Petrodollar Warfare: Oil, Iraw and the Future of the Dollar
Book Reveals the Background – and Blowback – from the First Oil Currency War
The invasion of Iraq may well be remembered as the first oil currency war. Far from being a response to 9-11 terrorism or Iraq’s alleged weapons of mass destruction, William R. Clark’s new book, Petrodollar Warfare Oil, Iraq and the Future of the Dollar, argues that the invasion was precipitated by two converging phenomena: the imminent peak in global oil production, and the ascendance of the euro currency.
Energy analysts agree that world oil supplies are about to peak, after which there will be a steady decline in supplies of oil. Iraq, possessing the world’s second largest oil reserves, was therefore already a target of U.S. geostrategic interests. Together with the fact that Iraq had switched its oil currency trade to euros – rather than U.S. dollars – the Bush administration’s unreported aim was to prevent further OPEC momentum in favor of the euro as an alternative oil transaction currency standard.
Meticulously researched by Clark, a Project Censored Award Winning Author, Petrodollar Warfare examines U.S. dollar hegemony and the unsustainable macroeconomics of ‘petrodollar recycling,’ pointing out that the issues underlying the Iraq War also apply to geopolitical tensions between the U.S. and other countries including the member states of the European Union (EU), Iran, Venezuela, and Russia.
The author warns that without changing course, the American Experiment will end the way all empires end – with military over-extension and subsequent economic decline. He recommends the multilateral pursuit of both energy and monetary reforms within a United Nations framework to create a more balanced global energy and monetary system – thereby reducing the possibility of future oil depletion and oil currency-related warfare.
(15 December 2005)
The Peaks and Valleys Of Oil Dependence
World Watch Institute
World Watch magazine devotes an issue to Peak Oil – this from the editorial:
Although no one knows for sure when oil production will “peak,” nearly everyone in the January/February issue of World Watch magazine’s Peak Oil Forum agrees that the age of oil will end—and the time to start transitioning to alternatives is now. While industry representatives such as Red Cavaney of the American Petroleum Institute argue that failure to develop “the potentially vast oil and natural gas resources that remain in the world” will have a high economic cost, others, such as Worldwatch Institute’s Christopher Flavin, argue that “the current path—continually expanding our use of oil on the assumption that the Earth will yield whatever quantity we need—is irresponsible and reckless.”
A lack of transparency in the world oil market makes assessing oil reserves a guessing game, with figures in official oil reports often based as much on politics as geology: nearly three-quarters of the world’s oil is controlled by state-owned companies, whose reserve figures are never audited. “We know that oil production will peak within our lifetime, we are pretty sure that market prices will not anticipate this peak, and we know that not having alternatives in place at the time of the peak will have tremendous economic and social consequences,” says Robert K. Kaufmann, an energy economist at Boston University. “Doing too little now in the name of economic efficiency will appear in hindsight as rearranging deck chairs on the Titanic.”
While some proponents of “peak oil” like to proffer doomsday scenarios, the Peak Oil Forum participants highlight the opportunity to engage human ingenuity as one resource that won’t peak. “Unless we believe, preposterously, that human inventiveness and adaptability will cease the year the world reaches the peak annual output of conventional crude oil, we should see that milestone…as a challenging opportunity rather than as a reason for cult-like worries,” says Vaclav Smil, a professor at the University of Manitoba.
(January/February 2006 issue of World Watch)
Energy Information Administration Forecast
Chris Vernon, Vital Trivia
Have we, the hydrocarbon depletion aware folk of this world got it wrong? Is it reasonable to think that this small band of retired geologists, academics, amateurs and energy enthusiasts have a clearer idea of what’s going on in the world than the prestigious governments and energy agencies? Someone once suggested to me that the very fact governments and energy agencies didn’t appear to recognise an imminent peak in oil extraction rates as evidence that there wouldn’t be such a peak, at least not soon enough to really worry about. The implied point being that they have a far greater understanding and more resources than then people like us.
Let’s have a look at how this great understanding and their resources have served them in the recent past by looking back at the 2001 International Energy Outlook from the US DOE/EIA IEO2001.
(10 December 2005)
UK: Aviation White Paper Disaster
Chris Vernon, Vital Trivia
Last week we looked at the shocking discovery that the EIA’s International Energy Outlook 2001 was completely wrong in it’s analysis of some major oil provinces, worrying since it seems some people, even governments, actually believe these guys know what they are talking about and use their forecasts to develop policy. Now it’s time to look at another major report from a government agency.
In Dec 2003 the UK’s Department of Transport published their aviation white paper, The Future of Air Transport. It claims to “set out a strategic framework for the development of airport capacity in the United Kingdom over the next 30 years, against the wider context of the air transport sector.”
(17 December 2005)
This is a devastating clear analysis of the white paper by Chris Vernon who concludes that “clearly the underlying assumptions are wrong, leaving us with another fundamentally flawed report which is influencing billions of pounds of expenditure.” -AF
North Slope oil decline leaves Alaskans somber
Tarek El-Tablawy, Houston Chronicle
Alaskan North Slope oil production, once heralded as a domestic mother lode, has hit a new output low — embodying the precarious balance confronting the U.S. as it struggles for energy security in an era of volatility in the international oil market.
The decline in Alaska is led by a slump in output from the once-mammoth Prudhoe Bay field, which has been producing since 1969. At its height in fiscal 1988, the field produced an average of 1.6 million barrels per day; but in fiscal 2005, it was down to 381,000 barrels per day. Overall production in the North Slope has dropped to an average of 916,000 barrels per day from 2.01 million barrels in the same period.
In Alaska, re-boosting output is as much dictated by politics as it is by geology.
While President Bush’s administration has pushed for opening a pristine refuge believed to hold about 10 billion barrels of recoverable crude oil, environmentalists argue such a move would only temporarily delay the inevitable while ruining the delicate Arctic habitat.
(17 December 2005)
A winter fuel crisis of high prices and shortages could darken homes and factories
Marianne Lavelle, US News
Falling gasoline prices make it easy to believe the nation has seen the last of the energy woes that swept in behind this year’s Gulf Coast hurricanes. But they don’t fool an unemployed woman on the Crow Indian Reservation, using the electric oven to warm her house on increasingly crisp Montana nights because her natural-gas heat has been cut off. For brickyard workers in Mill Hall, Pa., unemployment looms after the holidays, because it will be too expensive to fire the clay kilns this winter. And one retiree in a mobile home in Millinocket plans to take her asthma medication once daily instead of three times as prescribed, to save money to pay the kerosene bills that will soar in Maine’s bitter cold.
With the season’s first snowfall hitting the Northeast last week, it is becoming apparent that Hurricanes Katrina and Rita did far more to the nation’s energy equation than spoil Labor Day vacation drives. The storms upset the already precarious balance of the nation’s supply and demand for fuel. So much Gulf of Mexico oil and natural gas production remains in disarray that even with a mild winter, Americans face a Big Chill: astronomical heating bills–on average, 38 percent higher than last year’s record costs for natural gas and 21 percent higher for oil.
Triple threat. That means hundreds of closed factories and enormous hardship for low-income and working poor families, who can expect scant federal government help. And if bitter cold rides in on Mother Nature’s coattails, extraordinary measures will be needed to keep energy flowing, particularly in the Northeast, as natural-gas shortages spill over into oil and electricity supplies. “We pray for warm weather. We have a prayer chain going,” says Diane Munns, an Iowa regulator who is president of the National Association of Regulatory Utility Commissioners. “People are talking not just about high prices but actual shortages.”
Adds Matthew Simmons, a prominent Houston energy investment banker, who has warned of a new era of scarcity: “We’re headed into a winter that could be a real winter of discontent.”
(19 December 2005)
North Sea gas drying up faster than hoped
JAMES KIRKUP, Scotsman.com
Taking evidence from government ministers and energy industry experts, the House of Commons trade and industry committee heard that Britain’s gas is being depleted well ahead of schedule.
That will make the country more dependent on imported gas, and sharpen the problems caused by Britain’s lack of storage capacity.
The natural gas reserves in the UK “Continental Shelf” area are about 600 billion cubic metres, and production is declining from its peak in 2000.
According to current official estimates, the UK is expected to be 50 per cent dependent on imported gas by 2010, and 80 per cent dependent by 2020.
But during their inquiry, the MPs heard that “supplies of gas from the UK Continental Shelf had continued to decline at a faster rate than anticipated, leaving a larger shortfall to be made up from imports”.
(14 December 2005)
Italy: Enel sees possible electricity blackouts due to gas shortage
Enel SpA chief executive Fulvio Conti said that Italy risks electricity blackouts due to a shortage in gas supplies.
Speaking at a parliamentary hearing, Conti said that gas demand is increasing due to further consumption by gas-fuelled power plants, while supply capacity is limited.
Conti called for the construction of regasification terminals in Italy to foster imports of liquefied gas.
(14 December 2005)
UK: Gas-guzzling firms ask for cut-off compensation
Oliver Morgan, The Guardian
Major industrial gas users will write to the Prime Minister and the trade and industry secretary, Alan Johnson, this week demanding compensation if their gas supplies are cut off this winter.
The Energy Intensive Users Group (EIUG), representing industries such as chemical, steel, paper and glass producers which use high levels of gas in manufacturing processes, will argue that companies having supplies cut in emergency circumstances should be compensated for loss of earnings.
(18 December 2005)