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Politics and Economics

Caribbean oil initiative launched

The Venezuelan President, Hugo Chavez, has launched a regional oil initiative to provide fuel at cheaper prices to 15 Caribbean nations. Mr Chavez announced the Petrocaribe plan at a regional summit in Venezuela’s city of Puerto La Cruz.

He said the region had suffered centuries of imperialism and needed to strike out on its own. Critics say Mr Chavez is using Venezuela’s oil to secure diplomatic influence in the Caribbean.

Venezuela is the world’s fifth largest oil exporter, producing 3.1 million barrels a day. It is a leading oil supplier to the US, but Mr Chavez is seeking to develop diversified energy ties with the Caribbean, Latin America and Asia. The Petrocaribe initiative aims to further cut the preferential prices Venezuela gives to communist Cuba and other nations.
(30 June 2005)

Crumbs from the carbon banquet
Building more roads won’t cure Africa’s poverty – but it will worsen global warming

Ian Roberts and Mayer Hillman, The Guardian
According to Tony Blair and the report of the Commission for Africa, what Africa needs most is more roads. More important than healthcare, HIV prevention, security or better governance, road building will jump-start the stalled economy of a continent that has been mired in misery for decades.

The commission’s diagnosis is simple. Africa is poor as its economy has not grown. Improving its transport infrastructure would make its goods cheaper, allowing it to break into world markets and trade its way out of poverty. Of the $75bn needed to implement the commission’s recommendations, 27% would be spent on infrastructure, mainly for transport, compared with 13% on HIV and Aids, and 10% on education.

If road building is posited as the solution to African poverty, we have learned nothing from history. For the past two centuries, Africa’s roads have led to its impoverishment. Its earliest export was the indigenous population consigned as slaves to the Americas. The trade ended in the 1860s and was succeeded by a new wave of exploitation. European traders realised they could use Africa’s cheap labour to extract its abundant minerals and grow cash crops to export to Europe. To this end, Europe had to control Africa, and so the colonial invasion began.
(30 June 2005)

Saudi Ambassador to U.S. Resigns

Al Jazeera via Common Dreams
According to sources close to the Saudi government, Prince Bandar bin Sultan, the longest serving ambassador to Washington, has resigned after more than 20 years in the post…It is thought he would like a senior job back home, such as head of intelligence – a post that has been vacant for several months.

Prince Bandar took up the post as Saudi ambassador to Washington in 1983, when Ronald Reagan was the U.S. president and since he has maintained close relations with all subsequent presidents since then.

He played a central role in building the special relationship between Riyadh and Washington, a task that has become significantly harder since the 11 September 2001 attacks. Known to be in poor health, there has been speculation for some time that he wanted to leave his post.

If the ailing Saudi King Fahd were to die, it is expected that Crown Prince Abdullah would become king and Prince Bandar’s father, Prince Sultan, the current defence minister, would become crown prince.
(29 June 2005)

Energy Policy: It’s bound to get worse

Editorial, Seattle Post-Intelligencer
When the public is upset, Congress feels the need to look engaged. So, the Senate passed an energy bill on Tuesday that will allow its members to say they are reacting to high gasoline prices.

That may be good for the senators. But it will be a big surprise if the end result is beneficial for the American public, the economy or the environment.

The Senate’s legislation still faces a House-Senate conference committee, where the prospects for sensible outcomes will be slim. The House bill is so bad that if the Senate were to get half of what it wants, the outcome would likely be awful.

The Senate bill has come some lengths from the drafts of Vice President Dick Cheney’s energy industry friends. Thanks in large part to Sen. Peter Domenici, R-N.M., the Senate measure is genuinely bipartisan. It contains some decent provisions. Senators for the first time acknowledged the need to address global warming,
(30 June 2005)

U.S. to open energy office in China
Will focus on conservation and renewable energy between the two big energy consumers

Reuters via CNN
.WASHINGTON (Reuters) – Amid rising tensions between the United States and China on oil supplies, the U.S. Energy Secretary will meet with Chinese energy officials Thursday and announce the opening of an energy office in Beijing, a senior department official said Wednesday.
U.S. Energy Secretary Sam Bodman, representing the world’s largest energy user, will meet with officials from the National Development and Reform Commission of China, the world’s fastest-growing user, Karen Harbert, assistant secretary for policy and international affairs, told Reuters in an interview.
…The U.S.-China meeting is the first in a program established last year by former energy secretary Spencer Abraham, and will focus on efficiency and renewable projects to reduce U.S. and Chinese energy demand, Harbert said. “In recognition of the importance of our relationship the (Energy Department) has decided to open an office within the U.S. Embassy in Beijing,” Harbert said. “It will help us to have real-time discussions.”
The department hopes to have one or two staffers in place in Beijing by the end of the year, she said.
(29 June 2005)

Bidding war seen brewing over Unocal

Reuters via CNN
SINGAPORE (Reuters) – As Unocal directors consider whether to recommend CNOOC’s $18.5 billion bid to its shareholders, some fund managers and analysts said they expect rival Chevron to come back to the table with a higher offer.
One analyst said a third party — global major Royal Dutch/Shell — may even jump in to bid for Unocal (Research). So far, the state-run Chinese oil firm’s all-cash bid looks superior to Chevron’s (Research) $16 billion-plus stock-and-cash offer, some analysts and investment bankers said. But if political objections to the CNOOC (Research) bid fade, that could force Chevron to increase its bet.
(29 June 2005)

Mexico’s Congress Approves Bill to Reduce Pemex Taxes (Update1)

Mexico’s congress approved legislation that cuts taxes on state-owned oil company Petroleos Mexicanos, allowing the world’s third-largest oil producer to keep more profit to invest in oil and gas exploration.
(28 June 2005)

Mexico: the state, oil and silver
Roland Watson, Gold-Eagle website
The giant Cantarell Oil Field lies deep under the water of the Gulf of Mexico. But in financial terms it stands astride the entire nation of Mexico. Since its discovery in 1979, it has been the mainstay of Mexican production accounting for nearly 60% of the country’s total production of over 3.3 million barrels of oil per day.

That number of 60% is also appropriate as it is the cut that the Mexican government takes from the revenues of the state oil company, Pemex in taxes every year. With those revenues totalling $69 billion last year, the Mexican state is whistling all the way to the bank. And the good times just seem to keep on rolling as crude oil has stubbornly stayed in the $50 region most of this year.

At the political level, these revenues add up to about one third of government spending on welfare subsidies and so on. A small calculation shows that the output of Cantarell provides about 20% of government spending funds.

Now for the bad news, this is set to decline at an alarming rate with the recent announcement from PEMEX that 2005 is the year that Cantarell will begin an irreversible decline in production. This is set to drop from 2.11 million barrel per day to 2.02 million for this year. At $50 a barrel, that is a loss to the State coffers of nearly a billion dollars over the year. And what is more, we can expect the rate of decline to accelerate into double digits. Why is that? A look at the chart below will explain it.
(29 June 2005)
Roland Watson is publisher of the The New Era Investor and contributes to Energy Bulletin on PO-related topics.


Future climate could be hotter than thought – study

Patricia Reaney, Reuters via Yahoo!News
LONDON (Reuters) – Global temperatures in the future could be much hotter than scientists have predicted if new computer models on climate change are correct, researchers said on Wednesday.

Improvements in air quality will lead to a decrease in aerosols, small particles in the atmosphere that act as a brake on the impact of greenhouse gases. As the effect of aerosols lessen, searing temperatures could follow.
(29 June 2005)

Clearing smoke may trigger global warming rise

Fred Pearce, New Scientist
Global warming looks set to be much worse than previously forecast, according to new research. Ironically, the crucial evidence is how little warming there has been so far.

Three top climate researchers claim that the greenhouse gases already in the atmosphere should have warmed the world more than they have. The reason they have not, they say, is that the warming is being masked by sun-blocking smoke, dust and other polluting particles put into the air by human activity.

But they warn that in future this protection will lessen due to controls on pollution. Their best guess is that, as the mask is removed, temperatures will warm by at least 6°C by 2100. That is substantially above the current predictions of 1.5 to 4.5°C.

“Such an enormous increase would be comparable to the temperature change from the previous ice age to the present,” says one of the researchers, Meinrat Andreae of the Max Planck Institute for Chemistry in Mainz, Germany. “It is so far outside the range covered by our experience and scientific understanding that we cannot with any confidence predict the consequences for the Earth.”
(29 June 2005)

Clues of climate and the Bible’s seven lean years

Robert C. Cowen, Christian Science Monitor
When archaeologists sift through the debris of a vanished culture, they should consider the ancient climate. It can shed light on the bygone habitat and give plausibility to old myths. It can also give a useful perspective on our own climatically uncertain times.

Take the biblical tale of Joseph. The famous seven-year cycle of feast and famine appears to be one of Egypt’s regular routines, according to Dmitri Kondrashov, Yizhak Feliks, and Michael Ghil at the University of California at Los Angeles.

The scientists used new statistical techniques to fill in gaps in 1,300 years of Nile River water levels recorded from AD 622 through 1922. They then searched these data for climatically significant cycles.

…They also note the need for Joseph-like wisdom today. They explain that the “fairly sharp shifts” in river levels that have recurred in the past 1,300 years “support concerns about the possible effect of climate shifts in the not-so-distant future.”

The ancient Mayans on the Yucatan Peninsula could have used such wisdom. Their once-flourishing civilization collapsed between AD 750 and 950. Many archaeologists suspect that prolonged drought was the precipitating cause.

Now a remarkable geological record that tracks the relevant climate on a bimonthly basis strongly reinforces that conclusion.

…Many parts of the world, including North America, are stretching their fresh water resources to the limit. Even without man-made global warming, the climate could throw another dust bowl at us that we might find very hard to endure.
(30 June 2005)
The same metaphor was used by David Ehrenfeld in his 2003 article, The Joseph Strategy(“As the energy emergency unfolds, is the blackout of 2003 a preview of things to come?”). -BA

How global warming is changing the world
(special report)
The Guardian
About 20 articles on different aspects of global warming.
(30 June 2005)

One in six countries facing food shortage

John Vidal and Tim Radford, The Guardian
One in six countries in the world face food shortages this year because of severe droughts that could become semi-permanent under climate change, UN scientists warned yesterday.

In a stark message for world leaders who meet in Gleneagles next week to discuss global warming, Wulf Killman, chairman of the UN food and agriculture organisation’s climate change group, said the droughts that have devastated crops across Africa, central America and south-east Asia in the past year are part of an emerging pattern.
(30 June 2005)

Solutions and Sustainability

Los Alamos to Kyoto’s rescue

Kai Bird and Martin J. Sherwin, Christian Science Monitor
…Most people still think of Los Alamos as strictly a weapons lab. But since the end of the Cold War many of the lab’s scientists have been doing research on fuel cells, solar energy, fusion, and other cutting-edge technologies. It is not an exaggeration to say that the viability of our nation’s economic and environmental future depends on achieving breakthroughs in these fields.

This is not work that can be done most effectively by a defense contractor. History suggests that only the government can marshal the commitment of will and resources necessary to effectively combat global warming. Only the government can inspire scientists with a sense that this is a national mission. And only a great university can create a research atmosphere that will attract the talented scientists needed to get the job done.

Nevertheless, the Bush administration has decreed that the University of California must partner with a defense contractor if it is to bid to manage Los Alamos…Astonishingly, the government’s bidding criteria amount to a corporate giveaway.

…It is time to change Los Alamos’s mission. Give the defense contractors the job of dealing with our arsenal of nuclear weapons. But let’s invest in a new Manhattan Project committed to winning the race against pollution in the 21st century.
(30 June 2005)

Xiaokang Shehui
(“society of small peace/comfort/health” in China)

Mike Millikin publishes Green Car Congress, WorldChanging
According to Wikipedia, the Chinese term “xiaokang society” (xiaokang shehui, literally “society of small peace/comfort/health”)—first applied in China’s Classic of Rites (one of the five classics of Confucianism) some 2000 years ago—has been widely used in the PRC since around 2002.

The vision of a xiaokang society is one in which most people are moderately well off and middle class, and in which economic prosperity is sufficient to move most of the Chinese population into comfortable means, but in which economic advancement is not the sole focus of society. Explicitly incorporated into the concept of a xiaokang society is the idea that economic growth needs to be balanced with sometimes conflicting goals of social equality and environmental protection.

This last weekend, resource efficiency was the topic of a special session during the 2005 meeting of the China Development Forum in Beijing, and in it, resource-efficiency was explored as an aspect of xiaokang society.
(30 June 2005)
Nice piece on Chinese sustainability by Mike Millikin, publisher of Green Car Congress. Considering the importance of China for PO and the environment, there’s remarkably little reporting on it in the English-language media. -BA