April 28,2005
Uli Schmetzer
PETROL BUFFOONERY:


If you listen to Cassandras the Chinese boom is the Wooden Horse of our civilization. Oil prices are going up because the Chinese need more and more petrol. Every Chinese adult wants a motorcar and the tsunami of Chinese goods flooding our markets runs on oil.

Now if you listen to the whiz kids the world is simply running out of gas, something the experts have known for years. As the result the price of crude oil is going up because the smart guys (read future traders) are buying up what’s left.

And if you listen to the finger-pointers the invasion of Iraq is to blame for the hike in oil prices. The invasion unsettled the Middle East, especially the Saudi monarchy. The King and his family control the world’s biggest oil reserves. U.S military bases in Saudi Arabia protect the monarchy and the oil. But the Uncle Sam-backed monarchy is not popular among America-hating Arabs. The Yankee Go Home crowds have grown since the Iraqi invasion. Hence the growing jitters about the stability of oil supplies.

Finally, if you still want to listen, the optimists (read oil company lobbyists) scoff at all these doomsday predictions and argue there is plenty of oil left and our ‘bright’ and ‘innovative’ species (read greedy and egocentric corporations) will find an alternate source of energy – when it becomes necessary. So stick your head in the sand – and wait.

Reality, even these optimists concur, is that the invasion of Iraq – a country with the third largest global oil reserves - has precipitated a petrol crisis already in the making (The invasion also tripled the number of terrorist incidents in the U.S. last year). The conclusion: Instead of making the world safer from ‘terrorists’ the invasion made our habitat more dangerous. Instead of securing a steady flow of reasonably priced oil the market went crazy, the supply became dubious.

With nearly half our global energy derived from the dwindling oil fields the search for an alternate source should have been our main objective. More so since the hydrocarbon monster (oil and coal) is held responsible for global warming that now threatens the planet’s future and human survival. But with an annual trillion-dollar hydrocarbon turnover in the U.S. alone Washington’s Oil Mafia is not about to cut its profits. Instead the oil cartel is proposing legislation to open the Alaskan wilderness and the Californian coastal areas to oil exploration – and pollution. The Mafia wants more. Instead of offering tax cuts to institutes or companies looking for alternate energy the Texan oilman (read George W.) and his Mafia are promoting tax cuts for energy companies. This will encourage these companies to build more power stations and refineries to process the extra oil the Saudis and other oil-producing ‘allies’ have been persuaded to extract in order to keep petrol in the bowsers and prices reasonable. (High oil prices are good for the profits of the oil industry but if oil prices run amok the global economy will enter a free fall with a certain popular backlash and an end to the bonanza.)

Today the nation that controls the flow of oil controls the world. As the only superpower left it is obvious the U.S. envisages this role. A majority of Americans apparently now believe their country is the divinely chosen nation to impose its ways and its will on the rest of the world, if necessary by force. What better way to carry out this divine order then under the guise of saving the U.S. and the rest of ‘our world’ from sitting in the dark, deprived of electricity and locomotion. The formula is simple: Create the problem then adopt the cloak of savior. It’s an old recipe.

No doubt the Asian manufacturing boom has generated higher incomes with additional demands and drainage on oil supplies. Today the developed world talks of a few million additional consumers here and there while China and India, between them, have to cater for an estimated billion potential new users of petrochemicals, gasoline and gas. The global pumping, transport and petrol-refining infrastructure has not kept pace with this new demand. Worse, Russia’s production has slowed down.

Even a Pentagon report last October warned the prospect of global warming (dramatically changing temperatures and coupled with lack of fuel) could make resources so scarce nations would have to go to permanent war with each other to survive. Yet despite these apocalyptic predictions new energy technologies are either not ready or unable to compete with the current fossil fuel technologies. Worse, our market does not even recognize the current energy system needs replacing. Experiments, like a short-lived hydrogen fuel cell, were either abandoned or lost their financial support when problems developed. New concepts, like a gas-electric hybrid or the much-hailed cellulosic ethanol - fuel made from a crop called switchgrass which is grown in marginal lands with little water and no fertilizer - remain many times more costly then gasoline dependency.

Today the U.S. remains not only the world’s biggest polluter but with only five per cent of the world’s population it consumes a quarter of the world’s oil. Two thirds of that oil is imported from abroad. In the 20th Century the U.S. was the world’s largest producer of oil. But as domestic oil resources dwindled America had to look abroad to feed it voracious appetite for energy. As that appetite increased so did American interest and American readiness to use force. The excuse of human rights, democracy and the defense of ‘allies’ became thin facades in the quest to keep the supply routes open and the Arab oil flowing. The anachronistic, repressive and spendthrift monarchy and aristocracy of Saudi Arabia was propped up and safeguarded with U.S. military bases. Israel became a de facto U.S. colony and Washington’s main de facto sword in the Middle East. Without U.S. financial, military and political aid the State of Israel would not have survived. Without the State of Israel the U.S. would have lost its Arab oil years ago. Washington went to war to rescue the racist, repressive and arrogant emirate of oil-rich Kuwait - a key oil supplier - from the clutches of Saddam Hussein. Finally it turned its guns on Saddam himself.

With Saddam gone and Syria withdrawn from Lebanon (after Washington’s cryptic threats) the Arab world has no government left to champion its opposition to U.S. meddling and control of Arab oil resources. Into this vacuum stepped extremists like Usama bin Laden and a bevy of Moslem fundamentalist movements. Cunningly they combined religious credo with Arab nationalism creating, perhaps, an even more potent elixir then the faded communist cry, decades ago, for an egalitarian society.

In the end we have to admit: If history goes in circles then we can expect another global economic crisis, just like in 1973 and 1979 following oil price hikes by OPEC. We can also expect the U.S. will not win the war in Iraq or become a dominant military force in the Middle East. What many moderates now promote is a gradual change in U.S. policy: Reducing U.S. military presence and replacing it with what some call “a benign protection” policy. This policy would be based on a little finger wagging from abroad now and then. Its basic guidelines would be: ‘Dear Arab friends you can squabble among yourselves, you can even kill each other a little but don’t screw around with the flow of oil, otherwise we’ll have to come back in and give you a good spanking.’

Viable? Unlikely!

Skeptics like the economist Galbraith argue the U.S. political class is utterly incapable of changes. He compares them to the French aristocracy prior to the French revolution. Everyone knew the system was rotten and revolt was brewing. But life was such fun and so comfortable for the privileged. Changes would have been such a bother and so painful to their luxurious lifestyle.

In retrospect, surely not as painful as the guillotine. (ends)

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