Tag Archives: Mideast oil

Energy at home, energy abroad: disaster


Pres. Barack Obama’s war on fossil fuels is adding to world instability already wracked by international debt, demographic bulges and largely unpredictable galloping technology.

Domestic implications of his policies are increasingly apparent: the closing in of prospecting and drilling is costing tens, perhaps hundreds of thousand of jobs. The attempt to choose winners and losers through “green energy” subsidies is producing market distortions, huge losses of taxpayers’ funds and corruption rarely seen since the old Soviet Union’s Gosplan. Using executive fiat for arbitrary environmental rulings after Mr. Obama’s “cap and trade” quietly died in Congress is eroding Constitutional government by creating “precedent” for defying public opinion as expressed through the legislative process.

On the world scene, the impact is equally grim, although as always with intricate politico-economic problems, difficult to quantify.

It is a given, of course, that world energy is, as the economists say, an imperfect market. It runs the gamut: Pres. Hugo Chavez gives 100,000 bbl/da to his ideological buddy Fidel Castro to keep Havana lights on from Venezuela production, a principal source of American imports. Hand-me-down restrictive policies, a heritage of the Carter Administration’s misbegotten Department of Energy and its first head, James R. Schlesinger, dogs natural gas. Cartelization of the industry despite all the legislation and litigation since the Supreme Court broke up John D. Rocekefeller’s Standard Oil in 1911 continues to inhibit competition with the Organization of Petroleum Exporting Countries [OPEC] trying to set production quotas to control prices.

Yet, by and large, world energy is fungible – that is, production, stocks and therefore prices in one region impacts the worldwide market. After becoming a net importer in 1970, then doubling imports since the mid-80s to 50% of total consumption in 2010, the U.S. as world’s No. 1 consumer [and a producer of 25% of the world’s liquid gold] is decisive in establishing price, stocks and supply in other markets.

By impeding U.S. production through its refusal to lift controls, dragging out decisions or initiating or threatening to initiate new controls, the Obama Administration helps put a floor under world prices. That’s despite their erosion by a fall in consumption impacted by the worldwide economic recession, a very “leaky” OPEC struggling to control its 40% of world production, and production in the Persian Gulf for some grades a fraction of costs in North America. At a time of growing worldwide economic stagnation, despite the argument the real price of oil is skewed by a depreciating petrodollar in which most of it is traded, cheap oil remains as it has always been the sine qua non of American prosperity – and probably for world recovery.

Higher prices gorge feudal satrapies with their small backward populations in the Persian Gulf, unable to absorb and efficiently utilize capital. Worse, they indirectly finance world terrorists wherever they may be. For example, Saudi subsidies to mosques and community activities in the U.S. and the West as well as in the rest of the Muslim world carry with them Wahhabbi sect preachers insinuating sharia [pre-modern Islamic law] into Western legal codes, advocating armed jihad against “:infidels” and even fellow dissident Muslim sects or reformers.

Higher prices produce a petroleum bonanza for the increasingly authoritarian and corrupt Russian regime permitting it to avoid basic post-Soviet reforms. They give Moscow’s inefficient producers increasing international political leverage through gas sales to Germany and other Western countries. They reinforce the Putin regime’s efforts to reestablish Soviet hegemony over Ukraine and Central Asia and Moscow’s hope to intervene in a post-U.S. withdrawal Afghanistan.

Higher prices for its meager oil exports has propped up – along with Obama Administration appeasement – the bloody al-Assad dictatorship at war with its own Syrian people.

Not only has the natural gas snafu produced a temporary domestic surplus –with new technology pointing toward vast new production but it prevents potential liquefied natural gas [LNG] exports to high priced markets such as East Asia. U.S. sales to South Korea, for example, would block a proposed Moscow-Seoul gas project whose transit fees through North Korea would bolster the bankrupt, peace-threatening regime in Pyongyang.

Much of this, again, is the Obama Administration’s heritage. But its pandering to environmentalistas within its ranks has exacerbated old problems and invented new ones. With most of the President’s foreign policy initiatives in shambles, the external manifestations of his energy policy could be the straw that breaks the camel’s back.

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Crises – but which is the one?


Clichés come in at least two varieties: those sayings artfully worded, however empty of logic. Others trotted out because they do represent universal truths, vetted over centuries. One of the latter: “history does not travel in a straight line”. Afterward, reinforced with additional retrieved facts and by fads, we concoct a simple, “logical” timeline.

For those of us who lived through long decades of The Cold War, we look back to mistaken views of a world scene played out on many stages. Then as now, drama tended to overshadow more important currents.

Relevant, perhaps, was the 1956 Hungarian Revolution. A Soviet satellite state, incidentally Bloc leader under benighted central planning, attempted escape from Moscow’s grip. It, too, began with youngsters in a square. In part, alas! they were emboldened then too by Washington’s support for “liberation”. But when the brave stood against Communist tanks, the U.S. blinked, fearing nuclear war.

Almost simultaneously, Egypt’s military dictator Abdul Gamal Nasser used the pretext of the Eisenhower Administration’s refusal to build the Aswan Dam megaproject  to “nationalize” the Suez Canal, for a century an immensely profitable Anglo-French commercial entity. To regain control, London and Paris used another pretext, warding off but actually colluding in an Israeli Sinai occupation to insure its own passage through the essential waterway.

U.S. Sec. of State John Foster Dulles adamantly forced America’s allies to relent. NATO Sec.-Gen. Belgian statesman Jean-Paul Spaak, an unsung hero of the epoch, literally in tears, beseeched Dulles: we have sinned but grab this opportunity to secure Europe’s lifeline to Mideast oil. Dulles, forever the moralist, refused “to reward aggression”. Nasser got the Canal, reinforced pan-Arabism sweeping the region, allied with Moscow to bedevil the West until his death. But his legacy was a mess of pottage, dismally failing to produce that long-awaited Arab renaissance, leaving a further discredited secularism for the benefit of his Moslem Brotherhood enemies.

Contradicting another cliché, history does not repeat itself, no more than the same water runs under the same bridge as the stream flows on. Nevertheless, while our attention is focused on increasingly bloody events in Araby, perhaps again more important happenings may germinate the kernel of world history elsewhere:

·        The German parliament has just laid down the law to a more than willing Chancellor Angela Merkel: it will not accept a “Europeanization” of the Euro’s financial debacle. With Greece near civil war trying to impose austerity, its southern tier debtor neighbors – facing rapidly increasing borrowing costs – move inexorably toward new “bail-outs”. No all-Europe institutions or mechanisms can meet those costs. Now the Bundestag has closed the door at least temporarily on Eurobonds [with Germany as prime guarantor] which might repeat might have been an “out”. The Euro as we knew it is doomed. Can “the European project” – the effort to create a stable continent shorn of its age-old capacity for intra-European violence — survive it?

·        A huge, new wave of Muslim refugees from Tunisia, Egypt, now Libya [accompanied by “transiting” Black Africans] is flooding Italy and Europe. They come as Chancellor Merkel, French Pres. Nicolas Sarkozy, and even U.K. Prime Minister David William Donald Cameron [the youngest British leader in 200 years], publicly declare “multiculturalism” dead. Failed Western assimilation of new workers in otherwise declining populations has led to indigestible, economically deprived enclaves abetting bankruptcy for “welfare states” created in the postwar prosperity.

·        The Europeans, as the U.S., finds itself in the grip of a growing threat to physical security from totalitarian Islam but bemused by intellectual confusion reminiscent of the1930s seduction of intellectuals by the Leninist road to utopia. When the Catholic Church’s scholarly leader, Joseph Aloisius Ratzinger, attempted to renew the dialogue between Christianity [and Judaism] with Islam – a 1500-year-old debate – at Regensburg in Sept. 2006, he was howled down by the politically correct. Yet native Europeans, their government – and their economies –are assaulted daily by immigrants who want to continue non-European lifestyles including some of the world’s most barbarous customs, exploiting modern Europe’s tolerance and freedom.

·        China, which within a generation has turned itself into “the world factory”, is being drawn into shaky collaborative international financial arrangements but at only a snailspace. Beijing uses its export of “capital” – slave labor and increasingly stolen technology – to blackmail its trading partners. It expands exponentially a military machine against fictitious enemies. Using largely American and EU debt, Beijing is spurring threatening worldwide inflation, uneconomically pursuing raw materials– and increasing worldwide food shortages which it has helped to create by neglect of its agriculture. Its unlimited infrastructure expansion and claptrap financial structure including unprecedented payments surpluses – now pressured by Washington’s “quantitative easing” in its effort to reflate the world’s engine, the American economy – promises a bubble bursting at any moment.

Therefore, as dramatic and seemingly all encompassing as current Arab world happenings would appear, when this period is looked back upon, it could be other contemporary world crises were more important. We, of course, will never know – which, should, inspire a little humility [admittedly not seen in this unavoidably brief review].

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