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Tuesday, March 29, 2011

Drudge, Libya, oil price manipulation, and more...

I used to visit the Drudge Report fairly often, maybe once a week, just to catch up on the latest Republican propaganda lines. Today, I popped over and found a couple of surprises...
Inflation worries push consumer confidence lower...

Home prices STILL falling in cities...
Okay, which is it? Are prices going up or down?

Libya. Drudge seems to celebrate reverses by the Libyan rebels. Do you remember 2003, when we lefties were considered unpatriotic if we did not support the illegal invasion of Iraq? So what, exactly, has changed since then?

(Ah, memories! "Why won't you support our troops?" "Why do you hate America?" And then we had Ann Coulter's assurances that new Venona-style revelations would reveal that America's lefties were all in Saddam's pay...)

Casuistry fans will enjoy the right's attempts to justify Bush's invasion (which did not have U.N. support) while condemning Obama's role in the current U.N. efforts in Libya. Take Fox News, for example: Fact: Bush Had 2 Times More Coalition Partners in Iraq Than Obama Has in Libya. Fox won't tell you that Bush's "Coalition of the Willing" all had to be bribed (and bribed well) in order to be willing. That is not the case today.

Today's right-wing drive to support Our Pal Ghaddafy seems particularly bizarre when you recall the role Ghaddafy played in Reaganite demonology back in the 1980s.

Meanwhile, much of the left pretends that Obama has initiated another Bush-style oil-grab. No. Not true. If this effort were an oil grab, the U.N. and the Arab League wouldn't support it.

Frankly, I think the big oil companies would simply prefer to buy Libyan oil from a stable government. They don't really care who runs that government, as long as the oil keeps flowing. For all my mistrust of Obama, I don't believe that anyone in this White House harbors radical fantasies of conquering Libya and imposing Friedmanism on the entire economy.

So this isn't about oil. I'm cautiously persuaded by Juan Cole's argument:
There is no advantage to the oil sector of removing Qaddafi. Indeed, a new government may be more difficult to deal with and may not honor Qaddafi’s commitments. There is no prospect of Western companies being allowed to own Libyan petroleum fields, which were nationalized long ago. Finally, it is not always in the interests of Big Oil to have more petroleum on the market, since that reduces the price and, potentially, company profits.
That last sentence sent me into paranoia mode. I do some of my best thinking in paranoia mode. (Also some of my worst, so read with caution.)

Remember the price of oil in 2003? Remember what it was by 2007? In 2003, Americans all thought that "owning" Iraq would initiate a new era of really cheap energy. Instead, things went the other way. Arguably, the Iraq war lost support not because of the body count but because the price of gas rose above three bucks a gallon.

The dramatic price rise occurred for a number of reasons, and not least among those reasons was the continual sabotage of Iraq's oil fields by the Iraqi resistance. At least, "sabotage" was the story we got from the media. Here's an example from 2004. And here's an example from just last month. For seven years, it has been nothing but sabatoge, sabatoge, sabotage.

But who are these saboteurs? In whose interests do they operate? Let's repeat Cole's observation...
Finally, it is not always in the interests of Big Oil to have more petroleum on the market, since that reduces the price and, potentially, company profits.
Pinky, are you pondering what I'm pondering...?
Before 9/11 there were 7 countries without Rothschild central banks:
Afganistan, Iraq, Libya, North Korea, Iran, Sudan and Cuba.

Afganistan: invaded (now central bank)
Iraq: invaded (now central bank)
Libya: invaded
I can't quite get on board here, either, with the intimation of conspiratorial elements.

If the acting government is deriving profits from oil - and I assume (stress: assume) that the entity which calls itself the Iraqi government is still profiting in some way from oil sales, one need not ascribe efforts to sabotage those oil sales as conspiratorial - they would also function, in the view of the insurgency, as destabilizing to the regime they oppose.

In the sense that the Iraqi government wants to create an economic stability (particularly for the energy industry - to welcome foreign investment, economic opportunity, and all that jive)... disrupting the production of energy resources helps erode the basis of support for the gov't, on a purely insurgent basis (see here: "4th generation warfare" particularly the writings of William S. Lind).

Involving California/Enron style dynamics into the situation simply isn't necessary to explain the events, and as far as I'm aware there's nothing to support such allegations.
They don't need to manipulate oil higher, they are manipulating the dollar down. Its much the same thing.

Its a direct way of transferring wealth from the poor and middle class to the rich and corporations.

If you have financial assets and not real assets - factories, oil fields, gold etc, you are getting poorer.

Why do you think Gold and Silver are flying. Even equities.

I dont think they have deliberately screwed up oil production. I think it was accidental. I just think it demonstrates that their area of competence is stealing from Americans. Stealing from foreigners is much more complicated. Besides, the real feeding frenzy in Iraq was procurement. Boy did the defence contractors and their buddies make out on that one.

"They don't need to manipulate oil higher, they are manipulating the dollar down."

But during the time period I'm talking about, the price of oil did go up.
"But during the time period I'm talking about, the price of oil did go up."

Not denying it. And I can see why one might suspect conspiracy. A casual observer could easily come to the conclusion that that US policy was directed towards increasing oil prices. After all thats what happened.

All I am saying is that oil prices in dollars are going up faster than oil prices in Asian currencies cos the dollar is being depreciated - and this is definitely a feature (not a by-product) of US policy.

What I would also add is that ther has been a trend towards oil reserves being controlled by national governments rather than Corporate interests. BP for example is experiencing reserve depletion. To get hold of new barrels in the ground they have to partner with governments (not many fields to find in the UK or US these days). And government deals are usual subject to PSAs which are just not that lucrative.

If you wanted to have new oil licenses offered on better terms than standard production sharing agreements, then you would probably need to get involved in some "regime change", so you got to help write the PSA laws.

Like in Iraq.

If you didnt do a good job with this, you might find that oil prices went up cos short term production went down.

But hey, BP doesnt lose anything from that - Russian PSAs, for example, cap the revenue which accrues to the extracting company. So if oil prices go up they dont gain so much, but they dont lose ANYTHING. And the future is brighter thanks to those nice new Iraqi PSA laws.

Bottom line, high oil prices help a bit, but even if they didnt, oil companies would still want to buy themselves a future by getting access to some new reserves in the ground.

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