Oil Wars: Pop! Goes the Weasel…

Sunday, February 1, 2015
By Paul Martin

F. William Engdahl

When I was a young child growing up in America, a popular silly children’s rhyme was called Pop! goes the Weasel. One verse went:

A penny for a spool of thread,

A penny for a needle —

That’s the way the money goes,

Pop! goes the weasel.

The “weasel” known as the USA fracking revolution, America’s recent shale gas and shale oil boom, which has been touted by the Obama Administration as grounds for risking their radical regime change policies across the OPEC Islamic world, is going “pop!,” as the money goes…

The collapse of the five-year-old USA fracking revolution is proceeding with accelerating speed as jobs are being slashed by the tens of thousands across the United States; shale oil companies are declaring bankruptcy and Wall Street banks are freezing new credits to the industry. The shale weasel in America has just gone pop!, and soon the bloodbath will look like the aftermath of the Battle of Falkirk of Braveheart fame.

Unintended consequences

One of the unfortunate consequences of being in political blinders, as the leading figures around President Barack Obama today definitely are, is that their bold policy decisions tend to blow up in their faces with unintended consequences.

So it is with poor, pathetic Secretary of State John Kerry. Last September Kerry went to Saudi Arabia to the King’s summer palace on the Red Sea, to meet with the King of OPEC’s largest oil producer, Abdullah, and his advisers including by informed reports, Prince Bandar “Bush”, the former Washington Ambassador and former head of Saudi Intelligence responsible for the disastrous war against Assad in Syria. There, a deal was agreed, whereby the Saudis would flood the market, especially in Asia, with deeply discounted crude oil to force a price collapse. For Kerry and the Obama gang of myopics, it was a clever way to kill two birds—Iran and Russia—with one Saudi cheap oil stone.

Far from “killing” Putin’s Russia, it has dramatically accelerated a major consolidation of Russia-China energy cooperation in huge deals that shift the Russian energy market from west and the EU to the east—China, the two Koreas and Japan. Putin also boldly cancelled the EU South Stream gas project and opened negotiations with Turkey to make that key nation into a world “energy hub” instead, cutting the US-controlled Ukraine entirely out of the game of being transit to Russian EU gas traffic.

Far from killing Iran, it has accelerated major Iran energy deals with Russia including new nuclear power plants. And, despite all the best intentions of the CIA and Israeli intelligence services, who invested so much time and energy creating the psychopaths known as ISIS or as they now call it, IS, Bashar al Assad, backed by Russia and Iran, still is in Damascus. For Washington and its pathetic neo-cons, nothing seems to work anymore like they want.

What the not-so-well-thought-through Washington oil shock game has done, however, is to trigger an avalanche of bankruptcies and job cuts in the domestic US oil and gas industry, above all, the shale energy sector.

The USA shale oil catastrophe

The collapse of the domestic USA shale industry, which I predicted last year to become manifest sometime in the first quarter of 2015, is already visible. And this is just the beginning of what will be a snowballing of unpayable debts, shut-in oil wells, massive layoffs in the US oil and gas industry in the next several months.

According to OilPrice.com, spending on global oil and gas exploration and production could fall over 30 percent this year. That would be the greatest drop since 1986, the last time Washington tried to use the Saudis to collapse oil prices. Bank of America predicts Brent oil futures to fall to $31 by the end of the first quarter this year, over $5 below the lows of the 2008 financial crisis.

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