Wednesday, December 31, 2003

The End of the Oil Age Richard Heinberg writes: The atrocities of September 11, 2001 so dominated world news, politics, military affairs, and the economy that popular discussion soon divided all of recent history into two categories: "pre-9/11" and "post-9/11." For most Americans, the events were not only horrifying, but entirely unexpected. The Bush administration's response to the 9/11 attacks was to bomb Afghanistan, remove the Taliban regime from power, and install a compliant interim client government. A few commentators pointed out that Afghanistan was located near the strategically significant oil and gas reserves of the Caspian Sea, speculating that the war might be an effort to enforce the building of a gas pipeline through Afghanistan to warm-water ports in Pakistan. Others, including some oil-industry insiders, disputed the idea that the war was essentially about oil or natural gas, pointing out that Afghanistan wasn't essential to the domination of energy resources in the region, and that the proposed pipeline was of minor economic consequence to the US. But if not for oil, the US would have little interest in the Middle East. If not for US involvement in Saudi Arabia, Osama bin Laden might never have felt compelled to destroy symbols of American economic and military power. The Bush administration quickly proclaimed that the Afghanistan campaign was only the beginning of its "war on terrorism," and officials floated lists of other potential targets, numbering from three to nearly 50 nations. Critics of the Bush policy claimed that the administration had, in effect, declared war on much of the rest of the world. Most of the listed nations possessed important oil resources while many -- including Iran and Iraq, both high on the lists -- had little or no discernible relationship with bin Laden or Al Qaeda. Iraq, of course, has since been invaded, and the despotic regime of Saddam Hussein cast out. With "terrorism" as its ostensible but elusive enemy, the Bush administration appeared to be embarking on a plan to use its military might to gain footholds in strategic regions around the globe, and perhaps to seize full and direct control of the world's petroleum resources. On its face, this was a strategy that made little sense, as it risked destabilizing the entire Middle East. However, it was more understandable when viewed in light of information known by the administration, but obscure to the vast majority of the world's population: the rate of the global production of crude oil was about to peak. (12/31/03) Final Thoughts for 2003 Terence R. Wilken writes: Another year has almost come and gone, and what a year it was.  We are now at WAR, and Mad Cow Disease has come to the US.  Sure glad that we were able to find out that Mad Cow came from Canada.  Those darn cannucks anyway. From all outward appearances, the economy is on the rebound, and all is well in the USA and the world.  The markets should be up at year end, interest rates are still low, and the housing and employment statistics are doing well.  All we have to do is keep it up.  We must keep spending.  That is the ticket, and we can have fun at the same time.  What is a little debt when money is so cheap? So what is the downside?  Well, there are two things happening that could change things in the next year. The dollar is continuing to fall, and this does not bode well for several reasons.  Those goods from overseas will now become more expensive.  If you have been thinking about that trip to Europe or another country, now is the time to go.  If the dollar keeps falling, it will only become more expensive to make that trip.  Can we live with higher priced foreign goods?  I guess that we will have to do that.  How can we change what is occurring?  All we have to do is raise interest rates here in this country in order to make the dollar stronger. ... The second downside that may occur is inflation. ... Of course, it is only been covered on the internet.  I have not heard the dreaded words of inflation or stagflation voiced on the TV.  The big news on the TV is Michael Jackson and Scott Peterson.  Only the important issues are covered on the regular television channels. If inflation takes hold (and you all know my feelings on that issue), or if the dollar continues to fall, it will not be good for the economy.  When will this occur?  As I have said before, we must hold off any problems until after the next election. (12/30/03) 6:06:51 AM

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