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Comment by ck2 | Hacker News Reader

All it took was $4 gas.

All the Saudis have to do is drop their price to the point where gas is $2.50 again and suddenly all the US companies go under in 12 months.

But think how much we'll save by having less than 10k troops in the middle-east someday.

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Our increased production of oil is due to the new technology of fracking (fracturing the ground to get oil out of it). The situation is certainly not "We could have been fracking 15 years ago, but we didn't feel like it because Saudi gas was cheap". The energy sector is subject to the same process of technological advance that any other industry is. We came up with a new way to get oil out of the ground and figured out how to deploy it at scale. Saudi Arabia didn't have much to do with it. Gas could be selling for $2/gallon and people would still be tripping over themselves to get more of it out of the ground.

Secondly, the idea that we're keeping troops in the middle-east in order to get oil for ourselves is rather naive. There was nothing in the article about all the free oil that the US gets just because we have troops in Iraq. The different political factions there are fighting so hard over every drop of oil that there isn't any left for the iraqi people, much less the united states.

There are no conspiracies here. No international intrigues. Technology improved, so now we have more oil. The energy sector is about to go into a boom that's going to lift the whole country's economy.

The reason that American troops are in Iraq is completely different from, say, the reason that the Fifth Fleet is in Bahrain.

American troops left Iraq nearly a year ago.

Wrong. There are currently 15k to 16k Americans working in Iraq, under the auspices of the State Department. I guarantee they aren't all working desk jobs and God knows how many mercenaries...I mean contractors are still running around. Just because they aren't labelled "combat troops" doesn't mean they don't carry guns and kill people.

Those are not troops. Are Americans working or visiting, say, New Zealand to be considered an occupying force?

Do Americans working or visiting, say, New Zealand have legal immunity from murder prosecution? Were they imposed by an invading army?

Yes but the all-encompassing rhetoric about regional political stability is just dog whistling about oil price stability [1].

[1] Alan Greenspan

Even if you ignore all the externalities, hydro-fracking is still much more expensive than traditional shallow well land drilling operations, and it requires higher oil prices to sustain them. The 8 massive oil fields in Saudi Arabia (as well as many of those in Venezuela) fall into the "easy oil" category.

It's true that technology has improved, but it's likely that with more price pressure to improve the technology, these innovations would have come sooner. In addition, fracking is more work, period. It requires more energy than traditional drilling, and while this can be incrementally improved, it's fundamentally a much more energy intensive process that can't just be "optimized away."

To be fair: oil being fungible means that it doesn't much matter who gets Iraqi production or the direct profits from it. So long as that oil can be produced and sold by a regime not under international sanctions, it will increase market supply thus lowering price and giving the market a little more wiggle room to absorb supply shocks.

Which are goals much more in-line with American defense strategy in the region as a whole.

So while the view of our having invaded Iraq to steal their oil remains naive, it's hard to argue that the US receives no benefits from that oil being produced by a non-sanctioned (non-Saddam) regime.

You can't currently frak $2 a gallon gas yet. It's the higher price that makes these new techniques profitable.

"There was nothing in the article about all the free oil that the US gets just because we have troops in Iraq."

Quiz: how many US troops are in Iraq right now?

Isn't fracking terrible for the environment though? I realize that's not the point of this article, but it makes me wonder if we're setting ourselves up for even more ecological damage.

I'm wondering the same. The whole idea of fracking sounds like a very high risk with uncertain aftermath.

Maybe the U.S. should invest more in green energy then in "bad" energy and a new even worse way to get to it..

Most of the anti-fracking rhetoric you see online is overblown. Sure, it might have some negative externalities (like all energy production), but domestic fracking is certainly more environmentally friendly than Saudi oil production.

The Saudis and other oil exporters don't actually set the price of oil directly. OPEC have historically controlled oil prices indirectly by dialling their output up or down, but most producers are running flat out and have been for ages.

Saudi used to keep around 1.5m BPD production in hand to moderate supply disruptions and keep prices stable, but now they are running much closer to their maximum practical output capacity. Even if they opened all the taps and pushed forward more aggressively to bring more on line it would have a much more subdued effect than in the past. The days when they could materially affect prices on an ongoing basis are over.

Contrary to popular opinion $4 gas isn't really the producer's fault. Maybe they could get it down to $3.50 for a while (pure guess), but the idea they could just turn a spigot and gas would be £2.50 a gallon again is unrealistic.

also because it's not just about production - the value of the dollar fluctuates as well, what $2.50 bought you a few years isn't the same today, and won't be the same tomorrow.

I have come to the realization that oil prices do not translate directly to gas prices we pay at the pump. Even with a glut of oil, the gas prices at the pump depends on refineries which are controlled by the local companies. I think the $4 gas is the new normal. Also, the Saudi economy rely a lot on high oil prices so they wont dump more oil in the market.

> oil prices do not translate directly to gas prices we pay at the pump

Technically true, but the correlation is usually very strong: http://www.gasbuddy.com/retail_price_chart.aspx?city1=USA%20...

Gas prices increases follow oil price increases. Gas prices don't decrease much following oil price decreases.

Some might argue that won't always be a possibility, assuming it even is right now.

http://www.econbrowser.com/archives/2007/05/northern_ghawar....

Since restrictions were removed on commodity speculation, a great deal (I'd argue the majority of the big spikes) of the price fluctuation in gas has very little to do with the oil producers and an awful lot to do with speculators. They would not be happy to watch the price drop so far and I expect they'd do something about it.

Do those troops have more pressing engagements elsewhere? Or are they just going to be unemployed? To the extent that it's the latter, we really won't save anything.

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