U. S. Adversaries Being Crippled By Falling Oil Prices

Collapsing Oil Prices More Important That Sanction On Iran and Others

Just two months ago, spiking petroleum prices were emboldening confrontational oil exporters such as Venezuela, Russia and Iran. The oil price collapse is stressing their plans and forcing reconsiderations. Some analyst, for instance, estimate that Russia is spending at a rate only supportable by oil prices of at least $110 a barrel dimming their financing prospects.

Congress belatedly sensitive to voters’ unhappiness, passed an energy bill that would allow oil drilling in new offshore areas- albeit the wrong ones, trim oil company tax breaks, ease the way for oil shale development and help finance alternative energy sources.

The world’s total energy costs have dropped by more than $4 billion a day. That will hurt government budgets from Tehran to Texas, but it will ease burdens for countless others. The United States, which spent $51.4 billion on oil imports in July, accounting for most of its trade deficit, is on track to spend much less than that this month, reducing pressure on the dollar, the trade deficit and inflation.

Long range economic forecast had projected $94 a barrel by 2009 - it stood at $91.15 a barrel Tuesday. ENI, the Italian oil giant thinks prices could fall as low as what it costs to produce the world’s most expensive oil, citing the $65- to $70-a-barrel cost of developing Canadian tar sands.

OPEC hardliners advocated a new $100 floor on prices, but Saudi Arabia last week resisted a call to trim its output to comply with official OPEC quotas. Now the Saudis may be reconsidering. Sky high oil prices helped President Hugo Chávez pay for nationalizations of banks, the Caracas electric utility, a portion of foreign oil interests, radio stations and the local plant of an international cement firm. Other analysts said high prices may have emboldened Russia to invade Georgia, and Iran to continue to defy international calls to abandon its nuclear program.

America’s adversaries including Russia, Iran, Venezuela and the other usual suspects are backing and filling with both hands. Falling gasoline prices are driving optimism among American voters buoyed by the price board at the corner gasoline station will impact the November U. S. Presidential election and Iran’s June 2009 Presidential election too. In the former to help McCain be elected whom Iran disfavors and in the latter to forment trouble for anti-U. S. interests in Iran and elsewhere.

But, falling oil prices are also a whip saw; for instance: T. Boone Pickens has lost a bundle and altering his alternative energy ideas; can companies are worried lower fuel costs will be a disincentive for consumers to pay premums for fuel efficient vehicles, and development of tax sands and shale will be pushed back.

Of course airlines and trucking companies are happy, as are cos=nsumers depending on fuel oil to heat their homes this winter.

Long term forecasters are talking about $65 per barrel oil in 2012 effectively below $60 now