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As expected Iran boycotts the talks in Doha of 16 major oil producers seeking to stabilize oil prices. Saudi Arabia, Russia, Qatar and Venezuela sought to stabilize oil production at January levels to support oil prices. Wth the Saudia and Russia producing all out, Iran seeks to do the same, effectively closing the door on any agreement to freeze production levels.

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Commodities prices hit a low in June before the second Greece election on June 16, with lower unemployment numbers in the U.S. and growth of 6-7% in India and China. Still average prices of oil in 2012 of $115 a barrel are higher than the level in 2011. And corn prices dropping to $5.25 a bushel are still high compared with prices earler. Corn farmers in the U.S. are adding to acreage. The relatively lower prices also give more room for smaller stimulus by central banks to stimulate growth. Freeport-Mining CEO, Richard Atkinson said in a presentation that the growth is coming on top of a bigger baseline for China, India and Brazil. China's copper consumption went up by about 6 million tons a year, averaging 13% growth a year in the period 1995-2010. Now even with slower growth at 6% a year, by 2025 he estimates China's copper consumption at 9 million tons per year. This is a structural change that is supporting commodity prices, says Amrita Sen, analyst at Barclays Capital.

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India's crude oil imports were sharply higher in 2011 and 2012. India's imports of crude oil for the first 11 months of the 2012 fiscal year ending March 31, show a 40% increase over the same period in 2011 fiscal year. India's import bill was $128 billion for crude oil imports for the 11 months of fiscal year 2012. Indian subsidies to lower prices for fuel are $30 billion annually. The higher prices for crude create inflationary presssures in India and restrict economic growth.

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A test supply of 170 megawatts from the Kudankulam nuclear project in Tamilnadu state is added to India's southern grid. Full supply of 1000 megawatts is to be added by the Nuclear Power Corp. of India Ltd. by end of 2013. India's Supreme COurt dismissed petitions questioning the project's safety in May 2013. India signed a preliminary contract for nuclear project in Gujarat with Westinghouse. The state owned Nuclear Power Corp. of India is in negotiations for a project planned in Maharashtra state. Over the next 20 years India plans to increase nuclear production capacity from 4700 megawatts to 63,000, a 12 fold increase. The first Kudankulam reactor going into operation in 2013 comes into operation after a delay of 7 years because of antinuclear and land protests as well as court cases. The slowing of growth in India, depreciation of the currency, and the acutely felt energy shortages as industrialization moves forward, are leading to a new perception of the importance of nuclear energy to supplement energy generated from coal and other sources. China is also moving forward aggressively with development of nuclear energy and working with Areva and other companies for safe nuclear energy development. The new planned reactor by Areva in the south of England is also likely to offset the perception of nuclear energy after the Fukushima nuclear disaster. For these reasons nuclear energy development in India is likely to accelerate without the long delays seen earlier....

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The International Energy Agency lowers its global oil demand forecasts on Dec. 11, 2014, leading to further drop in the price of oil with oil futures in electronic trading for WTI at $58.89 on New York Mercantile Exchange, and Brent crude at $62.83 on ICE in London, for January 2015. The price of WTI U.S. oil dropped to $59.95 on Dec. 11, 2014.

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Daniel Yergin of consultancy firm IHS describes the geopolitical disputes in the Middle East between Russia, Saudi Arabia, and Iran that are leading to likely continued oversupply of oil in 2016, keeping prices in the $30-$40 range. Saudi Arabia is not likely to change its policy of going after market share, Venezuela is affected but lacks a voice in OPEC decisions, Russia continues its policies in Syria and Iraq under the Putin government affecting other Sunni states, and Iran following the lifting of sanctions is likely to ramp up supply to make up for its lost market share- all leading to an extended period of low prices. This situation benefits China, the European Union countries, India, Turkey and the U.S. in a period of slow economic growth in 2015-2016. Russia looks to use this period of low oil prices to shift to domestic industry after a period of rising imports when oil prices were high. The Saudis seeing their interests in the region threatened by Iran and Russia, and dissatisfied with the foreign policy of president Obama, see a policy of pushing for market share as appropriate in the current geopolitics of the region....

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Khalid al-Falih, chairman of Saudi Aramco, says at the World Economic Forum in Davos, on Jan. 26, 2016- "If prices continue to be low, we will be able to withstand it for a long, long time." With $630 billion in foreign currency reserves the Saudis are following a long term policy of full production. Gasoline subsidies are being reduced, IPO of Saudi Aramco being discussed to raise additional capital, and other steps being taken to plan for long term oil prices. Flexibility for a change in policy is diminished with the addition of Iranian oil production to supplies following the lifting of sanctions. The events in 2015-2016 of Russian bombing campaign in Syria, and the cutoff of diplomatic relations with Iran, have worsened the standoff with Iran and Russia in the Middle East conflict. As a result it appears that the Saudis are settling down for a long term policy of full production which would keep oil prices low for the long term. India, Japan, China, the U.S. and the European Union, Turkey and other countries benefit from low oil prices when their economies need a boost in 2016-2017....

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Experts point out that Saudi oil price policies are set on a technocratic basis by a small group of advisors. An oil industry veteran Naimi, 79, leads this group of advisors. This means the new King Salman is likely to follow the same course as his predecessor King Abdullah. Gulf oil officials were expecting a drop to around $50 to $60 a barrel, the drop below $50 has surprised even the Saudis. NYT cites IMF estimates of a loss of oil revenues for Saudi Arabia and its allies in the Persian Gulf of about $300 billion in 2015. The Economist and WSJ reports say that for the long term shale oil production and advance in technologies are likely to play a lasting role in keeping oil prices low. At a time when Saudi society is changing, population growing, an older generation likely to transition to a younger generation in government, the cost of the social safety net and ample benefits will remain a concern for the Saudis for the long term.

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Brent crude drops below $60 by Dec. 15, 2014.

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Results of a CBS New York Times Poll of 1018 adults in the U.S., reported Feb 28, 2006. Results show 55% showed support for gasoline tax if it reduced dependence on foreign oil, 59% showed support if it also reduced global warming. There is additional support if the money is used to fight terrorism, allocated to specific projects such as electric cars, or help low income people with extra gasoline costs. The important distinction in the results is what respondents were asked. When told about their response to a gasoline tax 85% of respondents opposed it, but when told it would reduce dependence on foreign oil 55% support it. Some respondents want to see it earmarked so that its use would reduce dependence on foreign oil through fuel efficiency improvements. The gasoline tax has remained at 18.4 cents a gallon since 1993. Politicians see the 85% and stay away from the issue and at periods of higher oil prices there is more concern about the impact on consumers. Prof. Borenstein, director of an energy institute at the University of California, Berkeley, says his calculations show a 10% increase in gasoline cost would reduces consumption by 6-8%. As the tax is regressive by putting a higher burden on low income consumers, this should be offset by income tax relief that would make middle and lower income people better off , says Prof. Borenstein. Some of the revenues would be used to support projects at automakers and research universities to develop more fuel efficient technologies for automobiles. Shows support is there if the tax and where money is spent is shaped in the right way....

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Problems facing the energy industry in India include lack of coal supplies to use all of the existing electricity generation plants. Lack of investment and modernization in the coal industry is holding back tapping of large coal reserves. India is expected to see a huge surge in energy demand in the next twenty years, with the International Energy Agency saying India will need $1.6 trillion in investment in power generation, transmission and distribution through 2035, and $550 million investment in coal, oil and gas sectors.

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The Saudi government announced sharp cuts in spending and subsidies to cut the deficit in 2016. The deficit in 2015 was about $98 billion or 367 billion riyals , according to Al Arabiya Saudi news channel. In 2016 the budget is designed to cut the deficit to $87 billion or 326 billion riyals. The 2016 budget is for 840 billion riyals, compared to 975 billion riyals in 2015. Saudi Arabia's foreign exchange reserves of $640 billion could be exhausted at this rate by 2020, experts say. Actions being taken by the government include increasing the price of some grades of gasoline sold domestically by 50%, as subsidies are being cut. The drop in oil prices to about $35-$40 is hurting Russia, Saudis and Venezuela. The Saudis have increased defense spending for conflicts in Yemen, and in other areas, as they oppose Iran and Russia in the Iraq- Syria conflict.

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Russian president, Vladimir Putin, tells academics and journalists at an event called the Valdai Discussion Club, he had reservations about expanding the state sector by approving the deal for Rosneft to acquire TNK-BP assets. His motivation for doing this was the endless shareholder conflict between the Russian partners and BP. Putin says he warned British prime minister Tony Blair that a 50%-50% ownership venture would not work as nobody was in control, and described this as so bad that "sometimes they were fighting each other with their bare hands." The injection of private ownership into Rosneft with the 20% stake for BP would provide stability for the company and was the bright side to this. Foreign academics and journalists participate in three days of discussions with Russian academics and journalists in this event. Putin has no new vision for this third term beyond consolidating and protecting the achievements of the last decade. He cited as his achievements- growth of the economy, expansion of the foreign exchange reserves, and the increase in the birthrate....

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The WSJ's Spencer Jakab points out the role of politics- with Saudi Arabia in a standoff with Iran and Russia in Middle Eastern conflicts- and Saudi policy of full output with no cuts unlikely to change, ensuring lower prices for 2016-2017.