Cryptocurrencies: A Necessary Scam?

Yes, Web3 is a bunch of bullshit. The problem is, compared to what?

Matt Stoller

Dec 7

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Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…

For a few years, I’ve been thinking about why social movements like crypto and bitcoin have so much momentum. I often get emails from proponents of crypto as an anti-monopoly tool, and a lot of smart people that I respect believe that it is based on a groundbreaking technology that will sweep the world. I don’t see it that way. I think it’s a social movement based on a dangerous get-rich-quick scam. But there’s a tremendous amount of goodwill involved, and as with GameStop, the underlying driver of the energy in this movement is mass and legitimate disillusionment with liberal institutions who have failed to deliver.

This weekend, I held a forum for paid subscribers on whether crypto is a useful anti-monopoly tool, and the debate got heated. I learned a lot, and after reading the comments, I decided to write an essay, because it seems like there’s a lot of confusion about what crypto is and what it’s for. Today, for instance, there’s a hearing in the House Financial Services Committee on the crypto, with lots of talk about innovation along with warnings about risks and regulation. While useful, such traditional financial reform chatter obscures the far more interesting political debate that crypto has brought to the surface of our society about finance, monopoly, and the state itself.

To explain what is going on, I think it helps to start with a historical analogy, the state that always seems to be a critical ingredient of every financial crisis. Florida. In particular, Florida in the 1920s.

In the early 1920s, just after a horrific war and decades of reform that ended in cynicism, a wave of speculation occurred around land in Florida. Thousands of disillusioned Americans in the Northeast sought to get rich quick, like the ‘mushroom millionaires’ who had profited in the Great War that killed so many. These speculators used financial instruments and easy money, the equivalent of deregulation, to gamble massively across the economy. The mania became so insane that there was speculation over land lots in the city of Nettie, Florida, a city which later turned out not to exist. Eventually, the bubble popped. First, multiple hurricanes hit the state. The stock market did the rest by crashing in 1929. The result was tears, losses and decades of litigation.

And with that, let’s talk crypto. Cryptocurrencies are a social movement based on the belief that markings in a ledger on the internet have intrinsic value. The organizers of these ledgers call these markings Bitcoin, or Dogecoin, or offer other names based on the specific ledger. That’s really all a cryptocurrency is. There’s no magic. It’s not money, though it has money-like properties. It’s not anything except a set of markings. Sure, the technology behind the ledgers and how to create more of these markings is kind of neat. But crypto is a movement based on energetic storytellers who spin fables about the utopian future to come. In a lot of ways, cryptocurrencies are like Florida land that no one ever intends to use. It has value in the moment it is traded, but only because there’s a collective belief that it has some intrinsic worth. (There is a wide variety of ‘tools’ in the crypto world, like NFTs, smart contracts, and global computing systems, but they don’t work, and none of them have any use cases except speculation and money-laundering, and even in their idealized form they have no use cases aside from doing stuff you can already do far more easily through existing technology, with a different permissioning model.)

That said, the crypto narrative is one that anti-monopolists in general find deeply compelling, since both the anti-monopoly movement and the cryptocurrency movement emerged out of the financial crisis. Elizabeth Warren became a Senator out of the crisis, and eventually pivoted to making the first call to break up big tech. Bitcoin was created on January 3, 2009, a few weeks before Barack Obama was inaugurated. Inscribed in the code of Bitcoin is the following phrase, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Both crypto and the anti-monopoly movement are reactions to the destruction wrought by neoliberalism.

Both financial crisis reformers and Bitcoin proponents believe that the existing financial order is a collusive arrangement between large banks who are supported by government power. Money laundering, tax evasion, criminal activity, and fraud are fine as long as you are an insider in this system, and the Federal Reserve and various other government institutions will not only not stop corrupt insiders, but will subsidize and bail them out if necessary. Meanwhile, the rest of us have to live with foreclosures, high interest rates on credit cards, and high fees for middlemen in every aspect of the economy.

Indeed, it’s hard to see how our social contract is legitimate or fair. No one went to jail for the financial crisis, and the ongoing parade of scandals is nonstop. Just to take a random story that came out last week, several groups published a finding that the $11 trillion private investment industry is a haven for money laundering. We all know there will be no state reaction to fix this.

So what is to be done? The traditional populist view is that we should reform our social order through politics, things like mass education, elections, and civic engagement. That’s how Elizabeth Warren sees the world. She wants to strengthen the state so it can restore the social order, one that will tolerate less cheating and will involve the rule of law applied to the powerful.

The crypto response is different. The crypto response is to reject the social contract itself as irredeemably corrupt. Their goal is put pressure on the state itself by creating a money-like instrument outside of the public rule-setting capacity of the government. This is framed in the name of consumer choice, as in the state shouldn’t be able to boss you around and tell you what you can do with your money. After all, it’s yours. And anyone who doesn’t buy into this idea is inherently defending a set of collusive bailout-friendly institutions that we sometimes call liberal democracy.

But core to having a state, even a democratic one, is the ability to ban things and use coercion to enforce such a ban. Societies and social contracts are built on cooperative mechanisms, but also barriers and enforceable rules. In this framework, the argument of crypto proponents makes no sense. It is basically, ‘You can’t tell me not to have access to a money-like mechanism, even if the point of this instrument is to defraud people or engage in ransomware attacks, and even if we know that the ultimate endpoint is a giant collapse when people trapped in a liquidity crisis find out that there is no lender of last resort for Bitcoin or any of the other cryptocurrencies. If you do, that’s tyranny.’

In other words, skeptics of cryptocurrencies generally believe that cryptocurrencies are easily manipulated mechanisms to launder money, commit fraud, evade sanctions, empower dictators, engage in heavily leveraged speculation prone to collapse, and ultimately break the state itself. The response to this concern is easy - exactly how is this accusation any different than the existing order? Surely if insiders are allowed to cheat in our regulated banking system, then why should we treat it as legitimate? Why not build our own financial channels? Yeah, maybe it’s bad, but at least we’re not Goldman Sachs or AIG.

That’s why I don’t think this movement can be dismissed as merely get rich quick mania. There’s goodwill and energy behind this movement, as well as a lot of wealthy cynics and scam artists. But the lack of legitimacy of liberal democracies is real. Increasingly, though, the arguments from cryptocurrency proponents are changing. They are saying they want to be regulated, they are not opposed to the state, they are just into technological innovation, and so forth. That’s why every witness in today’s hearing said they want regulation by the state. I don’t buy it.

We’re in new stage, where some very scary people are taking over monetary politics. If crypto boosters sought aggressive reform of the existing financial order, democratizing the Fed, clamping down on big banks, and so forth, and said that until that happens, they will pursue alternative currencies, that would be one thing. But that’s not at all how the politics of crypto works. In D.C., those who opposed the bailouts and sought to break up the banks - the reformers - are the most skeptical of cryptocurrencies. Meanwhile, the pro-crypto lobby includes men like Pat Toomey, the most pro-bailout and pro-Fed politician in D.C., and is financed by libertarian billionaire Marc Andreessen, a key force behind the rise of Facebook. Led by the leaders of Miami and New York City, a wave of mayors are actively trying to fuse cryptocurrencies to local governments, with Miami mayor Francis Suarez asserting that these are ‘natural resources’ and telling voters they may never have to pay taxes.

The amount of utopian bullshit and fake promises on a technology that doesn’t really work as anything but a speculative bubble and money laundering device should be a big red flag. Crypto is a movement based on the theory that the existing nation-state is a system rigged by billionaires, and the right response is to create a different and more corrupt order rigged by different billionaires, money launderers, and dictators. It will of course all end in tears, ironically when the Fed ends its monetary stimulus creating bubbles across the economy. That much we know. But how much ruin this movement engenders will depend on whether and how quickly we can restore the legitimacy of our existing governing systems.

Thanks for reading.

And please send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues, a newsletter on how to restore fair commerce, innovation and democracy. And consider becoming a paying subscriber to support this work, or if you are a paying subscriber, giving a gift subscription to a friend, colleague, or family member.

cheers,

Matt Stoller

https://www.opendemocracy.net/en/democraciaabierta/deforesting-the-amazon-for-wind-energy-in-the-global-north-a-green-paradox/?utm_source=tw 

A green paradox: Deforesting the Amazon for wind energy in the Global North

A shift to wind energy is leaving a trail of destruction in Ecuador, with a brutal impact on Indigenous communities and fragile ecosystems

• ESPAÑOL

Francesc Badia I Dalmases

1 December 2021, 12.00am

An island on the Pastaza river seen from the community of Sharamentsa in the Ecuadorian Amazon

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Francesc Badia i Dalmases

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What has the destruction of balsa trees in the Ecuadorian Amazon rainforest got to do with the wind power industry in Europe?

As the international commitment to renewable energy has grown in recent years, the increase in wind farms has triggered a huge demand for balsa wood, leaving a trail of deforestation in its wake.

Balsa wood is used in Europe, and also more intensively in China, as a component in the construction of the blades of wind turbines. Already-installed wind turbines, with blades that stretch to 80 metres, can cover an area of approximately 21,000 square metres, which is equivalent to about three football pitches. More recent wind turbine designs can incorporate blades that are up to 100-metres long that consume about 150 cubic metres of balsa wood each – equivalent to several tonnes – according to calculations attributed to the National Renewable Energy Laboratory.

In 2018, international demand for balsa wood increased significantly. The tropical wood is flexible and yet hard, while also being both light and resilient. Ecuador, which is the main exporter of balsa, with about 75% of the global market, is home to several large exporters, such as Plantabal S.A. in Guayaquil, which dedicates up to 10,000 hectares to growing the wood for export.

Balsa fever

The increased demand led to the deforestation of virgin balsa in the Amazon basin, in what came to be known as ‘balsa fever’. Balseros began to illegally deforest virgin balsa from the islands and banks of the Amazonian rivers in an effort to overcome the shortage of cultivated wood. This has had a terrible impact on the Indigenous peoples of the Ecuadorian Amazon, in a similarly brutal way to that caused by mining and oil extraction in recent decades, and the rubber boom at the start of the 20th century.

In 2019, the extension of a road in the Pastaza province bordering Peru through Indigenous Shuar and Achuar territory to link the community of Copataza to the western city of Puyo, caused controversy among the Achuar people.

For the most part, locals perceived the road, which was built without waiting for full Indigenous consensus, more as a threat of extractivism and deforestation than as a contribution to the potential development of their community. But it advanced like a syringe through the jungle, reaching its destination in November of that year.

Meanwhile, on the other side of the world, European Commission President Ursula von der Leyen presented the ambitious European Green Pact in Brussels. The pact, among other things, aimed to reverse climate change by promoting the progressive replacement of fossil fuels, which contribute to global warming through the production of greenhouse gases, with cleaner energy sources.

A wind turbine in a wind farm in Baix Camp, near Matarraña in Spain | Jordi Monserrat

As a result of the 2019 pact, the financial outlook for renewables, including wind power, boosted the number of wind farm construction projects in Europe, and added to China’s wind rush. In December 2020, President Xi Jinping declared that China would increase its installed wind and solar power capacity to more than 1,200 gigawatts (GW) by 2030, a five-fold increase from the current 243GW.

The triggering of ‘balsa fever’ has had devastating consequences for Ecuador’s Indigenous Amazonian communities. The story soon moved from the local media to the international press. And in January this year, The Economist published an article pointing out the problems that the irregular extraction of balsa for wind turbine blades had caused in Ecuador, highlighting the negative impact on the Waorani Indigenous people, based within the Yasuní National Park.

In September, when democraciaAbierta visited the Achuar indigenous territory, travelling down the Pastaza River, one of the areas most affected by balsa fever, we found that the territory’s balsa had already been completely deforested and that the balseros, in their determination to obtain more wood, had moved onto the Peruvian Amazon.

Rising prices due to supply shortages created an incentive to accelerate search for less environmentally damaging materials

The consequences of this rush have been especially destructive for local communities. In June, the Indigenous leaders of the Achuar Nationality of Ecuador (NAE), reacted by declaring that they would not allow the deforestation of balsa wood in their territory. “Don't make any investment, even if you cut down balsa you won’t be able to extract it, it won’t be sold,” they posted on Facebook.

But it was a futile declaration, which came too late.

In the Sharamentsa community, for example, which has embraced energy innovation by hosting a solar-powered canoe project, and which had actively resisted opening its islands to loggers, one of its leaders finally bowed to pressure – agreeing to the selling of the community’s balsa. It’s a decision that has caused pain, rejection and division among families and has had consequences for the ecosystem of the islands and for the river itself.

The balseros bring alcohol, drugs and prostitution, and pollute the extraction sites with plastics, cans, machinery, gasoline and oil spills. They abandon used chains from their chainsaws. They eat the turtles and chase away the parrots, toucans and other birds that feed on the flowers of the balsa trees. The breakdown of ecosystems by illegal deforestation has profound impacts on the balance of local flora and fauna, which will never recover.

Given the devastating social and ecological impacts of using balsa wood for wind power, it is urgent that the global turbine industry implements strict measures to trace the origin of the balsa wood it uses, to stop the large-scale reliance on this precious natural resource, and to prevent market pressure from leading to unplanned and illegal deforestation.

Fuel containers lie on the landing strip of the community of Sharamentsa, Pastaza, Ecuador | Francesc Badia i Dalmases

Alternatives that are less socially and environmentally damaging need to be relied on instead. Rising prices that followed supply shortages have created a powerful incentive to accelerate this process. According to The Economist, the price of balsa doubled from mid-2019 to mid-2020. In 2019, Ecuador exported $219m worth of balsa wood, up 30% from the previous record in 2015. In the first 11 months of 2020, it exported $784m worth.

In fact, alternative materials have been incorporated into the initial production stage of the blades since at least 2014, and have gone into full production after significant supply problems occurred in 2020, including materials such as Polyethylene Terephthalate (PET), a low-density foam generated from plastic bottles. Consultancy firm Wood Mackenzie has forecast that the proportion of PET use “will increase from 20% in 2018 to more than 55% by 2023, while demand for balsa will remain stable”.

Some of the biggest wind turbine producers are already abandoning the use of balsa wood. Vestas, a world leader in the sector, told openDemocracy it had “significantly reduced” its usage of balsa, instead utilising alternative materials. It said that only two of its turbine variants still have blades that use balsa. For those two models that still use balsa, the wood “only accounts for 150 kilograms per blade”.

An added problem for the blades is their recyclability. The first generation of wind turbines are starting to reach the end of their lifespan, meaning approximately 14,000 wind blades will be dismantled in Europe by 2023, according to Ramón González-Drigo, professor in strength of materials and structural engineering at the Polytechnic University of Catalonia in Spain. “Currently, between 85 and 90% of the total mass of wind generators can be recycled,” González-Drigo told democraciaAbierta. “But the blades represent a challenge due to the composite materials that make them up and whose recycling requires very specific processes.”

For all these reasons, the change of technology is urgent, although the damage to communities and the ecosystem has already been done.

Pressure on rural populations

The socio-environmental impact of wind farms does not end with the issue of massive deforestation of Amazonian balsa. Many of the regions in Europe that host these wind farms are experiencing serious socio-economic and environmental disruption from ever-larger wind turbines.

Wind farms require constant wind conditions in relatively unpopulated territories, where opposition from local populations is weak. This is the case of the Matarraña region, in the Spanish province of Teruel, where several wind farm projects are already in the final appeals phase and are very likely to be installed soon.

Many among the local population feel powerless to prevent the arrival of these million-euro investments that cause dire impacts on fauna, flora, landscape and social cohesion. “Here we have a debate between the need for renewable energy, where wind farms have a clear role, and the need to preserve the territory, the landscape. This doesn’t sit well,” said Eduard Susanna, a rural tourism business owner and olive oil producer based in Calaceite, in Matarraña.

View of a Baix Camp wind farm from the town of Calaceite in the Matarraña region, Spain | Cristina Juliana Abril

Wind power contributed 21.9% of the electricity consumed in Spain last year. The pressure to increase its share in the energy mix is fed by the commitment to decarbonisation and the upward pressure on electricity prices, which have soared to levels never seen before in Europe.

This pressure is felt by Spanish communities near wind farms, which perceive wind power companies “as a very strong aggression”, according to Esperanza Miravete, a geography and history teacher from Valjunquera, a town of 338 inhabitants in the same region of Matarraña. “The same aggressions are taking place in [the less populated rural regions of] ‘empty Spain’,” Miravete said. “There is no figure of landscape protection, there is no natural park or anything that can stop an industrial implantation here.”

Wind energy has already become a key aspect of global strategy and is set for further expansion in the coming years. But there are downsides to this boom. The deforestation pressure on balsa has been brutal for the Amazonian Indigenous people of Ecuador, while the pressure on regions in Europe to host new wind farms brings with it conflict.

This has created a green paradox. We need to decarbonise the global economy as soon as possible, and wind energy is a central part of that equation. However, this form of renewable energy will not be ethical or sustainable until every component involved is guaranteed not to cause further harm to the planet and its peoples.

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This article and documentary were supported by the Amazon Rainforest fund of the Pulitzer Center.

Canada to stop financing fossil fuel projects abroad

 

24 countries make the pledge, including the United States

Kyle Bakx · CBC News · Posted: Nov 04, 2021 9:00 AM ET | Last Updated: 21 minutes ago

The oil and natural gas sector is a key economic driver as one of Canada's top exports. The federal government agreed to end financing for Canadian fossil fuel project abroad. The commitment was signed on to with two dozen other countries at the COP26 climate summit. (Kyle Bakx/CBC)

Our planet is changing. So is our journalism. This story is part of a CBC News initiative entitled Our Changing Planet to show and explain the effects of climate change and what is being done about it.

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The federal government announced Thursday morning it will cut subsidies that help oil and natural gas companies operate and expand outside the country by the end of next year.

The United States, New Zealand and Costa Rica are also among a total of 24 countries signing the international statement.

The countries are pledging to direct the funds to clean energy development.

If every one of the countries implements the change, the policy could transfer about $15 billion US ($18.6 billion Cdn) a year of public money out of fossil fuels and into clean energy, officials said.

"We are in a climate crisis. We need to urgently reduce emissions in every sector of the economy, everywhere in the world. This, of course, applies to the energy sector as to all sectors of the economy," Natural Resources Minister Jonathan Wilkinson said during the announcement.

"Canada's signature is significant. We are one of the world's largest energy producers."

Natural Resources Minister Jonathan Wilkinson says Canada will end financial support for the oil and natural gas companies to operate internationally by the end of 2022. (Kyle Bakx/CBC)

In an interview on Wednesday evening, Wilkinson said the government has taken the position to end subsidies for the oilpatch and this is a first step in that process. 

"During the election campaign, the Liberal Party committed not to a specific date, but to phasing that out domestically as well. That is something we'll be working on," he said.

• Have questions about COP26 or climate science, policy or politics? Email us: ask@cbc.ca. Your input helps inform our coverage.

Japan, Korea and China, which environmental groups say are some of the largest providers of international public fossil fuel finance, were not part of Thursday's pledge.

Support for overseas coal power plants also ending

In the past week, Canada and the other G20 countries made a similar announcement to end financial support of coal power plants overseas.

"From our perspective and our partners from many civil society organizations, it is rather a historic day," Richard Florizone, president of the Winnipeg-based International Institute for Sustainable Development, said during Thursday's Thursday's announcement.

"After a wave of pledges on coal including from China and others in the past few months, this statement and action today shows that not only is urgent action needed to ensure we can end public finance for fossil fuels, but we can actually achieve it."

The announcement on international financing will impact Export Development Canada (EDC), a Crown corporation providing a variety of financial supports to help companies operate internationally.

Last year, the organization provided the oilpatch with about $1 billion in support after oil prices crashed to record lows, even turning negative.

By the beginning of December 2020, the EDC's oilpatch support included:

• About $852 million in bonding support for 43 companies.
• About $350 million in loans either approved or in the process of approval for 10 companies.
• About $15 million in credit insurance for 32 companies.

It's not yet clear how much of an impact Thursday's announcement will have on the sector.

ABOUT THE AUTHOR

Kyle Bakx

Reporter

Kyle Bakx is a Calgary-based journalist with CBC's network business unit. He's covered stories across the country and internationally.https://www.cbc.ca/news/business/bakx-cop26-fossil-fuel-subsidies-1.6236636?__vfz=medium%3Dsharebar

With shale subdued, Saudi, Russia become more comfortable with oil rally

 NDON/MOSCOW, Nov 3 (Reuters) - Saudi Arabia and Russia are more confident higher oil prices will not elicit a fast response from the U.S. shale industry, OPEC+ sources said, reflecting a desire to rebuild revenue and supporting the case against raising OPEC+ output more quickly.

The two countries lead the OPEC+ group of the Organization of the Petroleum Exporting Countries and allies. OPEC+ supply restraint has underpinned a rally that pushed global benchmark Brent crude to a three-year high of $86.70 last month.

The signs that Riyadh and Moscow are less wary about higher prices help explain why OPEC+ has rebuffed calls from the United States and other consumers for a more rapid unwinding of output cuts made last year during the worst of the pandemic.

"OPEC+ keeps an eye on U.S. oil production and reserves and for the time being the alliance has no worries about that," said a Russian OPEC+ source. "U.S. shale oil output is recovering relatively modestly."

All oil producers suffered a drop in income during the pandemic and the price rally has allowed them to rebuild their balance sheets.

U.S. shale companies were under pressure even before the pandemic to cut spending and expansion and increase returns to shareholders. That pressure has kept them in check even as oil prices have risen to levels that would previously have sparked a boom in shale oil drilling.

The trend looks to have eased OPEC+ concerns that higher prices would lead to more U.S. shale output, therefore making them more comfortable about the rally.

Russia often previously voiced concern that if OPEC did not increase output and keep prices in check, it would encourage more shale drilling. Russian officials have showed no such concern recently, OPEC+ sources say.

PRICE ASPIRATIONS

"There is little doubt that the Saudis and the Russians have raised their price aspirations. They started the year at an unofficial target of $75 Brent but are getting more comfortable with higher," said Gary Ross, CEO of Black Gold Investors and a veteran OPEC watcher.

"The reasons could be a combination of need, politics, and the market being able to handle it because of shale being a less dominant feature with apparent capital discipline," Ross added.

OPEC's forecasts call for no growth in U.S. shale output in 2021, and a modest rise of about 400,000 bpd in 2022, although internal forecasts seen by Reuters suggest the 2022 figure will be revised higher.

"The issue of shale oil has not arisen for several months, neither for the ministers nor at the technical level," said an OPEC+ source.

Investors have punished U.S. shale companies that tried to increase their spending on drilling for the last two years – knocking shares of companies that did not cut their budgets and aim for flat oil production.

U.S. shale operators have pulled away from far-flung locales where the break-even cost is higher than in the Permian Basin, the largest U.S. shale play, based in Texas and New Mexico.

The Permian's output peaked in March 2020 at 4.91 million barrels per day; it is forecast to be at 4.89 million bpd in November, or just 0.5% below that peak, according to U.S. Energy Department figures.

The rest of the shale basins in the United States, by contrast, were expected to produce a total of 3.3 million bpd in November, down 27% from a peak 4.5 million bpd reached in February 2020.

Rapid growth in the non-conventional shale oil supply has caused problems for OPEC in the recent past.

Rising shale output, encouraged by OPEC's policy of cutting supply to support prices, helped create a glut during 2014-2016. This glut eventually prompted the creation of OPEC+, which began to restrain output in 2017.

PRICE RALLY

With shale output seen as unlikely to rebound for now, OPEC+ has been able to avoid action to dampen the price rally.

OPEC+ at its meeting on Oct. 4 was under pressure from the United States to do more to cool the market. The group, sources said, had options to boost output by 800,000 bpd and by 400,000 bpd as called for in its plan. read more

Saudi Arabia made clear it was against adding more than 400,000 bpd, and Russia, which earlier this year was pushing for more rapid OPEC+ output hikes, did not object, OPEC+ sources said.

At its most recent meeting, to be held on Nov. 4, OPEC+ is also expected to stick to an increase of 400,000 bpd.

Saudi oil policy is driven by Crown Prince Mohammed bin Salman (MbS), who needs to fund initiatives such as Vision 2030, an economic reform plan, sources say.

"MbS is a young crown prince and will be a king for years to come and therefore he needs moderately high oil prices to help him deliver on his vision," a Saudi source close to government thinking said, declining to be identified.

"He outlines oil and Saudi OPEC policy himself, and he gave directions that they should stress at the last OPEC+ meeting that there will be no further increase," the source added, referring to the Oct. 4 meeting.

To be sure, OPEC+, Saudi Arabia and Russia have no official oil price target - OPEC dropped such efforts years ago as unworkable - and say the objective of production policy is to balance supply with demand.

Saudi Arabia is more dependent on higher oil prices than other key OPEC+ members. The IMF estimates Saudi Arabia's fiscal breakeven oil price is about $80, higher than other large OPEC producers such as Iraq and the United Arab Emirates. Russia's, in contrast, is around $40.

Russia, while less dependent on oil income than Saudi Arabia, has at various times this year urged higher output. In January, it secured a deal to boost its own production, while Saudi Arabia made a voluntary cut. read more

With shale not seen as a concern for now, calls in OPEC+ for more rapid output hikes have faded.

"The feedback we have from shale has been that investors are focused on recovering their capital, even with high prices, no increase in production is expected in the short term," said another OPEC+ source.

Reporting by Alex Lawler, Marwa Rashad, Gary McWilliams, Olesya Astakhova, Vladimir Soldatkin, Ahmad Ghaddar and David Gaffen; Editing by David Holmeshttps://www.reuters.com/business/energy/with-shale-subdued-saudi-russia-become-more-comfortable-with-oil-rally-2021-11-03/