>Reagan forcing the issue by spending the Soviets into insolvency because of the arms race
I agreed with most of what you said but you're wrong here, the Saudis forced the Soviets into insolvency because they didn't like the Soviet actions in Iran and Afghanistan. The Saudis were able to sell oil at a lower price than the USSR, took advantage of that and broke them. Any extra spending incurred by Reagan is a drop in the ocean compared the complete destruction of their revenue source.
"A central instrument for putting pressure on the Soviet Union was Reagan’s massive defense build-up, which raised defense spending from $134 billion in 1980 to $253 billion in 1989. This raised American defense spending to 7 percent of GDP, dramatically increasing the federal deficit. Yet in its efforts to keep up with the American defense build-up, the Soviet Union was compelled in the first half of the 1980s to raise the share of its defense spending from 22 percent to 27 percent of GDP, while it froze the production of civilian goods at 1980 levels."
Consider the other event that was contributing to that 20% increase in defense spending. (ie. the Afghanistan war)
Afghanistan was part of the Russian sphere of influence since the days of the imperial "Great Game" era. The Russians didn't invade Afghanistan because they got a kick out of tribal politics -- their sphere of influence was being threatened.
You, briandear, and refurb are painting with broad strokes where a more nuanced view might provide more insight. See the Reynolds, Kolodziej paper [1]. It was a complex situation with many factors.
I was curious about your claim, so I did some cursory digging to compare defense spend against potential oil export revenue. "Potential" because I can't find evidence the USSR exported before 1990.
According to some inflation-adjusted data I found [2], from 1980-1990 (approximately the period everyone is likely discussing here), in real terms the $/bbl dropped from $104.49 to $40.67. At this point the analysis of your claim becomes rather challenging. According to the US EIA [3], the USSR had no import/export figures to report prior to 1992. What we have left is to posit their total imputed revenue loss upon all production, and guess at their losses from various barter-like trades they performed for the oil. I'd appreciate it if anyone had more accurate data (unfortunately, Wolfram Alpha doesn't have this kind of data).
Assume for the sake of discussion you were right, and the Saudis pushed down the price of oil from 1980-1990. How much did this cost the USSR in lost oil production revenue? I pulled total production numbers from an US EIA spreadsheet [4]. By my calculations (I'll post the spreadsheet to a Google Docs if anyone is really interested in pursuing this), it is $2.2375E+12 USD in real terms, or $2.2T in round numbers. Even if the USSR consumed 50% and exported the rest in swap trades, that is still $1.1T over 10 years.
Taking refurb's numbers on defense spend and assuming an equal distribution across 10 years of $13.2B extra per year, or $132B over 10 years for the US. Even if we assume the USSR kept pace with that spending, or even doubled, you are right, the potential export losses on USSR oil dwarf the defense spending. If I were Russian, I'd want a Putin at the head of the table in a geopolitical climate that engineers that kind of machination, too. If this was engineered as some claim, it is one of the greatest untold stories of market manipulation and geopolitical chutzpah of astonishing scale.
Here is where it gets interesting and I can't connect the dots to tie up your theory. If you look at the US EIA figures [5], Saudi Arabian production dropped from 1980-1985. That is not consistent with the theory that Saudi Arabia pushed down prices during that period, as one would expect them to flood the market to accomplish a price decline.
I'm intrigued to hear other explanations of what caused that precipitous price decline in the 1980-1990 period that would be consistent with the available data.
I agreed with most of what you said but you're wrong here, the Saudis forced the Soviets into insolvency because they didn't like the Soviet actions in Iran and Afghanistan. The Saudis were able to sell oil at a lower price than the USSR, took advantage of that and broke them. Any extra spending incurred by Reagan is a drop in the ocean compared the complete destruction of their revenue source.