May 13, 2008
Column: The oily truth about America’s foreign policy
With the oil price heading upwards and President George W. Bush heading for Saudi Arabia, as part of a Middle Eastern tour, it is time to accept the truth. The pursuit of oil is fundamental to US foreign policy.
The importance of oil to American foreign policy is both obvious and curiously difficult to acknowledge in public. In the run-up to the Iraq war it was left to the left to make the argument that this was a “war for oil”. Establishment people – those in the know – rolled their eyes at this “conspiracy theory”.
Yet in recent months, both Alan Greenspan, former chairman of the Federal Reserve, and Senator John McCain have come close to saying that Iraq was indeed about oil. In his memoirs Mr Greenspan said he regretted that it was “politically inconvenient” to acknowledge that “the Iraq war is largely about oil”.
The remainder of this column can be read here. Please post comments below.
What does it mean to have a secure supply of petroleum, a commodity that freely trades on the spot market? Unlile natural gas, where a given pipeline supplies a specific consumer, in petroleum markets there is no natural consumer-supplier lock-up: if producer X diverts all his exports to country B, then country A would be able to purchase the resultant over-capacity of producer Y. This is like pressing a baloon on one side, only to have it expand on the other.
Mr Rachman, in what way was the war in Iraq about Israel? Were you referring to the Neocon-Likudnik conspiracy to divide and rule the Middle East?
Posted by: RCS | May 13th, 2008 at 7:48 am | Report this commentIf the oil issue was transparent and official it would really ease up a number of international negotiations.
What we have now is huge information assymetry, when say majority Americans are sure that the only reason they confront with Iran is nukes, while majority of Iranians are probably sure that that is all about oil. That is a false start to any talks and an electoral source for such inadequate leaders as Akhmadinezhad.
Posted by: Andrei, Russia | May 13th, 2008 at 9:02 am | Report this commentMr Rachman: This is indeed a very useful and honest article: Cogratulations.
The problems relating to the american
oil wars are complicated by the fact that not only do they want access to oil, they also want to own production and outsize profits. They go to incredible lengths to get it. I.e wars etc.
(See:http://www.tomdispatch.com/post/174929/michael_klare_america_out_of_gas)
A couple of months back, in Montreal,
I was reading an american journal. The writer was bemoaning the fact that we canadians “think that the oil from our tar-sands belongs to canada” !!
You are also right about the folly of getting everybody on the planet on four wheels.
Our energy policies are not moving fast enough to meet this kind of problem.
For example coal can be made into “clean oil” by a method which the germans invented in the 20’s. We have enough uranium to run the planet for at least another seventy years.
Here in Athens, one of the most polluted european cities, every second car is a 4×4. The gouv had a policy of high tax for these which was forced to abandon by the EU. Crazy.
To RCS: You should read some of the papers which the neo-cons were writing in the 90’s for the Netanyahu crowd. Eventually they got incorporated into a grand design : “A Policy for the Realm…” which was incorporated into the current defense posture of the US.
No,these people must be neutered, their ability to influence policy cut to zero. (See Mearsheimer + Walt)
Posted by: Cassandra | May 13th, 2008 at 9:29 am | Report this commentre Mearsheimer + Walt
great book….hope more people read it
Posted by: Reza | May 13th, 2008 at 10:09 am | Report this commentSome things that this guy says are hard to be misinterpreted by translation. I mean the goals of destroying another nation (even so hated) and enriching Uranium with no obvious purpose.
But anyways historically motivated conflicts like the one between Iran and Israel do not get closer to solution by adding up the “oil factor”.
Posted by: Andrei, Russia | May 13th, 2008 at 11:25 am | Report this commentAndrei
Ahmadi never said he wanted to destroy another nation. that is a sheer fabrication. If Ahmadinejad wanted to kill jews he could start with the 50k already in Tehran, not build them a hospital….He said that zionism, like facism and communism, will vanish from the pages of time. THis has been hyped up to sound like some kind of anti-semitic, genocidal call to arms by the Israelis. It is getting really tiring trying to explain this to people who sound intelligent enough to figure it out for themselves,
Re enricment. Let me remind you that you cannot operate a reactor without enriched uranium, so it is pretty crucial and definitely with an obvious purpose. Iran has the right to enrich Uranium, and seeing as how the US has been trying to destroy Iran for the last 30 years, in particular by bombing their refineries and making it impossible for them to take advantage or their petro wealth, you think the iranians would want to be able to enrich their own uranium without having to beg western nations for it.
Re Israel, Iran has always said it is willing to accept the fact that Israel will remain a racist aparteid jewish state it they just WITHDRAW from the occupied territories as instructed to do so by 30+ UN scurity council resolutions. The problem is that whenever a so called truce or peace deal is brokered, the ISraelis immediaely provoke the palestinians by raiding Gaza or announcing more settlements!!!….
As the saying goes, no justice, no peace
Posted by: Reza | May 13th, 2008 at 11:45 am | Report this commentThis is an excellent article, Mr Rachman; it is a pity that most of the comments above are written by one-issue extremists of various stripes who ignore the point in your column. My only comment is that oil at 125$/b is still too cheap, given its scarcity; in fact still cheaper than mineral water. When it reaches 1000$/b we will really have to change our way of life and consume less, no matter what American politicians say or how many new wars they start.
Posted by: IGM | May 13th, 2008 at 12:07 pm | Report this commentGR, a generally nice piece however two canards seem to have slipped in. The first is that the war in Iraq was about “Israel”. As has been noted on this blog as nauseam, the Israelis were against a destabilisation of the status quo. But as RCS points out, perhaps there was some conspiracy at work.
The second is that Iraq has driven the price of oil to where it is today and possibly upwards. Iraq certainly plays a part, but so does massively increase global demand, Iranian machinations, Venezuelan politics, Nigeria’s internal situation and market speculation; in fact a whole host of issues that are nothing to do with Iraq.
But in essence your premise is correct. America needs to secure its strategic interests, as does China, Europe and every other great power. Nothing strange or startling there. But to your point about “…no leading politician is yet prepared to say that Americans may have to adjust their lifestyles to a world of permanently higher fuel prices.” That’s because prices won’t be permanently high. Increased production capacity, decreased demand as the world economy slows, more oil coming on stream (think Brazil, Canada’s tar sands) and new technologies will all play their part in bringing down the price sooner or later.
“The only plausible routes to “energy security” lie at home in the US – in the development of new technologies and in a change of lifestyles.” Absolutely agree - the sooner the US, and every other country, cut the umbilical cord to the OPEC cartel, the sooner we stop funding the terrorism that is currently plaguing our societies.
Posted by: AYC | May 13th, 2008 at 12:09 pm | Report this commentAYC,
Posted by: Reza | May 13th, 2008 at 12:22 pm | Report this commentNobody is forcing the US to by Middle easter oil. Currently, they dont even buy a drop from Iran. WOuld you blame Mcdonalds for all the fat americans who buy frenchfries and big macs on a daily basis? The fact of the matter is that the US has a choice but for americans, it is much cheaper and easier to kill arabs and Iranians to get their oil that to switch to another source, or simply drive less…….
sorry everybody, one ast thing before i get back to work here…..proof the administration is lying about iran….
http://www.youtube.com/watch?v=hbeHZns83SE
Posted by: Reza | May 13th, 2008 at 12:52 pm | Report this commentEven if the world economy slows down it wouldn’t dramatically influence the new demand structure. With big separate columns for industrialized China and India, which in turn produce consumer goods for US market.
So that would require a dramatic change in the life style with automobiles being only one item in a long list of issues. No single candidate for American (or any other nation’s) presidency will be ever able to offer people that.
With respect to supply it’s really artificially cut in some producing countries (including OPEC and Russia), but that does not make their reserves unlimited. Even with the Arctics and other shore lines explored it’s a question of 50-60 years. Something US administration also understands by keeping national reserves untouched.
So alternative energy source is probably the only answer.
Posted by: Andrei, Russia | May 13th, 2008 at 12:52 pm | Report this commentReza,
You keep writing “aparteid”. It’s spelled: “apartheid”.
AYC,
I’m not an expert, but I don’t think the price of petroleum will come down. All the new production you are speaking of is only economically feasible at today’s prices or higher. So if prices permananetly come down, so would future production, which would again raise prices (of course the market ‘forsees’ all this through futures trading, so there is no need for such volatility).
No one has taken up my idea, presented in my previous comment, that generally there is no need to “secure” the supply of petroleum, which differs in this respect from natural gas. Let us imagine Saudi oil goes off-market for the US, then there would emerge over-capacity with other producers (for instance Mexico), since Saudi oil would glut the non-US market. Consequently, US demand would clear the said over-capacity and we would re-emerge at the same equilibrium we started with. Why am I wrong?
Posted by: RCS | May 13th, 2008 at 1:18 pm | Report this commentRCS, gas can be shipped by tanker too.
Gideon, if blog is amateur journalism, is there scope for amateur editors to help the some contributors to better flow their thoughts?
What does it say of some Mid East countries that, without foreign military intervention, oil would not flow to market?
Posted by: Tom | May 13th, 2008 at 1:21 pm | Report this commentTom, that only extends my proposition to liquefied natural gas (LNG) too (at a price concommitantly higher than that of piped gas).
Posted by: RCS | May 13th, 2008 at 1:34 pm | Report this commentThe Euro and War
April 25, 2008
OPEC Nations are again discussing which currency should be used to pay for petroleum. The disagreement was revealed when a ministerial meeting last November, supposed to be in closed session, was accidentally broadcasted live to reporters.
The Iranian and Venezuelan ministers called for measures that are more radical and a specific mention of the effect of the dollar to be added to the draft declaration: specifically to change the OPEC currency from the dollar to the Euro. This is very significant because petroleum based on the dollar has been the “flywheel” of our economy, keeping it steadily moving through the world economy’s ups and downs.
But Saud Al-Faisal, the Saudi foreign affairs minister, warned the meeting: “The mere mention that OPEC is studying the issue of the dollar is going to have an impact.” He said a reference to the US currency in the declaration could cause the dollar to “collapse”.
As the dollar continues its relentless six-year slide against the euro and other main currencies, the question is being asked more and more: what would it mean if the dollar ceded its global dominance to the euro?
Now turn the clock backwards to 2001. After 9/11 and the collapse of the US economy, Iraq, Iran, and Venezuela ministers wanted to change the OPEC’s currency from the dollar to the euro. An intelligence report came to the US administration that the Saudi minister was leaning towards the idea.
The main rationale for the Iraq Invasion and Occupation offered by U.S. President George W. Bush, former Prime Minister of the United Kingdom Tony Blair, former Prime Minister of Spain José María Aznar and their domestic and foreign supporters, was the allegation that Iraq possessed and was actively developing weapons of mass destruction (WMD). Leaders and diplomats from countries on the U.N. Security Council that opposed the war made statements that contested this view. These weapons, it was argued, posed a threat to the United States, its allies and interests. In the 2003 State of the Union Address, Bush claimed that the U.S. could not wait until the threat from Iraqi leader Saddam Hussein became imminent. In January 2005, the Iraq Survey Group concluded that Iraq had ended its WMD programs in 1991 and had no WMD at the time of the invasion; although some misplaced or abandoned remnants of pre-1991 production were found, US Government spokespeople confirmed that these were not the weapons for which the US “went to war”. The weapons for which the US and coalition partners invaded have not been found. Some U.S. officials cited claims of a connection between Saddam Hussein and al-Qaeda. No evidence of any operational or collaborative relationship with al-Qaeda has been found.
But all this was fine with President Bush. The USA had delivered Saudi Arabia “a clear picture” of what could happen in they abandoned the US Dollar for the Euro currency. Even Iran, who in 11 years could not destroy the Iraqi army, was suddenly mum on the dollar issue.
The dollar vs. Euro question is today a serious one because the US Federal Reserve has been pumping new dollars into the global economy at an astounding pace. A broad measure of US money supply growth was increasing at a rate not seen since 1971 when President Richard Nixon imposed price controls and ended the dollar’s convertibility into gold, which recently roared above $1,000 an ounce. The result is consumer prices having recently climbed 4 per cent from a year ago, and wholesale prices having soared 6.9 per cent. All of this leads to higher consumer price inflation around the corner. We are living witnesses to Milton Friedman’s famous dictum that “inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output”.
The Fed is acting with the best of intentions to head off a recession. But in a rapidly globalizing financial marketplace, it is in fact accelerating the demise of its own unique powers. Virtually all national economies show a positive link between currency depreciation and inflation and between depreciation and interest rates, meaning that their central banks cannot use loose monetary policy to stimulate their economies – it only fuels capital outflows and a rise in market interest rates to attract it back. Not so the US, whose currency has commanded a unique premium as the global store of value and the transaction vehicle for international trade. But this may be changing. The dollar is looking increasingly like a typical developing country’s currency, with long-term market interest rates, crucial to determining borrowing and investment behavior, climbing as the Fed pushes hard in the other direction—Stagflation.
If international use of the euro were to continue to rise, the Fed would lose other important powers. In a financial crisis, central banks are supposed to act as “lenders of last resort”, printing money to prop up banks and reassure their depositors. This does not work in developing countries. People withdraw money anyway. Their fear is not that the government will let the banks collapse but rather that printing money brings inflation and depreciation. So, they exchange their currency for “hard currency”, undermining the putative powers of their central banks.
But what if Americans were to do the same, selling dollars for euros in a crisis? The Fed would become impotent. This is not science fiction. American investors have lately been pouring money into foreign bond funds at a record rate.
What about America’s political power in the world? A continuing fall in the dollar means a fall in the global purchasing power of all its foreign assistance, whether for humanitarian, economic, or military purposes.
But it means much more than that. The US has exploited the unique role of the dollar in international trade and investment to disrupt the financial flows of its adversaries, such as North Korea and Iran. If such transactions switched to euros and were funneled through institutions not doing business in the US, this power would be neutered. The US would likewise lose influence over both friends and enemies facing financial problems, as they would be looking increasingly to Europe for euros, rather than to America for dollars.
The irony of this is that the current administration has not learned from the Iraq fiasco: invading a country does not protect your currency. Fast forward to 2008 and now there’s talk of invading Iran. You will hear threats of nuclear proliferation being mentioned by the current President Bush. But in the end, it is always about money. Iran would be the next easiest target to again influence “our friends” the Saudi’s to “stay the course of the dollar.”
Posted by: By Carlos T Mock, MD | May 13th, 2008 at 1:54 pm | Report this commentRCS,
Not sure that’s necessarily true. For example the huge new field discovered in Brazil does not fall under this umbrella. And I understand that is due to come online in two years. Also, as you will appreciate, it takes time for any increase in production facilities (drilling platforms, not to mention refining capacity, etc) to come on line. Given the high oil price, there has been increased focus on bringing new production facilities to bear - when this happens, it will lead to increased supply.
One final point. I see that the IEA has again revised down its forecast for 2008. OECD demand is down. China slightly up. The IEA have also said that oil production has been in SURPLUS for the past two months. Clearly demand is falling. Prices will fall, even if not in the short term.
Personally I am in favour of a high oil price. It encourages us to break the relationship with the wahabists. I just think it won’t happen any time soon.
Posted by: AYC | May 13th, 2008 at 2:50 pm | Report this commentCassandra”The problems relating to the american
oil wars are complicated by the fact that not only do they want access to oil, they also want to own production and outsize profits. They go to incredible lengths to get it. I.e wars etc.”
GR”The Iraq war was about lots of things: WMD, remaking the Middle East, democratisation, human rights, Israel, terrorism, the desire for a massive demonstration of American power. But oil was certainly among the motives. It is common to say that the Gulf is a “vital strategic area”. “Strategic” is shorthand for saying that it is home to two-thirds of the world’s known oil reserves.”
Both of the above quotes echo Michael Klare’s subject matter in a very worthwhile read this month for “The Nation “. (Link below) He concludes that the 2008 election is defining in the sense that it will either lead the US to greater reliance on imported oil via increased military conflicts and combative competition with Russia and China for the remaining supplies of oil and natural gas around the world OR the US can lessen our reliance on oil and develop energy alternatives, and work with China on developing these alternatives, but this means also lowering the US global military profile.
It is true as GR writes that “the Iraq war was about lots of things: WMD, remaking the Middle East, democratisation, human rights, Israel, terrorism, the desire for a massive demonstration of American power. But oil was certainly among the motives. It is common to say that the Gulf is a “vital strategic area”. “Strategic” is shorthand for saying that it is home to two-thirds of the world’s known oil reserves.”
However, you could say the very same IF the US ever strikes Iran …i.e., it may also be about “remaking the Middle East, democratisation, human rights, Israel, terrorism, the desire for a massive demonstration of American power”….. But OIL IS certainly among the motives, (I believe the main motive) IF the US ever strikes Iran…and that includes even using the growing conflict in Lebanon as the “excuse” to finally strike Iran or strike Hezbollah to provoke Iran to enter the fray and therefore providing the “need” for the US to go to war with Iran…In general, I think we are in for a difficult summer
http://www.thenation.com/doc/20080519/klare
Posted by: Lisa-Helene Lawson | May 13th, 2008 at 3:07 pm | Report this commentThere’s the matter of war reparations which Irak will presumably claim from the USA. After WW2, the Allies claimed reparations from Germany, and Germany was presented with a bill for USD20 billions, including reparations to Russia (which ended in 1953).
Posted by: J.J. | May 13th, 2008 at 4:04 pm | Report this commentInteresting how Americans apologized in 2003 for the coup against the democratically elected Prime Minister of Iran, Mossadegh…
According to the CNN Insight (April, 19 2000):
“Back in 1953, Washington and London orginized a coup to oust Iran´s regime and establish a military regime under the shah Reza Pahlevi…U.S. Secretary of State Madeleine Albright made an apology to the people of Iran…
When Iran nationalized the industry, the British Government, under Winston Churchill was furious. London set out to topple the man it blamed - the democratically elected prime minister, Mohammed Mossadegh.”
Winston Churchill, oh my god, the savior of democracy, the hero…..just a terrorist.
Posted by: Enrique | May 13th, 2008 at 4:26 pm | Report this commentReally the apology was short lived because a couple of years later George W. Bush and Aznar organized a coup against the democratically elected Prime Minister of Venezuela, Hugo Chávez…but this time they failed.
Posted by: Enrique | May 13th, 2008 at 4:29 pm | Report this commentEnrique said: “Winston Churchill, oh my god, the savior of democracy, the hero…..just a terrorist.”
Well, Sir Winston certainly was a forerunner to Saddam Hossein as he he advocated the gassing of the Iraqi tribes:
http://www.globalresearch.ca/articles/CHU407A.html
Quote
Winston Churchill’s Secret Poison Gas Memo
stamp] PRIME MINISTER’S PERSONAL MINUTE
[stamp, pen] Serial No. D. 217/4
[Seal of Prime Minister]
10 Downing Street, Whitehall [gothic script]
GENERAL ISMAY FOR C.O.S. COMMITTEE [underlined]
1. I want you to think very seriously over this question of poison gas. I would not use it unless it could be shown either that (a) it was life or death for us, or (b) that it would shorten the war by a year.
2. It is absurd to consider morality on this topic when everybody used it in the last war without a word of complaint from the moralists or the Church. On the other hand, in the last war bombing of open cities was regarded as forbidden. Now everybody does it as a matter of course. It is simply a question of fashion changing as she does between long and short skirts for women.
3. I want a cold-blooded calculation made as to how it would pay us to use poison gas, by which I mean principally mustard. We will want to gain more ground in Normandy so as not to be cooped up in a small area. We could probably deliver 20 tons to their 1 and for the sake of the 1 they would bring their bomber aircraft into the area against our superiority, thus paying a heavy toll.
4. Why have the Germans not used it? Not certainly out of moral scruples or affection for us. They have not used it because it does not pay them. The greatest temptation ever offered to them was the beaches of Normandy. This they could have drenched with gas greatly to the hindrance of the troops. That they thought about it is certain and that they prepared against our use of gas is also certain. But they only reason they have not used it against us is that they fear the retaliation. What is to their detriment is to our advantage.
5. Although one sees how unpleasant it is to receive poison gas attacks, from which nearly everyone recovers, it is useless to protest that an equal amount of H. E. will not inflict greater casualties and sufferings on troops and civilians. One really must not be bound within silly conventions of the mind whether they be those that ruled in the last war or those in reverse which rule in this.
6. If the bombardment of London became a serious nuisance and great rockets with far-reaching and devastating effect fell on many centres of Government and labour, I should be prepared to do [underline] anything [stop underline] that would hit the enemy in a murderous place. I may certainly have to ask you to support me in using poison gas. We could drench the cities of the Ruhr and many other cities in Germany in such a way that most of the population would be requiring constant medical attention. We could stop all work at the flying bomb starting points. I do not see why we should have the disadvantages of being the gentleman while they have all the advantages of being the cad. There are times when this may be so but not now.
7. I quite agree that it may be several weeks or even months before I shall ask you to drench Germany with poison gas, and if we do it, let us do it one hundred per cent. In the meanwhile, I want the matter studied in cold blood by sensible people and not by that particular set of psalm-singing uniformed defeatists which one runs across now here now there. Pray address yourself to this. It is a big thing and can only be discarded for a big reason. I shall of course have to square Uncle Joe and the President; but you need not bring this into your calculations at the present time. Just try to find out what it is like on its merits.
[signed] Winston Churchill [initials]
6.7.44 [underlined]
Source: photographic copy of original 4 page memo, in Guenther W. Gellermann, “Der Krieg, der nicht stattfand”, Bernard & Graefe Verlag, 1986, pp. 249-251
Unquote
Mr. Churchill’s case is a prime example of history being written by the victors.
Best,
P
Posted by: Pacifist | May 13th, 2008 at 4:57 pm | Report this commentP,
What finally counts is that this idea was not accepted. The Brits certainly were gentlemen compared with the Germans, maybe you could argue that Churchill himself was not (though I would disagree), but British society as a whole had moral scruples the Germans certainly did not have. Churchill was not free to act in total disagreement with British cultural norms, he was bounded by many unseen conventions.
It is true the victors write the history; it is also true that the just ultimately prevail.
Posted by: RCS | May 13th, 2008 at 5:19 pm | Report this commentDear RCS,
It is facile to claim that the just ultimately prevail. In fact, there is overwhelming evidence to the contrary.
Saddam Hossein’s gruesome fate was quite exceptional amongst the tyrants who generally die comfortably in bed and frequently are mourned by an adulating populace. (Mao and Stalin come to mind.)
If justice had indeed prevailed, the bombings of Dresden, Hiroshima and Nagasaki would not have gone unpunished.
Talking of dying criminals, how is Ariel Sharon getting on?
Anyhow, we digress from the thread, so I cut myself short.
All the best,
P
Posted by: Pacifist | May 13th, 2008 at 5:47 pm | Report this commentPacifist’s observation that some, (if not most) of the above comments have digressed from the thread strikes me one of the understatements of the year. Reading GR’s blog, I thought the subject was oil. Anyway, since I am not an oilman or energy analyst, I will only comment that, a year or even six months ago, anyone who dared to suggest that the invasion of Iraq had anything to do with oil was likely to be dismissed as a “conspiracy nut”.
Now, with Gideon’s apparent blessing, this connection, which some of us thought was clear right from the start, has finally become mainstream (or “on stream”)? It is interesting to note, however, that there has been almost no attention given in the US media to either Mr. Greenspan’s statement or to Senator McCain’s.
What would it take for the American public finally to focus on the oil factor in the Iraq war? I have one suggestion: A sermon on this subject by the Reverend Jeremiah Wright might just do the trick.
Posted by: algasema | May 13th, 2008 at 11:08 pm | Report this commentBoth my posts were about oil and foreign policy…
The politically correct is a right about oil to defend our energy sources, to guarantee energy supply (something most consumers in Europe and America agree); what is not politically correct is John Meinshaimer and Stephen Walt´s “The Israel Lobby”.
Margaret Thatcher and Ronald Reagan did a good job in support of Western consumers with the support of Norway, Russia, Mexico and other non-OPEC oil producers, something which led to a historical low barrel at a low 10 USD in 1997.
Now, however, what consumers get is oil at 127 USD and going up…something logical taking into account the US embargo against Iran which just recently hast driven the Spanish oil company Respsol and Shell to withdraw from one of the biggest and more promising oilfields in the World to avoid American retaliation. The European Union should do more to guarantee free trade and comfront American coercive policies against European companies.
Also taking into account the failure of Iraq´s Oil production which is still trying to reach the pre-War levels of 2001 (and those pre-war levels were already very low as a consequence of the US embargo)
I think that in spite of rising emerging markets oil will come down again to under 100 USD in one year if the US falls into Recession.
Posted by: Enrique | May 14th, 2008 at 12:42 am | Report this commentI mean politically correct is “writing about oil…”
Posted by: Enrique | May 14th, 2008 at 12:43 am | Report this commentMartin Wolf is a gem!…he really is!…now as I said, I don’t like list…I don’t believe human nature can or should be quantified….but if I made up a list… I would call it the”Gentlemen that are Precious Gems!” list! I would put Martin near the top! Look at his commentary today on Oil Prices..
I especially like this this item on his do nots and dos list:
“Second, do not blame the emerging countries for their growing demand. Citizens of rich countries must adjust to the higher prices of resources that the rise of the emerging countries entails. The only alternative is to attempt to destroy those hopes. That would be a blunder and a crime.”
Posted by: Lisa-Helene Lawson | May 14th, 2008 at 12:51 am | Report this commentThere are obviously too many people wanting to consume scarce resources. Either birth rates will fall, which is doubtful, or the spectacle of starvation will invade our video screens fanned on by hand-wringing journalists eager to make their name in hostile places.
India, China and Asia in general are irresponsible in demanding their right to pollute the skies to the extent of Western nations while having population growth out of control.
This is an Asian problem, not a US or Middle East problem.
Posted by: Tom | May 14th, 2008 at 1:16 am | Report this commentThat is a general puzzle of what happens to environment and prices of resources if the whole world adopts Western living standards.
The answer is basically that there is no enough capacity neither with resources nor with environment. Only India’s population exceeds US, EU and Russia combined. Not talking about China.
I agree that the claim to pollute “to the extent of Western nations” is irresponsible, but as in any external effects case some compensation formula for giving up pollution (and extensive use of resources) should be found.
Posted by: Andrei, Russia | May 14th, 2008 at 4:12 am | Report this commentTom:”India, China and Asia in general are irresponsible in demanding their right to pollute the skies to the extent of Western nations…”
India China and Asia are irresponsible???…Oh really!..it is not even clear that they will even follow a WESTERN economic model of industrialization and wasteful consumerism as they develop their economies…it is quite possible they could be the discoverers of the alternative technlogies which the entire world will need as oil resources become limited…if that is so let’s hope the West is paying them for the alternative technologies instead of plundering them for them…
Posted by: Lisa-Helene Lawson | May 14th, 2008 at 6:21 am | Report this commentThe reason that it’s so rare to have an honest acknowledgement of America’s oil-driven military policy is because it leads to a loss of legitimacy.
Nevertheless, once in a while it is admitted to. For example, during the run-up to the Iraq war in Sept. 2002, Donald Kagan told the Atlanta Journal-Constitution “We will probably need a major concentration of forces in the Middle East over a long period of time. That will come at a price, but think of the price of not having it. When we have economic problems, it’s been caused by disruptions in our oil supply. If we have a force in Iraq, there will be no disruption in oil supplies”
For those who don’t know, Donald Kagan is the co-author of ‘Rebuilding America’s Defences’, the document put out by the Project for a New American Century, a group of hawks which included about half of the Bush administration most senior officials, include Cheney, Rumsfeld, Wolfowitz and Feith. He is also father of Frederick Kagan (author of Bush’s surge strategy in Iraq), and of Robert Kagan, who writes op-eds in the FT.
Posted by: Patrick Cummins | May 14th, 2008 at 6:42 am | Report this commentMr.Kagan’s statements look pretty much like a reply to Mr.Rachman’s column on LD last week.
(c) Democracy 2.0 Neo-cons edition
Posted by: Andrei, Russia | May 14th, 2008 at 7:40 am | Report this comment“The Irak war is largely about oil” (Al G) and “The pursuit of oil is fundamental to US foreign policy” (GR). In that case, why are Americans not enjoying very cheap oil? Because the pursuit of oil is benefiting a only a chosen few in the US.
Secondly, the US economy could be booming, but it is not. Why? Because under the Bush regime military and defence expenditure is currently costing the US economy $600 bn a year (Russia spends $36bn/year). So who are benefiting from the Irak war? A chosen, lucky few companies, groups and individuals.
November 2008 will change nothing imo, if either McCain or Obama gets into the White House. Because a Republican president, or a WEAK Democrat (who can easily be manipulated) will simply produce more of the same.
Posted by: J.J. | May 14th, 2008 at 7:46 am | Report this commentReza, your grasp of history and economics, not to mention reality, is tenuous. Britain’s empire collapsed because its economy was weak and its empire a drain on resources. Its manufacturing base was hopelessly outdated and competitors - notably the US and Germany - were more geared to modern manufacturing techniques. Oil would not have solved the situation. That is palpably not the case with the US. It is the world’s largest economy and clearly it has the means to support its armed forces - the price of oil affects it no more and no less than every other economy.
Just one point regarding Churchill - thanks to him you’re not speaking German.
Posted by: AYC | May 14th, 2008 at 11:41 am | Report this commentIt is heartening to see that Mr. Rachman makes a reasonable stab at long term solutions to the energy problem in his last paragraph but I think he has muddled his thinking on energy security.
“Energy Security” is commonly thought as the availability of energy to those who are willing to pay the market price and energy insecurity as the situation where the markets don’t function propoerly.
If we accept the above premises, the first US war on Iraq was justified as Saddam’s takeover of Kuwait and his threatening stance towards Saudi Arabia would make the markets dysfunction in a major way.
However, it is impossible to argue that the second Iraqi invasion was in a comparable situation. Iraq was not threatening anyone and, in fact, its own production was hampered by the sanctions.
There was no threat to the markets to cause the US invasion and, energy was secure for anyone who was able to pay the (relatively low $26/barrel) market price.
Therefore, to the extent that the desire for oil can be held up as a reason for the American actions, it cannot have been in terms, descibed above, that we understand by energy security but because of:
a-) A desire to rig the market by taking control of a major producer by a major customer.
b-) A desire to physically deny future energy supplies to the strategic and economic competitors of the US (e.g. China) by directly controlling a major producer such as Iraq.
Even post occupation, it is envisaged that the control will continue by the terms of the contracts and laws that the US has imposed on Iraq.
c-) A desire to have a permanent, military stronghoold, not just inside Iraq but on the borders of Saudi and Iran in order to be able to dictate terms in pusuit of ebjectives a and b. (This is less credible as the US has sufficient resources in its naval fleet and based in Qatar and Bahrain already but Iraq has a unique position because of its energy resources and bordering on two other major oil produces).
As Mr. Rachman says, other factors were relevant in the mistaken decision to invade too. (Notably the NeoCon-Likudnik axis that the poster RSC helpfully mentions.)
All teh best,
P
Posted by: Pacifist | May 14th, 2008 at 12:43 pm | Report this commentAYC. The British Empire had reached its zenith; there began an era when the desire of the former British colonies for independence became unstoppable, despite Britain’s attempt to stop the clock, so to speak by force and military intervention.
Empires rise and fall. As regards the USA, its “empire” exists in the form of its post-WW2 “sphere of influence”, but this seems to be diminishing worldwide now. Bush’s military intervention in Irak fits the historical pattern
perfectly.
Second point. Britain was saved from invasion by the Hitler regime by the English Channel, imo. Specifically by bad weather when Hitler’s fleet was ready to sail across the channel. In fact, I believe that Hitler made the same mistake as Napoleon - both of them invaded Russia and the Russian winter beat both of them.
Maybe invading Iraq was THE fatal mistake made by Bush? His logistical lines are very (too?) stretched, just as Alexander the Great’s were.
Btw, the SIXTH hellishly hot summer in Irak is starting for the US troops down there. Just as hellish as a Russian winter, in fact?
Posted by: J.J. | May 14th, 2008 at 12:48 pm | Report this commentJJ, your grasp of history is as tenuous as Reza’s. Bad weather didn’t stop the Germans, I mean how long can a storm go on for. Ever hear of the Battle of Britain? And to draw a historical analogy between operation Barbarossa and Iraq is frankly absurd.
The US can in no way be compared to the British empire; to do so simply confuses the issue and is perhaps wishful thinking. But I would say that it is time that the US spent more of its GDP on developing alternatives to its dependency on oil.
It’s true that this dependency does lead it into positions where it otherwise would not be, and into relationships it otherwise would not have. And for all those victims of terrorism funded by petrodollars, the severing of the link can’t come soon enough.
Posted by: AYC | May 14th, 2008 at 1:34 pm | Report this commentIf Alan Greenspan and John McCain say the Iraq war is about oil, then we can begin to suspect it is about something else.
Posted by: Paskalis | May 14th, 2008 at 1:44 pm | Report this commentSo the oil price will reach $200 / barrel said Goldman? Is it just hype? The final call before the puts start? No doubt before setting off for Saudi Arabia to ask the Saudi to pump more oil, GWB knows (one assumes) that the bankers and traders on Wall Street agree to a fall in the oil price. The American consumer/voter has suffered enough, all (Bush, Wall Street, Riyadh) accept that.
So don’t be caught! Remember the subprime story was not all bad - the smart guys bailed out in time. Same story with the fall in the gold price. Same story with oil now, too?
Posted by: J.J. | May 14th, 2008 at 1:51 pm | Report this comment.
That oil was of some concern during the preparation of Irak 2 is obvious ,during the occupation of Bagdad the oil ministry was the first and only government building secured against looters .
A Texas politician as president and an oil executive as V.P. wouldn’t have brushed it as immaterial ,neither should they have .
The power of the Israeli lobby on U.S. foreign politic is a fact ,AIPAC doesn’t make any bones about it ….it’s legal too .
Quite a few of the Neo-cons are close to the right of Israeli politics , what a surprise !
There is no substitute for oil, it’s the cheapest , most powerful power enabler
The “addiction” of the U.S. population to oil is the same as the “addiction” of any country with an equivalent standard of living ,
less oil mean less personnal energy budget
I.E. a lower standard of living , there is a direct relationship between power consumption and lifestyle .
While the recent Tupis find ( thumb up to the platform crews that was some awesome drilling ),Santos , Marioca and Tupis in Brasil are good news , the coming on line of this excellent grade oil will take five years to get going at least ten years to reach some sizable production , hundred of wells have to be drilled and piped in condition akin to a moon landing ,
that will not be cheap oil either !
The fisher-tropp process of coal to oil is well established ,the south africans perfected it in the SASOL plants , financialy it’s about breaking even now .
While both my spelling and grammar would undoubtedly profit from some editing , it would waste some of the flavor of the original ,
a blog contribution is after all a reflexion of the contributor mind .
.
Posted by: jeannick | May 14th, 2008 at 10:15 pm | Report this commentjeannick,
Your last paragraph raises a smile. However, there is one spelling error I cannot leave untouched: should read ‘Iraq’ not ‘Irak’. The distinction is important in Semitic languages. ‘q’ transliterates Arabic ق (Qaaf; Hebrew ק Qof), which is an emphatic ‘k’ sound.
Posted by: RCS | May 14th, 2008 at 10:58 pm | Report this commentIn Spanish is Irak…and Sephardics use K in their spanish dialect (ladino) much more than castilian spanish.
Posted by: Enrique | May 14th, 2008 at 11:03 pm | Report this comment.
Thanks RCS
Enrique… my Spanish amount to a few grunts about beer and anatomy , my Sephardi Hebrew is virginal in it blankness .
I must plea simple lazy stupidity .
.
Posted by: jeannick | May 15th, 2008 at 7:27 am | Report this commentjeannick,
If i am not mistaken oil sells for about $3 and change in the usa.
Posted by: Cassandra | May 15th, 2008 at 8:44 pm | Report this commentWhat individuals care about is the price at the pump. If oil gets to be 6$/gallon then you will see a definite
shift in the consumption profile of the average consumer.
Jeannick:
Today’s prices at the pump:
Regular $3.77/gallon
Premium $4.0+
Posted by: Cassandra | May 15th, 2008 at 9:06 pm | Report this comment.
the price at the pump in europe is what… 6$ a gallon ?
in quite a few countries the price versus hourly wages is even higher , I’m sure some contributors could enlighten us .
In Sydney this morning it’s 5.85 $US per gallon ( 1.5 A$ / liter )
This in a country of long distance driving and squeletic public transports so the whinning about the insuferable pain of the American motorist raise very little sympathy indeed .The most they can expect is a friendly pat on the back . Welcome to the real world mate
.
Posted by: jeannick | May 15th, 2008 at 10:06 pm | Report this commentAt 11: 40 Pm my time I am confronted with 2 very different stories on Bush’s meeting with King Abdullah…
FT claims:”Saudis to boost oil output after US pressure
By Javier Blas in London
Published: May 16 2008 14:06 | Last updated: May 16 2008 23:17
Saudi Arabia said on Friday that it was increasing its oil production to its highest level in two years, bowing to intense US pressure …..”
WSJ: “Saudis Rebuff Bush on Oil
U.S. Still Struggles
On Energy Policy;
Price Hits New High
By JOHN D. MCKINNON, STEPHEN POWER and NEIL KING JR.
May 17, 2008; Page A1
The Saudi king rebuffed President Bush’s request for higher oil production, in the latest sign of how U.S. leaders are struggling to combat soaring energy costs that have become a major election-year issue”
Really what’s a girl to do but pour a glass of wine, go to sleep and wait to see what the morning brings….
Posted by: Lisa-Helene Lawson | May 17th, 2008 at 7:42 am | Report this commentThe WSJ did get me giggling as it outlines the Democrats in Congress are drafting a “NOPEC” bill..that entails providing the US with the ability to take legal action against OPEC!!!!…I love Obama and want him to win …but it does give one pause to think about having a Dem in White House and Dem congress …Dem controlled Congress get more than a little goofy at times on trade and foreign policy…
To: L-H L.
Sweetie, the whole object is to confuse, although no doubt those in the inner circle (Wall Street and Big Oil) know what’s going to happen to the oil price. Goldman is still forecasting a price of USD140 for the rest of this year but should we believe them?
Posted by: J.J. | May 17th, 2008 at 11:33 am | Report this commentI really dont care about the oil price…that’s not important at the moment …it is more important if Saudis broke with rest of OPEC…the political implications here are as important as the economic …especially for the region…reports are still conflicting…
Posted by: Lisa-Helene Lawson | May 17th, 2008 at 2:52 pm | Report this comment.
Check on the IEA site saudi Arabia has cranked up production by 1.3 millions barrels a day since two months , to give a hand to their ( they think )best friend , they are now producing as much as they probably can plus or minus half a Mill.
To complain about tyrannical regime non representative of the arab population wishes is downright ungrateful , the arab population wishes would probably be unpalatable to G.W.B.
The last time it was tried , Hamas got elected ,the next time could be Lebanon and Hezbollah would get elected ,in Saudi Arabia that would be the return of the Ikhwan
.
Posted by: jeannick | May 19th, 2008 at 2:11 am | Report this commentI am not sure…it is possible the crank up had little to do with Bush visit and more about a signal to Iran over balance of power issue … as usual Bush made a mess of things…insulting Egypt in Egypt no less!…ignoring and/or being insensitive to Palestinians…
Posted by: Lisa-Helene Lawson | May 19th, 2008 at 2:50 pm | Report this commentI suppose Egypt was making headway with a Hamas-Israeli truce…so of course this administration has to rock the boat…
.
I had the experience of spending some time with surly , willfull , dim witted nine years old who though he was very cunning
that make me think of the foreign policy of this administration , with the concepts of armagedon and the Rapture added !
I’m yearning for the swearing in of the new one and the passing of the nuclear codes to someone else .
.
Posted by: jeannick | May 19th, 2008 at 10:56 pm | Report this comment