WW-IV and Oil

[ThomWV]

I listened with some interest during the last several days to the news that the State Department was removing dependents and non-essentials from Saudi Arabia as well as advising all Americans to consider their safety and possibly leaving.

Some would say that the fourth World War will be the war between the European Economic Community and the USA. Its suggested that the first shots have been fired in fact. It is argued by some that Sadam's demand that Iraqui oil be paid for in Euros rather than the world standard of dollars hastened the war. I do not know if that is true or not but I would not be suprised. And that brings me back to the Saudis. Is there a chance they may have suggested a swtich to the Euro as well? That could be enough to bring the rath of bush down on them.

Just thinking, as I was listening to the news.

Remember when it was said that one of Bush's strong points was that he was an oilman, and by god he'd know how to get prices down. And then there is Cheney's ties to the natural gas of the west. You seen natural gas prices lately?

Thom

[NJCher]

1. natural gas prices

My power company raised the price of natural gas by 8 per cent about four months ago. Then today I saw on the news they were lowering it around 4 per cent. I wonder what's going on.



Cher

[Dissenting_Prole]

13. Could it be?

That 4 months ago, the summer recharge season was in full swing and supplies were low, thus higher prices. In the fall, reserves are up and there is lots of supply so the price goes down. Erratic price changes are a symptom of depletion. If we have a long, cold winter, watch the price sky-rocket. There is a small chance that some users may be cut off in March if it gets cold due to North American natural gas peak.

[thebigidea]

2. WWIII, ya mean. Only neocons and the like go for WWIII-was-the-cold-war

if WWWIII-was-the-cold-war, we would've noticed. And most people wouldn't need to be told WWIII-was-the-cold-war.

[Bush is a chimp]

3. Easy one

Bush is an oil millionaire, He is greedy, Iraq has a lot of oil, Bush invades Iraq to control the oil, Bush then sells oil to American companies that are not his own at inflated prices, American oil and gas companies charge the American people an arm and leg for it, Hence we the customer the American people get the shaft and Bush gets richer!

Like they say, Shit rolls downhill! We the American people are the ones it is going to land on every time!

[ThomWV]

5. No, Not The Cold War

The Cold War was not WW-III. Everything between Korea and the fall of the Soviet Union, including Viet Nam were battles in WW-III. In no case could you call those tens of thousands of GI's who's lives were lost in those conflicts as having been lost in some sort of COLD war, it was infact very hot indeed.

Thom

[thebigidea]

6. if this was true, why isn't it common knowledge?

why do I need you to explain it?

I didn't need someone to tell me that about WWI or WWII.

Why don't the history books agree?

Who believes this, and where did you get that idea?

[ThomWV]

7. OK

OK,

If it offends your sensibilities we'll just call it WW-x. I don't give a shit and neither does anyone else. What fuggin high horse are you ridin' around on today?

Thom

[thebigidea]

8. no, I'm honestly curious

I've seen this thing floating around a while and am wondering where it started and why it started.

And if you don't give a shit, why are you talking about it?

And as far as nobody else giving a shit about it, geez - you'd think people would if there are millions of corpses.

[never cry wolf]

10. Why don't you start a thread asking the question?

I'd be curious to know as well.

on edit: Nevermind, I found the answer. I remembered vaguely someone describing it as thus.

http://www.cnn.com/2003/US/04/03/sprj.irq.woolsey.world.war/

[thebigidea]

11. Woolsey, huh? Freakin' PNAC snake

No wonder I had an aversion to calling it WWIV

if THIS guy was involved:

[jokerman93]

15. Spooky Picture

woolsey stands large in looming sharpness against sea land and sky.

[littlejoe]

16. Adhering to a strict definition of a world war, you are incorrect.

We have had only two worlds wars. We have had other wars since, but you cannot construe these as world wars. What revisionist history have you been reading?

[BlueEyedSon]

4. Much much more

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=3821

[never cry wolf]

9. You are correct

Please review the PNAC publication, "Rebuilding America's Defenses" here: http://www.newamericancentury.org/publicationsreports.htm

It was published in 2000 before shrub got sElected and once he was in these people basically rewrote our foreign policy to match.

The basic tenet is the with the demise of the USSR, the US is the lone superpower left standing. We should seize upon this opportunity by building up our military and posting our troop stategically worldwide.

The first strategic location needed, in their eyes, in order to create their vision of a pax-americana is the gulf region in general and Iraq specifically for the oil. Not because the greedy bastards want their oil buddies to get rich (a nice side benefit tho) but their thinking is that if they have their hand on the world's gas nozzle they can much more easily suppress any potential emerging rivals such as the EU, Russia or China. If you control their energy, you control them.

So you see, they are already well into their strategy. It was within that document, as most here already know, that they stated that the required build up of the military and actions would take a long time to sell to the general public save a "Pearl Harbor type event."

:nuke:

on edit: spelun and stuff

[Tinoire]

12. US kiss of death to Oil countries switching to the Euro

Iraq - Euro well we saw what happened
Iran - Euro they're next
Venezuela - Euro we will pull every trickin the book to bring you down
Anyone notice the nasty little war brewing between Soros/Bush vs Russia? Well... Hang on to your hats.

The previously unthinkable is now on the table. Russia, the world's second largest oil exporter, is giving serious consideration to trading its black gold in euros, a switch that would surely set dominos in motion among other oil producing nations and, ultimately, knock the dollar off its global throne.

Americans can thank George Bush and his Pirates for accelerating a process that might have taken decades to evolve, but which now looms as a "catastrophe" on the horizon. "There are already a number of countries within OPEC that would prefer to trade in euros," said oil analyst and U.S. Council on Foreign Relations member Youssef Ibrahim, in an interview with the Moscow Times, October 10. "Putin's putting a big card on the table."

A switch to the euro "is really possible," according to Russian economist and Putin advisor Yevgeny Gavrilenkov. "Why not? More than half of Russia's oil trade is with Europe. But there will be great opposition to this from the United States."

Gayrilenkov can be forgiven his understatement. Russian President Vladimir Putin dropped his bombshell as if casually stating the time of day. Is Russia considering a switch from dollar-pricing of petroleum? "We do not rule out that it is possible. That would be interesting for our European partners," Putin told reporters at a joint news conference with German Chancellor Gerhard Schroeder in the Ural Mountains region of Russia.

Interesting, indeed. Even more important than the huge and immediate boost that a Russian oil-euro arrangement would provide to the European Union, the move would signal the definitive end of America's artificial dollar-domination of the planet, a privileged status the U.S. has abused as a weapon since the end of World War II. ((I guess Bush didn't peer deeply enough into Putin's soul))

<snip>
http://www.globalresearch.ca/articles/BLA310A.html




I thought this article, reposted with permission from FEASTA, gives a pretty clear explanation for neophytes.


Energy

Cóilín Nunan: Oil, Currency and the War on Iraq

This document is also available in Word and PDF formats.



It will not come as news to anyone that the US dominates the world economically and militarily. But the exact mechanisms by which American hegemony has been established and maintained are perhaps less well understood than they might be. One tool used to great effect has been the dollar, but its efficacy has recently been under threat since Europe introduced the euro.

The dollar is the de facto world reserve currency: the US currency accounts for approximately two thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all world exports are denominated in dollars. In addition, all IMF loans are denominated in dollars.

But the more dollars there are circulating outside the US, or invested by foreign owners in American assets, the more the rest of the world has had to provide the US with goods and services in exchange for these dollars. The dollars cost the US next to nothing to produce, so the fact that the world uses the currency in this way means that the US is importing vast quantities of goods and services virtually for free.

Since so many foreign-owned dollars are not spent on American goods and services, the US is able to run a huge trade deficit year after year without apparently any major economic consequences. The most recently published figures, for example, show that in November of last year US imports were worth 48% more than US exports(1). No other country can run such a large trade deficit with impunity. The financial media tell us the US is acting as the 'consumer of last resort' and the implication is that we should be thankful, but a more enlightening description of this state of affairs would be to say that it is getting a massive interest-free loan from the rest of the world.

While the US' position may seem inviolable, one should remember that the more you have, the more you have to lose. And recently there have been signs of how, for the first time in a long time, the US may be beginning to lose.

One of the stated economic objectives, and perhaps the primary objective, when setting up the euro was to turn it into a reserve currency to challenge the dollar so that Europe too could get something for nothing.

This however would be a disaster for the US. Not only would they lose a large part of their annual subsidy of effectively free goods and services, but countries switching to euro reserves from dollar reserves would bring down the value of the US currency. Imports would start to cost Americans a lot more and as increasing numbers of those holding dollars began to spend them, the US would have to start paying its debts by supplying in goods and services to foreign countries, thus reducing American living standards. As countries and businesses converted their dollar assets into euro assets, the US property and stock market bubbles would, without doubt, burst. The Federal Reserve would no longer be able to print more money to reflate the bubble, as it is currently openly considering doing, because, without lots of eager foreigners prepared to mop them up, a serious inflation would result which, in turn, would make foreigners even more reluctant to hold the US currency and thus heighten the crisis.

There is though one major obstacle to this happening: oil. Oil is not just by far the most important commodity traded internationally, it is the lifeblood of all modern industrialised economies. If you don't have oil, you have to buy it. And if you want to buy oil on the international markets, you usually have to have dollars. Until recently all OPEC countries agreed to sell their oil for dollars only. So long as this remained the case, the euro was unlikely to become the major reserve currency: there is not a lot of point in stockpiling euros if every time you need to buy oil you have to change them into dollars. This arrangement also meant that the US effectively part-controlled the entire world oil market: you could only buy oil if you had dollars, and only one country had the right to print dollars - the US. ((new HTML trick ;) couldn't resist)

If on the other hand OPEC were to decide to accept euros only for its oil (assuming for a moment it were allowed to make this decision), then American economic dominance would be over. Not only would Europe not need as many dollars anymore, but Japan which imports over 80% of its oil from the Middle East would think it wise to convert a large portion of its dollar assets to euro assets (Japan is the major subsidiser of the US because it holds so many dollar investments). The US on the other hand, being the world's largest oil importer would have to run a trade surplus to acquire euros. The conversion from trade deficit to trade surplus would have to be achieved at a time when its property and stock market prices were collapsing and its domestic supplies of oil and gas were contracting. It would be a very painful conversion.

The purely economic arguments for OPEC converting to the euro, at least for a while, seem very strong. The Euro-zone does not run a huge trade deficit nor is it heavily endebted to the rest of the world like the US and interest rates in the Euro-zone are also significantly higher. The Euro-zone has a larger share of world trade than the US and is the Middle East's main trading partner. And nearly everything you can buy for dollars you can also buy for euros - apart, of course, from oil. Furthermore, if OPEC were to convert their dollar assets to euro assets and then require payment for oil in Euros, their assets would immediately increase in value, since oil importing countries would be forced to also convert part of their assets, driving the prices up. For OPEC, backing the euro would be a self-fulfilling prophesy. They could then at some later date move to some other currency, perhaps back to the dollar, and again make huge profits.

But of course it is not a purely economic decision.

So far only one OPEC country has dared switch to the euro: Iraq, in November 2002,(3). There is little doubt that this was a deliberate attempt by Saddam to strike back at the US, but in economic terms it has also turned out to have been a huge success: at the time of Iraq's conversion the euro was worth around 83 US cents but it is now worth over $1.05. There may however be other consequences to this decision.

One other OPEC country has been talking publicly about possible conversion to the euro since 1999: Iran (2,4,) a country which has since been included in the George W. Bush's 'axis of evil'.

A third OPEC country which has recently fallen out with the US government is Venezuela and it too has been showing disloyalty to the dollar. Under Hugo Chavez's rule, Venezuela has established barter deals for trading its oil with 12 Latin American countries as well as Cuba. This means that the US is missing out on its usual subsidy and might help explain the American wish to see the back of Chavez. At the OPEC summit in September 2000, Chavez delivered to the OPEC heads of state the report of the 'International Seminar on the Future of Energy', a conference called by Chavez earlier that year to examine the future supplies of both fossil and renewable energies. One of the two key recommendations of the report was that 'OPEC take advantage of high-tech electronic barter and bi-lateral exchanges of its oil with its developing country customers'(5), i.e. OPEC should avoid using both the dollar and the euro for many transactions.

And last April, a senior OPEC representative gave a public speech in Spain during Spain's presidency of the EU during which he made clear that though OPEC had as yet no plans to make oil available for euros, it was an option that was being considered and which could well be of economic benefit to many OPEC countries, particularly those of the Middle East(6).

As oil production is now in decline in most oil producing countries, the importance of the remaining large oil producers, particularly those of the Middle East, is going to grow and grow in years to come (7).

Iraq, whose oil production has been severely curtailed by sanctions, is one of a very small number of countries which can help ease this looming oil shortage. Europe, like most of the rest of the world, wishes to see a peaceful resolution of the current US-Iraqi tensions and a gradual lifting of the sanctions - this would certainly serve its interests best. But as Iraqi oil is denominated in euros, allowing it to become more widely available at present could loosen the dollar stranglehold and possibly do more damage than good to US economic health.

All of this is bad news for the US economy and the dollar. The fear for Washington will be that not only will the future price of oil not be right, but the currency might not be right either. Which perhaps helps explain why the US is increasingly turning to its second major tool for dominating world affairs: military force.


REFERENCES

Anon., 'Trade Deficit Surges to a Record High', Reuters, (January 17, 2003), http://www.centredaily.com/mld/centredaily/news/4970891.htm
Recknagel, Charles, 'Iraq: Baghdad Moves to Euro', Radio Free Europe (November 1, 2000), http://www.rferl.org/nca/features/2000/11/01112000160846.asp
Anon., 'A Look At The World's Economy', CBS Worldwide Inc., (December 22, 2000), http://www.cbsnews.com/stories/2000/12/22/2000/main259203.shtml.
Anon., 'Iran may switch to euro for crude sale payments', Alexander Oil and Gas, (September 5, 2002), http://www.gasandoil.com/goc/news/ntm23638.htm
Hazel Henderson, 'Globocop v. Venezuela's Chavez: Oil, Globalization and Competing Visions of Development', InterPress Service, (April 2002), http://www.hazelhenderson.com/Globocop%20v.%20Chavez.htm
Javad Yarjani, 'The Choice of Currency for the Denomination of the Oil Bill', (April 14, 2002), http://www.opec.org/NewsInfo/Speeches/sp2002/spAraqueSpainApr14.htm.
The Association for the Study of Peak Oil, Newsletter 26, (February 2003), http://www.asponews.org

FURTHER READING

William Clark, 'The Real Reasons for the Upcoming War With Iraq: A Macroeconomic and Geostrategic Analysis of the Unspoken Truth', (January 2003), http://www.ratical.org/ratville/CAH/RRiraqWar.html


http://www.feasta.org/documents/papers/oil1.htm

Reposted, with permission from a web-site encouraging dissemination, the Foundation for the Economics of Sustainability
http://www.feasta.org/news.htm

[never cry wolf]

14. Awesome post, Tinoire

I read it before here on DU, probably from you but I only had time to scan the article. It is now bookmarked, thanks you!

[littlejoe]

17. I am further enlightened by your post. Thank you. eom

[Tinoire]

18. Aww shucks. To you and Steviet_2003- my pleasure n/t

People like you guys make the time spent worth it :)

Peace