As the global economic meltdown proceeds, the mine shaft canaries such as Pakistan and Iceland are beginning to gag on the volatile mixture of what now passes for financial air. Nevertheless, the bright side of this chaotic crap crash of greed and gambling honest taxpayer money is great news that finally, despite our best efforts, we are actually going to stop paying for BOTH sides of the war. In fact, not only are we going to stop financing the Orc side of this war but the meltdown will bring the war home to the Orcs themselves in order balance the budget due to the current shortage of exuberance and confidence in capitalism. Iran, for example, already drudging under a 26% inflation will have to make the budget by cutting back the people's subsidies. Now won't that make the citizens sore. In fact, Iran's breakeven price for a barrel of oil is $90. according to Mohsin Khan, director of Middle East and central Asia at the IMF:Gulf Times
“Iran’s break-even price is $90 a barrel, and that is a big issue in Iran right now,” Khan said.
“If prices dip below $90 a barrel, and we have seen it touch $89 earlier this week, then they would have to tighten their public expenditure policy, and probably cut subsidies, which would be an issue for the government there – the public would not be content,” he said.
I just bet they won't. I'm pretty pissed myself at the yankee govt's bailout of Wall Street gamblers with my taxes myself until I started looking at the BIG picture.
So lets look at the break even marks AKA the point at which certain enablers and just-look-the-other-way govts start to suck wind and fiscal deficits:
Saudis--$49.
Algeria $56.
Kuwait-$33.
Qatar--$24.
In general, the less population you have to buy chow for-- the lower the price for a barrel of oil you can take and still balance the budget without a deficit. Time for a Guinness.
UPDATE:FT :"US crude oil futures dropped $1.75 to $87.15 a barrel after having hit a 10-month low of $86.50 a barrel on Wednesday. US crude oil futures dropped $1.75 to $87.15 a barrel after having hit a 10-month low of $86.50 a barrel on Wednesday. The Opec basket, a measure of the group’s oil prices, fell on Wednesday to $77.38 a barrel, below the $80 that some members of the cartel have suggested is their minimum price." Time for a meeting. On Nov. 18th OPEC will meet to consider how to pay their bills in view of the current tsunami meltdown. Timely.
