Monday, January 19, 2015

That's Oil Folks!

Kirschen, Dry Bones cartoon,Kirschen, economics, Economy, Oil, oil prices,Shuldig, Russia, banks, cold war, Venezuela,
According to CNN:
Big energy companies aren't the only ones losing out on the dramatic fall in oil prices. Banks are in the hot seat, too.
"Hundreds of banks were forced to shut down in Texas when the state fell into a recession in 1986 during a steep decline in oil prices. That 1980s meltdown mirrors the current drop in prices that carried oil below $45 a barrel this week.
Cheap credit helped fuel the U.S. shale boom, allowing countless energy companies to find oil in new places. Banks also capitalized on economic booms in oil-rich regions like Texas and North Dakota. It would only make sense for these same banks to feel some pain from oil's downward spiral. Drilling projects that made sense at $100 may now be losing money, creating headaches for the lenders that financed the expansions. Some highly-leveraged shale companies may even go belly up due to the plunge in oil prices."

But maybe the oil prices could be part of the new U.S. - Russian Cold War?
According to this opinion piece in the Washington Post:

Falling oil prices hit Venezuela, Iran and Russia hard
"As oil prices continued to plunge last week, it was instructive to watch the disparate reactions of three governments whose whopping losses are likely to produce some of the biggest international stories of 2015.
There was the panicked scrambling of Venezuelan President Nicolás Maduro, who skipped his own state of the union speech for a desperate world tour in search of loans or promises of $100 oil. He got neither, even as rumors flew back home about whether he would be allowed to stay in office on his return.
There was the cool response of Vladi­mir Putin, whose ministers announced drastic cuts in government spending — except for defense. Russia’s proxy forces in eastern Ukraine meanwhile launched a new offensive."

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