Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts

Saturday, June 11, 2011

The Wars on Libya

The current attack on Libya by the United States is not the first. According to the authoritative Library of Congress, the attack is the second such war; the first was fought intermittently between 1800 - 1815 against the so-called Barbary States of North Africa led by Tripoli.

The war was never declared by the US House of Representatives as required by the U.S. Constitution. The Library of Congress study analyzed the 250 wars fought by the US and reported that Congress declared war in only five of them: the war of 1812, the 1848 war against Mexico, the 1898 war against Spain, the 1917 World War I, the 1941 World War II.

The Barbary States regular source of income was piracy. The young US paid cash tribute as did European nations to buy immunity for their ships and cargoes. When the Pasha of Tripoli raised the price for American immunity, US refused payment, negotiations failed, US set up a blockade. President Thomas Jefferson persuaded Congress to authorize the building of warships that saw intermittent action until the US blockade was lifted, the US considered resuming payments, a US ship and prisoners were captured and ransomed.

In the final settlement, Tripoli renounced all rights to halt or to levy tribute on US ships. It was not a brilliant triumph and did not end piracy until US Admiral Stephen Decatur scored a significant naval victory over the pirates.

In recent decades, Libya’s pirate/dictator Moammar Qaddafi has engaged in domestic and foreign terrorist actions earning the enmity of the US and other victims. A few years ago, a settlement was reached that satisfied the US and other affected nations: acknowledgment and payment was made by Libya for the destruction of a plane and passengers over Scotland, the responsible criminals were remanded for punishment, and Libya surrendered materials and plans for the manufacture of nuclear weapons they had imported.

Some Libyan tribes have revolted against the harsh Qaddafi regime. NATO and US military forces are helping them, mostly by bombing government installations. US participation has mainly been firing powerful, Tomahawk missiles from US ships in the Mediterranean Sea – an act of war but without authorization from Congress. Congressional resolutions demanding that the president adhere to the U.S. Constitution have failed by close margins despite receiving votes from both Democrats and Republicans.

The attacks on Libya continue. Libya’s prime oil export has been diminished, affecting the world price. Libya's assets frozen in US banks amount to $29 billion. American actions against Libya were acts of war by all international standards and are parallel to US military actions now in effect against Iraq, Afghanistan, and Pakistan, where we are currently fighting wars authorized by Presidents George W. Bush and Barack Obama in violation of our constitution.

Qaddafi and his regime can fairly be described as modern pirates who ought to be resisted militarily - but by methods that conform to our prized national document and heritage, the United States Constitution. Presidential wars are illegal in the United States and unwise everywhere else. Making war, wasting the lives of our youth, and spending the enormous cost are too important to be left to the responsibility of one person and his advisers.

While NATO and US intervention in the Libyan civil war is carried out in the name of human rights, it is not clear which intervening nation will benefit from the overthrow of the Qaddafi regime. And big money is at stake - from the oil funds frozen in the US and future revenues from Libya's oil wells in a world of diminishing supplies. The armed conflict in Libya has taken more than 1.3 million barrels a day off the world market, helping to support the current high price of oil.

Saturday, March 12, 2011

Oil or Israel or Both

When Egyptian youth began their occupation of the Cairo square, it was difficult for the Israeli public to take it seriously. They knew that the Egyptian army dominated the government, that the so-called dictator Hosni Mubarak served at army pleasure. One of the most popular jokes circulating in Israel during the first outburst of protest in Egypt read "Dear Egyptian Rioters, Please don't damage the pyramids. We will not rebuild."
Israel's seeming indifference in the current continuing crisis is matched by its indifference to popular outrage in almost every nation over its 44 year occupation of the West Bank territories once controlled by Palestinians. This indifference was sustained by its belief that authoritarian Arab regimes would keep their subjects’ rage in check and that the survival of the authoritarian Arab regimes would be defended under the United States security umbrella for geopolitical reasons and especially for the continuity of the oil business. The deference to the US was responsible for the stability of Egypt's and Jordan’s peace accords with Israel.
This functioning of power reaches beyond the limits of representative democracy into sanctified areas of corporate profits, national income and world hegemony. Hosni Mubarak is out of power but Israel may once again become the pariah nation in the region. If democracy becomes a way of life there, at least one of the nascent political parties will make demands of Israel. A change of government in Egypt, still undetermined, is likely to undermine Israel's strategic situation, even the degree of US support, as America might be forced to choose between Israel and the wildly profitable flow of Arab oil.

Thursday, May 15, 2008

Solving the Oil Crisis

Solving the Oil Crisis

By Jerome Grossman

High oil prices and a hotly contested election have turned the energy debate into political football. Calls for a gasoline tax holiday this summer would produce miniscule savings to drivers. Cries to force OPEC to pump more oil have been futile as the cartel enjoys enormous profits and wants more. Drilling in Alaska and offshore Florida and California risks serious environmental damage. Demands to tax the multi-billion dollar profits of the oil companies lack political clout and would be opposed by corporate America coast – to – coast.

There are only two ways to reduce prices: increase supplies or reduce demand. This is basic Capitalism 101. Increasing supplies is limited by environmental concerns and cartel power. Reducing demand in the United States, the nation that consumes about a quarter of global production would have an immediate effect on oil prices, bringing them down dramatically but still several hundreds of percent over cost.

Here are some suggestions:

1. Increase the current tax on gasoline to a level that would dramatically decrease auto driving, reduce air pollution and global warming while using the money generated to repair roads and bridges and to modernize mass transportation.

2. Subsidize the auto companies in their retooling to produce cars that obtain 50 miles to a gallon. Why should we wait until 2020 when the technology is available now? Let the automakers repay over a period of years.

3. Institute a rationing system for gasoline and heating oil with special allotments for transportation to and from work.

4. Allow a tax credit or refund for people of lower income to offset the increased tax.

5. Encourage (with a tax break) work by telecommuting that would reduce pollution, traffic and unhealthy stress on workers who sit in gridlock twice a day.

6. Promote a nationally coordinated program of car pooling, ride sharing and more efficient mass transit.

Reducing U.S. addiction to foreign oil would ease the Federal Budget Deficit. Foreign oil suppliers are awash in trillions of U.S. dollars and are using some of them to buy American assets and corporations in the largest transfer of wealth in the history of humanity, without firing a shot.

Goldman Sachs says that the price of oil could reach $200 a barrel this year. Without a plan, our costs could go even higher. Enough is enough. Let's have some serious political leadership for change to stop indulging ourselves in our uncontrolled appetite for oil.

Thursday, December 13, 2007

The Costs of the Iraq War

The Costs of the Iraq War
By Jerome Grossman

About two thirds of Americans now regard the U.S. invasion and occupation of Iraq as a serious mistake. The mistake was planned and organized by President George W. Bush and his administration with the help of too many Democrats who went along with his imperial fantasy. Too many Americans, carried away by superpower imperial glory, expected an easy victory at low cost.

They were wrong. Whether or not military victory will have been achieved at some future time, the costs have been high and far more than the anticipated benefits.

Some of the costs are painfully obvious. About 4,000 U.S. military deaths, about 40,000 U.S. military wounded, Iraqi insurgents and civilians killed and wounded estimated at one million; Iraqis who have fled their homes and their country to foreign lands estimated at two million; cost to the U.S. taxpayer estimated at one or two trillion dollars depending on eventual length of the war; the dramatic decline in U.S. reputation among the 1.3 billion Muslims and most nations, a decline that is harming U.S. business and diplomatic interests.

Some of the costs are less obvious. The power and influence of Iran in the Middle East has been greatly increased. The Sunni regime in Iraq that was a buffer to Iranian expansion was overthrown and succeeded by a Shiite regime friendly to Shiite Iran. If and when the U. S. military leaves Iraq, the new Shiite bloc might threaten traditional U.S. allies, Saudi Arabia, Jordan and Egypt.

Perhaps the most important costs to the U.S. have been the increase in the price of oil which has doubled since 2002, driven up by the Iraq war to $90-$100 per barrel. As the American consumer increases his insatiable consumption of oil and gasoline, the flow of these liquids is matched by the flow of U.S. dollars to oil suppliers.

When the oil producers were buying U.S. Treasury bonds, the effects were minimal. However, the oil royalty have modified their financial strategy by using their U.S. dollars to buy U.S. assets, taking large positions in Citigroup, News Corp., Procter & Gamble, Hewlett-Packard, Pepsi, Time Warner, and Walt Disney, to name only a few. Land, real estate, and skyscrapers are also targets. And the sophisticated investors have hired prominent American bankers, media experts and Washington lobbyists to protect their interests in the U.S. This represents an historic transfer of wealth, unprecedented in human history, financial conquest without firing a shot.

Monday, December 10, 2007

Subsidizing Iowa

Subsidizing Iowa
By Jerome Grossman

The political eyes of the nation focus on the farm state of Iowa where voter caucuses will choose delegates to the Democratic and Republican conventions on January 3. The Iowa caucuses are important because they are the first selection of delegates in the country. For many elections Iowa has determined the political trend by giving enormous political publicity to the winner, boosting his/her chances in the New Hampshire primary and beyond.

As in other states, the candidates are evaluated according to personality, electability, endorsements, organization and positions on issues. In this election, the main issues discussed are the Iraq War, immigration policy, and health care.

But the holy issue in Iowa is not discussed because virtually every candidate has pledged to maintain and increase the enormous subsidies for corn and ethanol production given by the federal government. Only one presidential candidate has declared his opposition, Senator John McCain, and the most recent poll gives him 5% in Iowa, far below his national average.

This year, Iowa's farmers and ethanol refiners will receive tax breaks and subsidies amounting to $2 billion. For ethanol this amounts to $.51 per gallon. Iowa gets back from the federal government. $1.10 for every dollar it pays in taxes; the state is not paying its fair share for the military, education, health, etc. and is actually making a profit on the tax system.

Iowa’s representatives in Congress have guarded the state's interests well, particularly their senators, Charles Grassley (Republican) and Tom Harkin (Democrat). They have important seniority as chairs of powerful committees so that it does not make any difference which party is in power. They have it covered.

The corn subsidies were originally installed to protect small farmers from foreign competition and from the big farmers with lower costs. However, as the small farmers disappear, the subsidies enhance the profits of the biggies.

Production of ethanol from corn is controversial. Federal law requires that this biofuel be 10% of all gasoline sold and the industry is trying to get this raised to 20 or 30%. The fundamental purpose of ethanol is to reduce reliance on foreign oil suppliers. However, some experts question the value of ethanol. They point out that the conversion of corn to ethanol requires so much energy that there are no net savings, that the conversion process requires too much water, that ethanol rich blends are corrosive for metals and plastics, could hurt car durability.

These programs have driven up the price of corn and products derived from corn significantly. Corn prices have doubled and diversion to ethanol is raising the overall cost of food as well as diverting grain from poor countries. Today corn syrup is used to sweeten jams, condiments like ketchup, and soft drinks. It is also a favorite ingredient in many so-called health foods. Big increases in the price of foods with corn syrup will affect the diets of millions of American families, and much bigger grocery costs as well.

As ethanol refining plants spring up all over Iowa, conservation of oil and energy is not receiving necessary attention. Subsidization of rational policies for the solution of local or national problems is an appropriate management tool. In this case, the objectives would be national energy independence and efficient use of energy. The technology exists to dramatically cut auto emissions, to reduce automobile consumption of gasoline, to reduce use of electricity, to operate machines with less energy. Let the federal government subsidize these energy-saving installations initially, modernizing our energy system. Simply replacing every old – fashioned electric light bulb in the country with the latest technology is already making a difference. We could do it with a fraction of the trillions of dollars we are spending abroad on oil, on oil related warfare and occupations, on support for client oil-producing states.


The Iowa caucus campaigns would be a prime place to raise these questions. Is there a candidate from either party with the courage to defy conventional Iowa political wisdom, who will demonstrate innovative thinking and the ability to manage the energy problem, by leading the country in a serious discussion of a serious problem? The solution to the energy problem is not in the Middle East but here at home where we can apply our technological skills for the benefit of all 50 states.

Friday, November 2, 2007

It’s the Oil, Stupid

It’s the Oil, Stupid
By Jerome Grossman

While President Bush praises the invasion of Iraq as spreading freedom, while the Democrats in Congress are overcome with admiration for the U.S. troops installing democracy by the barrel of a gun, the rest of the world is saying, “It's the oil, stupid.”

The U.S. is stuck in the Middle East, just where it wants to be, without an exit strategy because it never intended to leave, not as long as the area contains 60% of world oil reserves and 40% of world natural gas reserves.

Do the math. Iraq has 115 billion barrels of known oil reserves, more than five times the total in the United States. In addition, it is the least explored of the world's oil-rich nations. It has been estimated that Iraq has 300 billion, yes billion, barrels of undiscovered oil. U.S. forces are now occupying in Iraq one quarter of the world's oil reserves. And these forces are now in position to protect the oil of Saudi Arabia and to threaten the oil of Iran.

At today's prices, which may be low given that consumer demand is growing in China, India, etc., the value of Iraqi oil would be about $30 trillion. The projected cost of the U.S. invasion and occupation is about $1 trillion. I won't try to evaluate the 4000 U.S. dead soldiers and 90,000 U.S. wounded.

Was the strategy of invading Iraq for its oil reserves developed at the secret meeting of the Energy Task Force in late 2001 organized by Vice-President Cheney? The oil and energy executives attending discussed the world situation at length but the administration refuses to release the details. But they can't fool Alan Greenspan, who was clear on the matter in his new book: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: The Iraqi War is largely about oil.”

While the immense profits were certainly part of the overall plan together with eliminating a dedicated opponent of Israel, neither the money nor Israel was decisive. Probably more important was control of the oil as a tool, or perhaps a weapon in support of U.S. world hegemony. Modern industrial nations require oil for productivity and consumer satisfaction. Crossing the interests of the U.S. will carry the risk of being shut off from the indispensable liquid. The invasion/occupation of Iraq was more than a defensive measure for oil supplies; it gave the U.S. a potent offensive tool to keep other nations in line with American policies.

Wednesday, October 24, 2007

The "Madness" of King George Bush

The "Madness" of King George Bush
By Jerome Grossman

On October 17, President George W. Bush issued a stark warning to the entire world, that if Iran obtained nuclear arms, it could lead to “World War III.” A few days later, Vice- President Richard Cheney reiterated the message, sending a more specific warning to Iran: “We will not allow Iran to have a nuclear weapon.”

Why did President Bush use “World War III?” A U.S. attack on Iran need not involve other nations; Iran has no allies with the obligation, the power, and the inclination to come to their aid. Invoking a World War was a way to send an indirect threat to Russia and China to prevent them from helping Iran achieve nuclear weapons, now or in the future, even as eight other nations have done. Is Bush threatening to set the whole world on fire or did he make another speaking error?

The Russians were scheduled to ship nuclear fuel rods to the Iranian nuclear reactor in Bushehr in November. The contract is legal under the Non-Proliferation Treaty as long as the degree of enrichment is three to five percent. Weapons grade nuclear material must be enriched to a much higher level. The Iranians claim that the reactor will be used only to produce electric power and deny high enrichment.

However, if the reactor becomes operational in November, it would be impossible for the U.S. to bomb the installation. The fallout from the bombing would turn the city and surrounding area into another Chernobyl. In addition, the bombing would release radioactive material over a wide area, as happened in Chernobyl, contaminating the land and causing loss of life throughout neighboring countries in the Middle East, including Israel, perhaps into parts of Europe.

The U.S. wants to preserve its option to bomb Iran from the U.S. fleet in the Persian Gulf, U.S. bases in Europe and the Indian Ocean. The U.S. is trying to prevent Russia from making the shipment. Russia has already delayed once. In the meantime, Secretary of Defense Robert Gates is in Eastern Europe suggesting that the U.S. defer installing missile defense hardware in Poland and Czech Republic, a program that deeply offends Russia. This could be the basis for a deal: no fuel rods for no missile defense system in Poland.

If U.S. intelligence reveals that the shipment of nuclear fuel rods is on the way, the U.S. will bomb Iran before arrival to prevent the Chernobyl effect.

Talk of World War III sounds extreme and even wild: the use of “madness” is a method to obtain concessions by threatening an irrational act. President Richard Nixon and Henry Kissinger liked to use it, frightening opponents into thinking that Nixon was irrational enough to do the unthinkable, thereby obtaining concessions to appease the seeming craziness, a very dangerous way to manage a nation and the world.

These people are playing with millions of human lives.

Wednesday, October 10, 2007

? Divide Iraq into Three States?

? Divide Iraq into Three States?

By Jerome Grossman

For several years, Senator Joseph Biden, D-Delaware, chairman of the Senate Foreign Relations Committee has been promoting a division of Iraq into three separate states, Shiite, Sunni, and Kurd, linked by a weak federal government. The theory is that the separation will allow each group to organize itself in accordance with its own traditions and objectives, to adopt separate policies, to elect its own leaders, thereby minimizing conflict and ending the civil war now raging for power and resources.

The plan needs to be taken seriously, because in September the U.S. Senate formally voted approval by 77 Democrats and Republicans. However, the Prime Minister of Iraq and the U.S. ambassador to Iraq immediately criticized the Biden plan as ineffective and unworkable.

Although each of the three groupings dominate particular areas, in many cities and towns they had been living together for years. Separation would require mass migrations involving loss of homes, jobs, as well as schools and associations that would be painful for all concerned and would certainly lead to local conflict in the very process of separation as people are forced to dispose of their assets.

How would the borders of each state be set? There are no natural divisions and the resolution of the border problem would surely lead to conflict.

How would the oil revenues be divided? Iraq lives off its oil with no other significant assets. In the likely Sunni area, there is no oil. Would they receive a fair division of the revenues? Would it be on a population basis, on area of land, on needs? How much would be stolen by people in the other two states?

Will each area have its own defense forces, or its own police? Would one area import enough arms and foreign soldiers in an attempt to conquer the other two? Would an arms race develop for defensive or offensive purposes?

Could each area afford the inevitable triplication of services notably more expensive than services by a single, unified government? Could each state support itself?

Would these three little weak countries be dominated or absorbed by powerful neighbors Iran and Saudi Arabia?

Would Turkey allow an independent or semi -- independent Kurdistan? The Kurds are the largest ethnic group, 25 million, in the world without their own country. They are anxious to unite their scattered people now residing in Iraq, Turkey, Iran and Syria. Those nations refuse to surrender any part of their territory to the Kurds. Right now, Turkey has many troops on the border of Kurdish Iraq to prevent Kurdish infiltration.

The fact that the U.S. Senate promotes the Biden plan is additional evidence of the dominance of the U.S. in Iraqi affairs. The U.S. has the controlling military power, as well as the political power through the puppets the U.S. selected, installed and supports. However, the Bush administration is unlikely to adopt the Biden plan. The practical difficulties are too great and partition is contrary to the prime U.S. interests in the Middle East. The U.S. needs Iraq as a military base to dominate the area where 60% of the Earth's oil reserves and 40% of the natural gas are located. Control of those reserves will give the U.S. another tool to influence the policies of other nations. The U.S. invaded and occupied Iraq without an exit strategy because it never intended to leave. The continuing occupation will have fewer problems with a unified Iraq. With 737 military bases already in 130 countries, control of Iraq will add another region to U.S. hegemony.

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