrels per day in June.
And there have been rebuffs in the past by the former Soviet Union, which turned down an invitation to become the 14th member of the oil cartel in 2008 (Indonesia didn’t suspend its membership until 2009)…
This past week, the Saudis once again extended their offer to Russia — in exchange for Putin pulling support for Assad’s regime.
As I said before, OPEC isn’t doing so well these days. Nigeria, one of the few members capable of increasing production, is in bad shape, with crude production falling to the multi-year lows. Then there’s Iraq, whose pipeline into Turkey has been bombed more than two dozen times this year alone.
Russia might be the last hope for OPEC to keep control of the world’s oil supply.
However, one fact will ring true to the end: This game is still rigged.
And truth is things aren’t much different here in the United States…
Turning the Tables
The ties between Big Oil and the U.S. government are enough to make your head spin. And truthfully, you’re probably not aware of just how short their leash is…
From 2008 to 2012, between $134 million and $175 million was spent annually to lobby government officials. All this cash serves to nudge politicians in the direction that ExxonMobil and friends want them.
So far this year, the oil and gas industry has shelled out a cool $71 million to do the same thing.
As you might have guessed, the top ten spenders in 2013 resembles a who’s who in the oil and gas industry:
I know that doesn’t inspire much confidence in the system, nor does it do much to boost the hope for those of us that still hold on to the American dream.
Fortunately for us, we have a different option — one that can turn this kind of corruption into a distinct advantage…
And next Tuesday, my colleague Nick Hodge will release a new report that will provide you with all the details.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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