Red State Renegade

Don’t rejoice in lower oil prices just yet. Enjoy them, but don’t count on them.

Rises and drops are always attributed to news events by politicians and the media. When Katrina was about to hit, I wrote here that oil would soon be breaking the $70 mark (regardless of storm damage), but that it would be blamed on the upcoming hurricane (of course, no one knew how serious Katrina would be). At the time, there was much discussion about $70 being a giant ‘psychological barrier,’ just as there was epic discussion later on about the $100 barrier.

What history shows is that these ‘psychological barriers’ are just bullshit terms for the pundits and politicians to toss around, and that in reality they don’t exist. The price of oil drives it’s own path based on the primary factors of supply & demand - just the way commodities are supposed to work.

The graph above shows that while events do cause temporary moves in energy prices, there is a long term trend that is much simpler to explain. It has no relation to ‘psychological barriers’ or wishful thinking.

The next big barrier they will talk about will, of course, be $200. Don’t kid yourself - we may be looking back shortly at the good old days of $140 oil. The president of OPEC warned of $200 oil recently, and Goldman Sachs has announced that oil could exceed $200 in the next two years.

And remember, the ‘experts’ have consistently misjudged the price of oil for years:

A global recession is imminent

Never fear…Our Commander in chief tells us the economy is strong.

But some actually had it right all along. Some commentary from before we went to war, predicting that a prolonged war in the middle east would lead to a global recession:

Robert Shapiro, former undersecretary of commerce in the Clinton administration, 10/2/02:
“If the conflict wears on or, worse, spreads, the economic consequences become very serious. Late last year, George Perry at the Brookings Institution ran some simulations and found that after taking into account a reasonable use of oil reserves, a cut in world oil production of just 6.5 percent a year would send the United States and the world into recession.”

Independent, 11/16/02
“A war against Iraq could cost the United States hundreds of billions of dollars, play havoc with an already depressed domestic economy and tip the world into recession because of the adverse effect on oil prices, inflation and interest rates, an academic study [by William Nordhaus, Sterling professor of economics at Yale University] has warned.”

CBS MarketWatch, 3/20/03
“If war with Iraq drags on longer than the few weeks or months most are predicting, corporate revenues will be flat for the coming year and will put the U.S. economy at risk of recession, according to a poll of chief financial officers.

This is not a joke!

Yet another brilliant idea to help bring stability to the Middle East:

“The United States has asked Israel to check the possibility of pumping oil from Iraq to the oil refineries in Haifa. The request came in a telegram last week from a senior Pentagon official to a top Foreign Ministry official in Jerusalem.

The (Israeli) Prime Minister’s Office, which views the pipeline to Haifa as a “bonus” the U.S. could give to Israel in return for its unequivocal support for the American-led campaign in Iraq, had asked the Americans for the official telegram.

The new pipeline would take oil from the Kirkuk area, where some 40 percent of Iraqi oil is produced, and transport it via Mosul, and then across Jordan to Israel.”

Am I wrong, but weren’t the last mid-term elections viewed as a ‘vote for change?’

After flip flopping and giving in on every bill relating to defense, and the Iraq troops, the do-nothing congress has also compromised again on a proposal to boost automobile fuel mileage.

At the same time, Nancy Pelosi and Harry Reid continue to insist that impeachment is ‘off the table,’ despite a petition for Cheney’s impeachment that now lists 127,000 names. As well, An American Research Group poll last month found a majority of Americans — 54 percent — favored Cheney’s impeachment.

Aren’t these people called ‘representatives’ for a reason?

Another upcoming issue is Health Care. We will see if they take a real stand on that or just pay it enough lip service to say that they tried….

What a surprise, gas prices going up this summer:

In the news this week: Halliburton - the ultimate evil empire of oil services, formerly headed by the dark lord himself Dick Cheney - will be moving their corporate headquarters from Houston to Dubai. The reason given is that they would be closer to much of their work, since the oil business centers on the middle east.

This news reeks of something larger…something too large to keep hidden. This is the company that profited more than any other company from the wars of the last five years, and just last month was accused by federal investigators of responsibility for $2,700,000,000 of $10 billion in contractor waste and overcharging in Iraq.

Incidentally, Halliburton is tied to the unfolding scandal about treatment of war veterans and conditions at Walter Reed vet hospital as well.

It could be simply to avoid paying U.S. taxes…to avoid looming investigations…or something more insidious, (like proximity to the upcoming occupation of Iran?)…but something here stinks. And for some reason, I think this time we are going to find out.

Whether anything can be done about it is another story…

Personally I’ve always felt that the real roots of the Iraq war lie in Dick Cheney’s Energy Task force 2001 meetings, which he went to great lengths to keep secretive.

Despite pressure from the General Accounting Office, a lawsuit from Congress itself to force open the records, and Freedom of Information Act suits reaching the Supreme Court, only limited records have been released. Even the members comprising the Task force are shrowded in secrecy, though it is known that the panel included prominent Oil company executives, as well as representatives from Enron (quite possibly the fallen Kenneth Lay).

Some of the earliest leaked (not released) documents included maps showing ALL Iraqi oil fields (the largest undeveloped Oil fields in the world are in Iraq) and tables documenting companies and countries holding contracts to those oilfields.

Yet administration officials have discounted and even belittled any suggestion that our invasion had anything to do with Oil.

Well, this week sections of a new Iraqi Oil law were leaked and began to swirl around the internet, fueling lingering suspicions that our foreign policy has more to do with Energy and money than commonly admitted (imagine that!).

From the NY Daily news:

A proposed new Iraqi oil and gas law began circulating last week among that country’s top government leaders and was quickly leaked to various Internet sites - before it has even been presented to the Iraqi parliament.

Under the proposed law, Iraq’s immense oil reserves would not simply be opened to foreign oil exploration, as many had expected. Amazingly, executives from those companies would actually be given seats on a new Federal Oil and Gas Council that would control all of Iraq’s reserves.

In other words, Chevron, ExxonMobil, British Petroleum and the other Western oil giants could end up on the board of directors of the Iraqi Federal Oil and Gas Council, while Iraq’s own national oil company would become just another competitor.

The new law would grant the council virtually all power to develop policies and plans for undeveloped oil fields and to review and change all exploration and production contracts.

Since most of Iraq’s 73 proven petroleum fields have yet to be developed, the new council would instantly become a world energy powerhouse.

“We’re talking about trillions of dollars of oil that are at stake,” said Raed Jarrar, an independent Iraqi journalist and blogger who obtained an Arabic copy of the draft law and posted an English-language translation on his Web site over the weekend.