I “think” this is the part that caught my eye Bill…
Demand for oil is up, substantially, worldwide, including the U.S. NO ONE could have done anything about it, but I’m completely baffled why someone for whom “no blood for oil” was a slogan with some attraction would POSSIBLY think about griping about oil prices now. Either your economic well being is something the government is supposed to protect, or it is not. Make up your mind. But the “problems in Iraq” kvetch doesn’t withstand even the basest numeric challenge.
I’m also constantly baffled that people actually believe that government has much control over economic ebbs and flows at all. There is more demand for oil worldwide, including speculative demand, than there is supply. But the supply issues have absolutely, positively not come due to anything that has happened in Iraq. Heck, as a result of the actions in Iraq, we have MORE supply, from Libya, which we wouldn’t purchase from before. I guess we’ll just pile the blame for that on top of everything else. Thanks, George.
Bill Mann
Wrt Administration policy globally….Even before the 98 “O&G Crash”, which I had the “good fortune” to participate in, it has been the “policy” of the US Government, (both Dem & Re-pug) to expand ALL source suppliers of oil – to feed the burgeoning “Demand” for distillate products across the globe, and the unstated policy, to “keep oil prices as “low & stable” as possible. This was Energy Policy since the early 80′s throughout the 90′s to current day.
The result was an “unholy alliance” between the biggest suppliers within the ME and elsewhere, and the Governments of ALL parties. While at the same time, fiscal policies (read Tax policy) where put in place to both “Starve the Beast of Government”, and to “stimulate Cap X spending” (and helping out the manufacturers) by the average consumer, (read section 179 depreciation law – as applied to 1040 schedule C or a Corporate 1120 if you like)
The affects of that “stimulation” was to allow ANY taxpayer/consumer, to both purchase a gas guzzling SUV (of your choice), deduct fully that cost in less then 3 years, and deduct much if not all of the costs of operation.
Well known changes going back to the 80′s, and commented upon in detail elsewhere. My point earlier was that this/these fiscal policies, had the direct and “LUC”, result of stimulating demand for distillates, while at the same time feeding that demand through the alliance of the US Government and the producers, mostly in the ME….to “feed that demand”……
“We’d” forgotten the oil shocks of the 70′s, and literally, as “Peak Oil” production was reached in the US (around Mid 70′s according to Hubbert’s work) made the conscious decision to both “support and encourage”, the oppressive and despotic regimes across the world…..as long as “they” insured a steady supply of the product, that this Nation (and others) required to run their economy.
“Demand meet Supply” and it worked, till 9-11-01……then the whole equation changed. Suddenly, and surprisingly, to no one but this administration, “Supply” of oil, became “suspect”…..We saw in the markets (late 2001) a “risk premium” applied to the WTI benchmark, first a couple of bucks on the 1 yr contract, then along about early 2004, 8-12 US$, accounting for the blow-off POO $49.50 recently.
“Supply meet Demand”, every-thing’s reversed. “Hubbert’s Peak”, is now applied to the Supply, globally, even though his work was exclusively US in it’s original form. And why? Because, “Supply” is now in doubt, AT RISK! Why could anyone wonder at this, or be surprised that the hedges and speculators would attach such a “large” political risk premium on the international and foreign policies of the US? If any-body’s breathing easier today because POO has come down to $42, please re-read the memo on “Political Risk Premiums”.
This is “Real”, Bill…..and imv, it’s NOT gonna go away.
And who can we “thank”? Well, imho, GWB recently (for a Neocon policy of US “Oil” Imperialism), RR from 20 years ago for tax policies for encouraging Demand, Bush41 for extending the hand of cooperation to the House of Saud in the hopes Supply would be safer, and even “Wild Bill Clinton”, for failing to adjust US energy policy to a World Supply at obvious risk, simply because the spot price was crashing in 98.
Then we come to Iraq, at the heart of ME Oil Supply. And where, imho, the “Risk Premium” is coming from. Now this gets convoluted, cause while I was “in favor” of taking Sadman out in 03, I was vehemently opposed to a continuing years long and strong US Military presence in the ME, placing imv our Oil life-line at sizable political risk, imv…….”forever”. This is, imho, the Neocon energy policy, as perpetrated by this present administration. In my words….”Rule the world, in the name of Oil”….not even a bank robber could have designed a better policy.
For anyone to claim that the administration (or any other for that matter) is NOT responsible for what has happened to the Oil markets, is just beyond my ability to comprehend. Of course it’s government policy, and of course, “IT’S ALL ABOUT OIL”. I believe the World oil markets are mirroring administration policy, and have for decades!
Do I “ignore” the obvious and substantial increasing Demand from the Asian Tigers? NO! But neither should the administration! Cheney and the rest of Oil Cabal in the administration, are reportedly “smart oil guys”. They could have seen this coming, in 2001, as I did. I know what action I took to confront what was obvious. What did they (the Neocons) do? Did “they” help the situation or did they exacerbate the problem? You decide…..cause I already have, several years ago, when I saw this coming. And I’m not even in the “bidness”.
I’m just a lowly Econ/History major, trying to make a living in a dangerous economic environment, with a government “sticking it’s head in the sands” of the ME, and hoping “things will work” out for their friends.
Sheez, some-days, I “wish the communists Czars were still around”…….things were simpler then……at least in the Oil Markets. And in those days, the Neocons, had someone other then me to “shoot at”.
KBM (O&B since 1984 & The BB – tm since 1999)
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