(Guest Post by Matthew Ladner)
Texas Comptroller of Public Accounts Glenn Hegar took to the pages of the WSJ to declare The Saudis Gambled and Texas Won:
What the Saudis and the naysayers closer to home seem to have forgotten is that the free market is the greatest incubator of technological innovation. Energy producers in this country have gauged the challenges of lower prices, are working to tackle them, and it’s paying off.
The technology behind shale production is advancing rapidly, and its costs are falling. Today the industry can tap multiple separate oil pools from a single vertical hole, drilling horizontally through miles of rock with computer-guided, steerable drill bits. Some of these “octopus” wells can feature as many as 18 horizontal shafts.
OPEC’s gamble to kill American innovation was a short-term strategy without an endgame, and no appreciation of how the strategy would spur greater efficiencies and innovation in the U.S. Call this a gentle reminder: It is never wise to bet against capitalism, especially in Texas.
George P. Mitchell continues to beat price fixers and klepto/petrocrats. This has the potential to be the biggest beat down since Herbert Dow drop kicked the European chemical cartel.
Jay P. Greene's Blog 
Not to rain on the Texas comptrollers parade but rather more urgent for the Saudis then competition from fracking is the development of nuclear weapons by Iran. Fracking will reduce Saudi Arabia’s pricing power going forward. Iran will kill them. Holding down the price of petroleum hurts the Iranians and, hopefully, slows down their development of nuclear weapons.
I’m pretty sure I know which would be the more important goal were I the Saudi oil minister and which a nice, secondary benefit.
I tend to agree that the Saudis almost certainly have a bigger eye on Iran than North Dakota and Texas. Their public discussion of this subject however has entirely focused on the notion of maintenance of market share, and they rather plausibly put it out there that it would be irrational for the low-cost producer (SA) to cut production in order to make the world safe for high price producers (frackers, off shore mega projects, oil sands etc.)
So taking them at their word, their strategy seems to have flopped because frackers have moved from high price to mid price producers.
The other big problem for the Saudis is that they have a gigantic welfare state along with a huge, and growing, royal family, i.e. another entitled class.
Oil funds both so the Saudis are between Iraq and a hard place….ba dum bum.
Cut back on the welfare state for the non-royal Saudis and you’ve got civil disorder. Cut back on welfare for members of the royal family, which I believe now numbers in the thousands if not tens of thousands, and you’ve got a palace revolution.
Sorry, you lost me at “taking them at their word…”