By Jon Dougherty
(TNS) Conservative talk giant Rush Limbaugh opened his Monday program with a detailed and accurate explanation of what took place today on Wall Street throughout the day, with the Dow falling more than 2,000 points in one of the worst performances on record.
Specifically, Limbaugh noted that today’s 2k drop has far less to do with the ongoing trickle outbreak of Wuhan coronavirus (COVID-19) and a lot more to do with a Saudi Arabia-Russia geopolitical spat over oil.
The Cliff Notes version is this: Around the time President Trump was inaugurated (remember, Saudi was his first overseas trip), Crown Prince Mohammed bin Salman announced that he wanted to diversify his country’s economy away from all oil to other industries that includes oil. For decades, the Saudis were the biggest oil players on the planet but other countries have been horning in on the business thanks to a combination of proven oil reserves and better drilling and extraction technology.
That diversification has not happened. Though MBS, as he is known, pitched his idea in the United States to the Trump administration, Hollywood, and Silicon Valley, fears that the Saudis could nationalize investments made by American industries at some point down the road has prevented American firms from taking the plunge.
Over the weekend and toward the end of late last week, Mohammed bin Salman was triggered. Something set the guy off, and he decided… There was an effort to destroy OPEC a year or so ago that bombed miserably, and it involved… If you remember, the oil market was flooded with supply, and the price of crude came way down. The price of gasoline came way down. You might remember, people were very worried about how the producers were gonna stay in business.It was thought that this was an attack on fracking, which it was. Fracking still costs more to get oil out of the ground than traditional drilling of wells. Well, now we throw into the picture Russia. Mohammed bin Salman has made the decision — or the strategic realization has occurred to him — that if he’s really gonna corner the oil market, if he’s gonna really do damage, he’s got to do damage to Russia. Russia is a massive producer of oil. But Russia’s oil infrastructure is old and outdated, and what really is happening here — the reason why the market’s down 1,300 points today — is oil.
Mohammed bin Salman is flooding the world oil markets with cheap Saudi crude, and his number one target is Russia, and shale oil — which, to an extent, is the United States. I’m sure that his effort here is not intended to do great damage to us, and I’m sure he’s been telling everybody in Washington, “Stick with me on this. Our common enemy is Russia,” because Russia in the Middle East is Syria, and Saudi Arabia… Look, it’s Mohammed bin Salman that started the war in Yemen, which ended up getting one of their oil depots blown up a few months ago.
Anyway, this is very, very complicated global geopolitics.
Limbaugh — who is ‘in’ with President Trump and his family — theorizes that MSB let the president know of his plans ahead of time before he bottomed out the price of Saudi crude, and not just to hammer the Russian economy but also the economy of another Saudi nemesis: Iran.
The U.S. shale market contracted and consolidated a great deal the last time oil tanked, and likely that will happen again. Plus, the drop in prices will be grand for consumers and the U.S. economy in general, which will likely, in short order, be reflected in a once-again-rising stock market:
But what is happening with the stock market today is 85% this. It is the crown prince of Saudi Arabia declaring open warfare on Russia involving the price of oil and the flow of oil, the free flow of oil at market prices is what this is all about. And the crown prince of Saudi Arabia, he’s taking advantage of the fact that they’ve got more oil than they know what to do with.
He is lowering the price and trying to run people out of the market by making it impossible for them to stay in it. He cannot do damage to us in this regard because we don’t need their oil anymore, and that’s thanks to who? That’s thanks to American capitalism and fracking and people who stuck with that despite all of the environmentalist wackos trying to shut ’em down. Despite all of the left-wing Democrats trying to shut down pipelines and fracking, we are no longer dependent on Saudi Arabia.
So what they do with their supply of oil as it relates to OPEC is something that we have some protection against. It’s not that we’re totally unaffected by it because it still is the price of oil. But we can satisfy our own needs. We can keep our country running. We can keep our people’s automobiles fueled. We can keep our electric cars charged. We can do whatever we want because we have our own independent supply.
Now, Russia’s economy is such that they don’t produce oil for the same reasons we do. They are a totalitarian regime, and their interest in oil is selling it so that the government will have wealth, so that Putin and his buddies will have wealth, so that his oligarch buddies who are in commodities and chemicals and who need oil will have wealth. It’s not for the Russian people. …
We’re not totally immune. What is happening here is gonna have an impact on producer prices around the world, but the upside to this for us is the damage this could do to Russia.
There’s no love lost between Saudi Arabia and Russia, and that’s because of Middle Eastern geopolitics and warfare. By the way, Donald Trump is standing aside and letting Mohammed bin Salman wreak all kinds of havoc on his buddies in Russia. I hope the Democrats are noticing this. I hope the Drive-By Media — I think the Democrats in the media are too stupid — I don’t think any of them even know what I just spent the first half hour of this program telling you.
I don’t think they have the slightest clue. They’re so busy trying to make the case that this massive market plunge today is because of the coronavirus. And it isn’t. This is about oil. And it’s about specifically Saudi Arabia’s attempt to drive competitors out of the market and Saudi Arabia, by the way, is also trying to shut down OPEC. They’re sick and tired. Mohammed bin Salman does not like OPEC. If they’re not gonna beat OPEC, then there isn’t gonna be one.
The ride will be a wild one for a while, but it will come to an end and things will get back to normal. The trick is to convince the president’s core supporters and others leaning towards voting for him in November that what’s taking place now is temporary and pre-planned.