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Iraqi Oil – the $250bn gift to Saudi Arabia and Russia

Daily Kos, Jerome a Paris
Whenever one talks of Iraqi oil, conspiracy theories abound as to the real motive of the Iraq war, or the intentions of the Cheney clique viz. Iraqi oil.

As I have written before, the only theory that vaguely makes some kind of strategic sense is that Bushco wanted to sit on the Iraqi reserves, deny them to everybody else and keep them for the time in the near future when peak oil strikes and it becomes a huge strategic advantage. Not very useful in the short term, but possibly rational in the long run (in a narrow, zero-sum game tunnel vision sense, but hey, that’s who they are).

But in the meantime, some other players, and I am not talking about ExxonMobil or the other majors, are laughing all the way to the bank.

(20 December 2005)
More from Jerome over the past week:
A pipeline is like a marriage with kids (Dec 16)
Energize America – A Blueprint for U.S. Energy Security (Fourth Draft) (co-authors devilstower, Meteor Blades and many others; Dec 13)
Countdown to 100$ oil (18) – OPEC happy with oil above 50$ (Dec 12)
Wind power now CHEAPER for US retail consumers (Dec 11)

Roger Ebert picks Syriana as #2 movie for 2005

Roger Ebert, Chicago Sun Times
“Syriana” is an endlessly fascinating movie about oil and money, America and China, traders and spies, the Gulf States and Texas, reform and revenge, bribery and betrayal. Its interlocking stories come down to one thing: There is less oil than the world requires, and that will make some people rich and others dead. The movie seems to take sides, but take a step back and look again. It finds all of the players in the oil game corrupt and compromised, and even provides a brilliant speech in defense of corruption, by a Texas oilman (Tim Blake Nelson). This isn’t about Left and Right but about Have and Have Not.
(9 December 2005)
Syriana appears as #2 in Ebert’s list of the year’s 10 best films. Mentioned by David Roberts at Gristmill. Also weighing in on Syriana is James Howard Kunstler.

The price of oil

Peter Maass, NY Times
…[E]very barrel of oil that is not extracted from America must be drilled from someone else’s backyard, often with little regard for the consequences. Because our appetite for energy has grown over the decades, new drilling, along with the damage it tends to create, has not been halted; it has been outsourced.

…The gymnastics of people like Schwarzenegger – probably the most famous Hummer owner in the world – are emblematic of the cognitive dissonance that runs in our national bloodstream. We demand clean beaches and untouched wildernesses at home but live in an energy-intensive fashion that leads other countries to sacrifice their waters and forests. This disconnect is easily explained. You don’t need to alter your lifestyle much to help protect baby seals or punish Kathie Lee for supporting sweatshops, but you might need to suffer inconveniences – like higher gas prices, energy-conservation efforts and new taxes for alternative-fuels research – if better energy policies were adopted.

If the protection of our environment comes at the expense of others, might it be an expression of selfishness rather than virtue? The more we focus on defending our environment, the less we may focus on environments outside our borders; activism can become anesthesia. Domestic restrictions on drilling have had the unintended effect of insulating our tender consciences from the worst impacts of oil extraction. Out of sight, out of mind. For that reason, could it be that drilling rigs within sight of Key West or in a part of Alaska that is an Alamo of conservationism would be a useful thing? Perhaps a few more drilling platforms in our most precious lands and waters would make us understand that the true cost of oil is not posted at the gas pump.
(18 December 2005)
Good points, but as David Roberts points out, Maass focuses his criticism on his presumed allies among environmentalists. This is a strange form of self-hatred; as if to prove himself macho, Maass has to go after someone, and it might as well be that whipping boy of the right, the environmental movement. This re-direction of negative feelings away from the powerful and towards members of one’s own group is characteristic of oppressed minorities. -BA

Venezuela gives Exxon ultimatum

Greg Morsbach, BBC News
Venezuela has given the world’s biggest oil company, ExxonMobil, until the end of this year to enter a joint venture with the state. Failure to do so will almost certainly result in Exxon losing its oil field concessions in the country.

Venezuela’s socialist government has now signed new agreements with almost all foreign petroleum companies. After months of pressure from left- wing leader Hugo Chavez most foreign oil firms working there have caved in.

They have agreed to hand over a controlling stake of their oil interests to the Venezuelan state. This means that Venezuela now calls the shots in what the foreign guests can and cannot do. In addition, the companies which have signed the new contracts – such as Chevron, BP, Shell and Total – will in future be presented with much higher tax bills by the government.

But Venezuela says it is only fair that the foreigners are made to pay up as they have got away lightly in the past. Much of the oil revenue in Venezuela goes into social projects in shanty towns and poor rural areas.

But the US oil giant, ExxonMobil, is digging in its heels and is so far refusing to agree to the terms of the new deal.

Exxon risks losing Venezuelan operations if it fails to comply. There is growing unease among foreign energy companies based Latin America that they may be forced to become junior partners by a string of left wing governments.

In the case of Bolivia and the apparent shift to the left there following elections on Sunday, it is possible that the new government will decide to follow Venezuela’s example and renegotiate oil and gas contracts with foreign investors.
(20 December 2005)

Morales to nationalize Bolivia oil, gas

Associated Press via Yahoo! News
Winner of Bolivia Election Repeats Vow to Nationalize Oil and Gas, Says He’ll Void Some Contracts
LA PAZ, Bolivia — The winner of Bolivia’s presidential elections has repeated his vow to nationalize oil and gas and said he will void at least some contracts held by foreign companies “looting” the poor Andean nation’s natural resources.

Indian coca farmer Evo Morales said he will not confiscate refineries or infrastructure owned by multinational corporations. Instead, his government would renegotiate contracts so that the companies are partners, but not owners, in developing Bolivia’s resources, he said.

“We will nationalize (Bolivia’s) natural resources,” Morales said at a news conference Tuesday in La Paz.

“Many of these contracts signed by various governments are illegal and unconstitutional. It is not possible that our natural resources continue to be looted, exploited illegally, and as the lawyers say, these contracts are legally void and must be adjusted,” Morales said.
(21 December 2005)
According to a Marxmail report of Morales’s first post-election TV interview with the foreign press, the new president of Bolivia will renegotiate oil and gas contracts. Bloomberg has more on the situation in Bolivia. -BA

Senate rejects Arctic drilling

The Senate on Wednesday narrowly blocked a Republican plan to tap into the nation’s largest untapped reservoir of oil beneath the frozen tundra of an Alaska wildlife refuge.
(21 December 2005)

Calpine opts for Chapter 11

Toby Shelley, Financial Times via MSNBC
Troubled US power generator Calpine has filed Chapter 11 petitions to give it the breathing space to reduce its $18bn of debts and restructure its business.

The move, in a Manhattan court late on Tuesday, is the latest in a drama that has seen the collapse of one of the best known names in the North American electricity market.

…Calpine generates electricity for more than 20m households across the eastern US, as well as Canada and Mexico, operating some 90 power plants.
(21 December 2005)

Costly commodities spark global change
Jorn Madslien, BBC
Oil, gas, gold, copper, platinum – 2005 was the year of high commoditiy prices. Now the world is realising that the era of cheap oil and other raw materials is over.
The financial markets reflect the harsh reality of increasingly scarce resources.

Brent Crude currently trades close to $60 (£34) a barrel, up from about $40 a barrel in early January, and from about $25-30 a barrel 18 months ago. Other commodity prices have also soared, in part because of rising industrial demand from manufacturers, though also due to strong interest from investment funds.

And the boom is far from over.

…Energy prices – that is the cost of oil, gas and coal – have been pushed higher by a combination of a growing fear of future supply shortages and soaring demand from the US – and India and China, where industrialisation is pushing ahead at breakneck speed.

Goldman Sachs, which is one of the most bullish players in the market, now predicts the average price of a barrel of oil to reach $68 in 2006, up from $57 in 2005.

…the impact of rising energy and other commodity costs is not limited to the private sector: governments are also changing their behaviour as they adjust to new realities.

…Financial market players often talk about how the market is governed by two factors: greed and fear. The point is particularly poignant for players on the geopolitical arena, where profit motives are balanced by fears of violence and war rather than mere economic loss.

In other words, energy supplies are increasingly seen as a security issue, rather than merely a question of supply and demand in a competitive market place. Seen in this context, rising energy prices are changing the way world leaders are thinking.

In Russia, President Vladimir Putin is not only busy wrestling control from oil industry oligarchs. He is also keen to reduce Russia’s reliance on neighbouring countries for its exports, so he has overseen the construction of a Gazprom gas pipeline linking Russia with Germany along the bottom of the Baltic Sea (bypassing Ukraine and Poland), and he is keen to develop Murmansk’s Barents Sea port as an exit point for liquefied natural gas (LNG) exports… [USA, UK and other countries are mentioned.]

Science is the solution

The idea that biofuels – made from plants such as sugar beet or corn – can re-emerge as an alternative to oil is gaining currency – in Europe, the US and, not least, in Brazil, where the military government first started thinking about biodiesel during the 1970s oil crisis.

…The era of easy oil may be over, acknowledges Chevron’s chief technology officer, Don Paul, but his message is nevertheless one of high hopes for the future. “We’re not going to run out of fuel. We’re going to learn to make it out of other things.”
(21 December 2005)
For a rebuttal to the techno-optimism of this BBC analysis, see Kurt Cobb’s piece: Energy: Fairy Dust for Techno-optimists”>. -BA

The slippery slope
Is there enough oil? Or is there just enough oil to keep the Bush regime going?

James Ridgeway, Village Voice
American resolve to make the world safe for Western democracy will increasingly depend on economic control of oil. To that end, the U.S. is locked in feverish competition with China for the remaining oil and gas resources in Central Asia and the Middle East. Another huge reservoir of oil and gas lies under Russian control in Siberia.

News last week that Bush crony Donald Evans is on the short list to become head of Rosneft, the Russian oil giant, could give us added sway over that oil pool. Evans was commerce secretary and is a longtime pal of George W. Bush and one of, if not the main, adviser to Bush on energy matters. To have him running Russian oil would be quite a coup.

…Under Bush, the U.S. is committed to lessening dependence on foreign oil, especially oil in such faraway places as the Middle East, in favor of closer-by supplies in Latin America and Canada.

In reality, Bush foreign policy aims to make the U.S. more dependent on foreign oil by domination of remaining supplies. There are any number of signs that demonstrate this policy in action. For example, in the name of energy independence, Bush wants to spend billions to build liquefied natural-gas plants along the U.S. coasts to receive and process gas imported from the Middle East and Africa.

The most likely sources of LNG are in Central Asia, principally Turkmenistan, along with Saudi Arabia in the Persian Gulf. Another large reservoir of gas lies in West Africa’s Gulf of Guinea. The gas trade binds us more—not less—tightly to the Middle East.
(20 December 2005)

Oil prices ‘may hit new heights’

Mohammad Ezz Al Deen, Gulf News Dubai.
The oil price increase will boost the revenues of the Gulf countries, which will earn about $270 billion (Dh991.74 billion) from oil exports in 2005, he said.

“It is interesting to note that Iraq and the United Kingdom have dropped from the top 10 oil producer rankings in 2005 after a very long period,” Al Hajji said.

“It is also interesting to note that Saudi Arabia and Kuwait were the only two Gulf Cooperation Council (GCC) members in the Organisation of Petroleum Exporting Countries, or Opec, to feature among the top ten oil producers of 2005,” he said.

“Factors such as a severe winter and violent hurricane season accompanied by a declining US dollar will definitely lead to new records in the summer of 2006,” Al Hajji.
(22 December 2005)

Churches pray for heating bill salvation

Doug Guthrie, The Detroit News
21 Dec 2005 by . Archived on 22 Dec 2005.
It’s getting chilly in some of God’s houses, where the rising cost of winter heating has pushed the size of monthly utility bills toward the heavens.

Natural gas heating bills in Michigan have jumped an average of 46 percent since last year, putting many houses of worship in a financial pinch at an already difficult time.

As a result, men and women of the cloth across Metro Detroit are dialing down on congregations huddled in sanctuaries that are often bigger than barns.Some are considering cutting community programs, others are seeking greater contributions and one Catholic church closed partly in anticipation of heating bills it wouldn’t be able to pay.

The surprise arrival of a $3,700 natural gas bill for November at St. Charles Catholic Church in Detroit means Christmas services will be held in a cheaper-to-heat basement social hall for the first time in 86 years, when the sanctuary and its 56-foot-high ceiling was being built.

“Right now, we are praying that people will be generous at Christmas,” said the Rev. David Preuss, pastor at St. Charles.
(21 December 2005)