By Steve from Virginia
May 25, 2014
"Russia needs higher prices so that its oil extraction industry can meet its skyrocketing costs. Putin, like the rest of us, has reached the neck-line of the Triangle of Doom, the pointy-end of the gangplank where there is negligible room to maneuver, where the conventional solutions — such as threats of war to inflate the oil prices — don’t work any more. There is almost nothing Putin can actually do: he certainly cannot escape the triangle. He dares not risk a conflict with Europe as that would entail Europeans deciding to do without Russian petroleum and gas; this would cause prices to drop, the opposite of what Putin intends. He also dares not risk an outright war with Ukraine that Russia might is certain to lose. He dares not risk a credit embargo, although the market voting with its feet amounts to the same thing. Putin pretends … he cannot control his own destiny. He cannot afford to build a larger, more threatening army, nor could he use one if he had it. Russia would have to borrow more from London and Frankfurt. Armies like cars are non-remunerative. Anything Putin could gain in a war would be worth less that what his army would cost! Despite the hoopla and armored brigades, the crude price is holding steady. The best evidence of the oil peak is the inability of the threat of wars in an oil producing- regions to inflate the price. It means the customers cannot borrow any more; they are broke."