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Week 12 - March 24th - 2003 |
| David
Seaton's Energy Links® Editorial In
the first hours of a war, especially a 'media war' it is nearly impossible
to see the battlefield situation with any clarity. Misinformation and outright
lying form part and parcel of war's ancient 'songbook'. Many are singing
off its pages now. It seems clear, though, even at this early stage of
fighting that despite initial "Shock and Awe" Iraq's under-equipped and
underpaid army is standing to fight in defense of its homeland against
a foreign invader. A natural, predictable, human reaction, to be sure.
If this proves to be true it will compound immeasurably the political disaster
of beginning this war without a new UN resolution. The impact on Arab opinion
will be out of proportion to the number of Americans killed or captured.
For Arabs "honor" is a vital concept, a 'living' word and a feisty Iraqi
defense of their homeland against America's overwhelming strength will
quickly - today, instantaneously - take on mythic proportions in the Arab
and Muslim world. A less desired outcome for America would be difficult
to imagine; it will be bad now, worse later; perhaps for generations. What
the United States government wanted were pictures of American soldiers
being joyfully greeted by 'liberated' Iraqis. There have been a few, but
if Iraq's army stands to fight Arab opinion will gratefully latch on to
that. Islam's "humiliation" is seen by many, perhaps most, Arabs and Muslims
as one of Bush prime objectives in this war and any credible resistance
on Iraq's part will cause the "Arab street" to rally to its cause. It could
the 'perverse outcome' of making Saddam Hussein a legendary hero in the
eyes of Muslims everywhere! Last week I called George W. Bush "Murphy of
Arabia" after the legendary sage whose dictum "Anything
that can go wrong, will go wrong" is engraved upon the 'hearts and
minds' of all those who have experienced its timeless truth. I shall quote
it here it in full and suggest that my readers consult its wisdom in the
days to follow. Note:
'number eleven' seems especially written for the PNAC.
Murphy's Law: 1. Nothing is as easy as it looks. 2. Everything takes longer than you think. 3. Anything that can go wrong will go wrong. 4. If there is a possibility of several things going wrong, the one that will cause the most damage will be the one to go wrong. Corollary: If there is a worse time for something to go wrong, it will happen then. 5. If anything simply cannot go wrong, it will anyway. 6. If you perceive that there are four possible ways in which a procedure can go wrong, and circumvent these, then a fifth way, unprepared for, will promptly develop. 7. Left to themselves, things tend to go from bad to worse. 8. If everything seems to be going well, you have obviously overlooked something. 9. Nature always sides with the hidden flaw. 10. Mother nature is a bitch. 11. It is impossible to make anything foolproof because fools are so ingenious. 12. Whenever you set out to do something, something else must be done first. 13. Every solution breeds new problems. David Seaton
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| What
Oil Wants (Newsweek)
The jockeying has already begun, and the race seems likely to be won by American and British firms: ExxonMobil, ChevronTexaco, Shell and BP. According to industry insiders, these giants are now the front runners in part because British and American troops are likely to end up in control of Baghdad, which can’t help but influence Iraq’s choice of business partners. More important, the world’s largest private oil companies are the only ones that can afford both to restore Iraqi oil production, which is now running at under half its 6 million-barrel-per-day capacity, and to develop its vast untapped fields. To protect the tens of billions they will need to pour into a postwar Iraq, the oil giants are likely to push a controversial form of contract that gives them an ownership stake in the oilfields and guaranteed relief from national tax and environmental laws for the life of the project. So far, oil companies have won these deals, known as production-sharing agreements (PSAs), mainly in weak states that don’t know better than to give away the store—but never in the big Middle Eastern countries. “The issue is not oil per se, but ultimately having the large international oil companies change the terms of their involvement in the region” through production-sharing agreements, says Saudi oil and security analyst Nawaf Obaid. In a sense, Big Oil would like to turn the clock back to a time before the great wave of nationalizations in the 1970s, when global —giants known as the “seven sisters” were pushed out of much of the Middle East and Latin America. Today, all the world’s largest oil producers are state monopolies, which control the vast bulk of the most easily accessible fields from Saudi Arabia to Mexico. Private giants like ExxonMobil often get stuck with shaky service contracts, and they own reserves only in their home country or in ever more remote and dangerous regions, from the deep sea to Central Asia. Given the risks, oil companies began searching for ways to create as much long-term stability as they could get, and that’s where the production-sharing agreements first came in, shortly after the nationalizations began. Click here to read more Contents |
| US
not to release oil from stockpiles (Financial Times)
The US on Thursday decided not to release oil from its strategic stockpile leaving the future of the fragile world economy in the hands of Saudi Arabia, the world's largest producer and one of Washington's most controversial allies. Spencer Abraham, US energy secretary, said world supplies were "more than adequate to compensate for any disruption", but that the US would tap into its strategic stockpile if needed. "You don't want to use it too early," said Joseph Stanislaw, president of Cambridge Energy Research Associates, pointing out that the US tapped its inventories the day bombing began in January 1991, five months after Iraq invaded Kuwait. Meanwhile, the Organisation of Oil Exporting Countries announced it would permit its members to ignore their quotas and tap into their spare capacity. However, the statement was seen as a public relations exercise as most Opec members are already producing above their quota and at their maximum capacity. Saudi Arabia, Opec's biggest producer and the only member with substantial spare capacity, in January began to increase the amount of oil it put on the market, raising production to almost 1.5m barrels a day. The decision helped eventually to spark the downturn in oil prices, which yesterday regained some of their losses as the Pentagon confirmed that several Iraqi oil wells had been set alight. But Saudi Arabia's move was not altogether altruistic. The kingdom has made several billion extra dollars in the past three months due to the run-up in prices and its additional production. More importantly, Riyadh was able to mend some of the damage the September 11 terrorist attacks caused to its relationship with Washington. The relationship between the major oil producers and their consumers has improved significantly since the crippling embargo of 1973 backfired on Opec as demand slowed together with the economy and consumers looked to alternative fuels. Click here to read more Contents |
| Saudis
Stock Oil Reserve to Make Up for Iraq Loss (New York Times)
Saudi Arabia has amassed a reserve of nearly 50 million barrels of oil that it plans to use to compensate for possible disruptions of Iraqi oil exports if war erupts, according to a senior Saudi official and industry experts who have been told about the supply buildup. "We have about 50 million barrels, most of it in the country," said the Saudi official, who spoke on the condition of anonymity. "We can tap into it immediately once there is a shortfall." The Saudi stockpile has been built up over the last three months as oil prices have climbed near their highest levels in years. Calls have increased from various political quarters for the Bush administration to release oil from the United States Strategic Petroleum Reserve, which holds 600 million barrels of oil. So far, the administration has said it will let the Organization of the Petroleum Exporting Countries try to make up for any disruptions before tapping the strategic reserve. OPEC is led in effect by Saudi Arabia, the only country with spare production capacity that can be called on in case of supply disruptions. "We will make sure there is enough oil in the market," the Saudi oil minister, Ali al-Naimi, said in a statement. "We have plenty of spare capacity." In New York yesterday, the price of crude oil for April delivery settled at $34.93 a barrel, down 45 cents, on profit taking by traders. During the day, oil traded from $34 to $36.95 a barrel. Industry analysts said Saudi Arabia probably felt compelled to increase production to back up assertions it has long made that it can take care of problems that buffet oil markets. "It is in the Saudis' interest to produce oil and store some of it away, and the cumulative effect of that is a substantial reserve," said Lawrence J, Goldstein, president of the Petroleum Industry Research Foundation. "The Saudis know that sustained high prices weaken economic activity, decrease demand and encourage non-OPEC production. They want to see a predictable, stable oil supply." Iraq has been exporting about 1.5 million barrels a day. The cushion the Saudis have built into their system could make up for about a month's disruption of those exports, although Saudi Arabia does not plan to draw down all 50 million barrels, the Saudi official said. Click here to read more Contents |
| Oil-thirsty
China vulnerable to the side-effects of conflict (Financial Times)
China has until now been one of the world economy's few bright spots. But as war against Iraq appears inevitable, the "factory of the world" faces a harsh external challenge from the impact conflict may have on oil prices. The country is the world's third biggest oil consumer but it has none of the mechanisms - such as strategic reserves or oil futures contracts - that allow other big importers, such as the US and Japan, to cushion the effect of price volatility on companies and consumers. It will have to rely instead on the knock-on effect of any release of Japanese and South Korean stocks that would help drive down prices in the region. The biggest impact, which will be felt around the world, would be a release by the US government of some of its 600m barrels of oil stocks. But China's lack of preparedness has also been part of the problem. Last-minute buying ahead of a possible halt in Iraq's production and some of Kuwait's exports, has helped underpin prices, analysts said. "It is part of the reason crude is so high. China and others, such as India, Japan and the US, have been buying oil to fill their inventories in advance of a possible disruption in the Middle East," says Jay Saunders, Deutsche Bank analyst. "China is much more sensitive than others." The Beijing government is being blamed as industries ranging from transport to steel and textiles are hit by rising costs. "It is a really difficult situation," says a director of the Beijing Bashi company, which runs the capital's buses. "Our oil costs have gone up by 10 per cent compared with last year, but the government will not let us raise our ticket prices because they say it is a matter of social stability." Click here to read more Contents |
| Oil
and Votes, Two Factors Fueling the War: Analysis (Peoples Daily - China)
(...)Why did the US still decide to launch the war despite opposition from so many countries? According to opinions reported by Western media, behind the US rush to war against Iraq lie the imperatives of US global strategy. The United States wishes to emphasize its global strategy through regime change in Iraq On January 16, the United States magazine, "Foreign Policy in Focus", featured a signed article entitled "The Coming War With Iraq: Deciphering the Bush Administration's Motives." In this article, author Michael T. Klare said he believed the answer to the Bush administration's determination to oust Saddam Hussein was a combination of factors related to the pursuit of oil and the preservation of America's status as the paramount world power. "Ever since the end of the Cold War, American policymakers (whether Demoract or Republican) have sought to preserve America's 'sole superpower' status and to prevent the rise of a 'peer competitor' that could challenge US paramountcy on anything approaching equal terms," the author said. (...)Oil is another factor fueling the US rush to a war against Iraq.With demand for oil increasing yearly, the United States currently relies on imports for 55 percent of its oil needs. It is quite clear that the energy requirements drive an important part of the US global strategy. The US ability to dominate world affairs would be greatly reduced if it fails to control the Middle East, whose oil reserves make up 65 percent of the world's total. Some US strategists believe the country should lessen its dependence on Saudi oil in view of the anti-US sentiment there. The key to ensuring oil supplies to the United States thus lies in the establishment of a pro-US government in Iraq, which ranks second in the world in terms of oil reserves. In addition, some international analysts pointed out that an Iraq war would also meet the political needs of the Bush administration at home. Bush owed his victory in the 2000 presidential elections to some extent to support from US weapons manufacturers and oil companies. According to the Washington Post newspaper, an Iraq war could be related to Bush's reelection campaign. Click here to read more Contents |
| An
Air of Empire (Leon Fuerth - Washington Post)
(...)If war comes, we may be quickly victorious. And perhaps the president's sweeping vision of positive change throughout the Middle East will also come to pass. The more brilliant our success, however, the more deeply we will be feared. And the reason for that is not just the stunning demonstration of power in bringing it about but the fact that the government of the United States went out of its way to drive home one point: We are dominant, and dominant is as dominance does. That has its price. Americans -- whether they support or oppose war with Iraq -- need to realize the consequences of the status we may shortly assume. The beginning of empire is the end of commonwealth. We have already seen how that works in the failed bidding war the United States engaged in for the sake of support in the Security Council and from Turkey. The irony is that all along the United States has had every right to resume military operations against Iraq under existing Security Council resolutions, because Saddam Hussein was patently in breach of his commitments. Instead, the administration chose to base its actions on an unlimited assertion of an American right to make war at will. Whether or not we intend to be an empire, we now present the aspect of one -- an appearance that has already contributed to the fracturing of our alliances by playing into the ambitions of those, such as the French and their followers, who believe their mission is to contain us. The administration knows that it is responsible for the reconstruction of Iraq after this war is over. But it does not appear to realize that it also must find a way to reconstruct another collateral casualty: the notion that America is part of a community of nations. Click here to read more Contents |
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