Oil wells near McKittrick, Calif., one of the places where hydraulic fracturing, or fracking, is on the rise. The U.S. became the world's largest oil producer this year, surpassing Saudi Arabia and pumping some 11 million barrels a day.; Credit: David McNew/Getty Images
It’s no secret that the relationship between Vladimir Putin’s Russia and the Obama Administration has cooled considerably since the former Soviet nation began military maneuvers in Ukraine and the Crimean Peninsula. Similarly, U.S. relations with Iran have been virtually nonexistent until yesterday’s announcement that an ease to sanctions may be ahead. Just as tensions and rhetoric seem to have relaxed, however, New York Times Columnist Thomas L Friedman introduces a new political theory on the world oil supply: that America and ally Saudi Arabia may be silently ‘pumping’ Russia and Iran to the edge of economic ruin.
Citing the current market rate for a barrel of oil ($83), Friedman suggests nations who can’t pump as cheaply are being stuck with barrels of oil they can’t sell--for example Iran won’t turn a profit if barrel prices are less than $100. This forces them to either take a loss, or simply not sell.
But Los Angeles Times reporter Paul Richter contends that while the U.S. may be out-pumping the two nations, the objective probably isn’t Putin’s total collapse:
“The economic pressure isn't expected to change Putin's aggressive efforts to retain strong influence over Ukraine, which he considers non-negotiable. But they are causing strains in his relations with the Russian elite and business establishment, two pillars of his political support.”
Why do you think the U.S. and Saudi Arabia continue to keep oil prices so low? Do you think this is an effective means to achieve a political end?
Guests:
Michael Ross, Professor of Political Science at UCLA, and the author of: 'The Oil Curse: how petroleum wealth shapes the development of nations'
Phil Flynn, Senior Analyst, The Price Futures Group, Contributor to the Fox Business Network