I found the following on www.prudentbear.com. It is an expression of how higher oil prices
have an economic policy role in finding needed new holders for dollar reserves and
devaluing our deficits. Other results of higher oil prices: 1. Elasticity of demand will
lead to lower consumption of oil products - nothing like higher prices to force more
efficient energy usage, 2. the politics favoring Alaskan drilling will become
insurmountable.
Harvey Miller
Fabfile Online
Guest Commentary, by Richard Benson
America's tribute
April 6, 2005
Richard Benson is president of Specialty Finance Group, LLC , offering diversified
investment banking services.
The Asians remain shocked and in disbelief. Just when Japan, China, Taiwan and Hong
Kong had accumulated enough dollars to buy oil to keep them warm for many winters, it's
all over. In broad daylight, the Americans and OPEC cheered as the price of oil popped up
from $30 a barrel to over $50 a barrel. Indeed, this jump in the price of oil increases
the world's daily oil consumption bill of 84 million barrels a day to $4.2 billion, from
$2.5 billion (or $1.5 Trillion a year from $900 billion). The world now has to shell out
an additional $600 billion a year of "lucky bucks" to the oil producing countries just to
stay in motion. That's quite a tribute to pay!
The bigger shock, however, is in the devaluation of dollar holdings of United States
' Treasury debt. The rise in oil prices guarantees that the value of the dollar will be
pushed down even further and stay down! Now that China is the number 2 oil importer and
Japan is number 3 - with the rest of Asia very thirsty for oil as well - you can
understand why the Asians must find a way to protect themselves.
The American strategy for using oil to finance our deficit is, of course, brilliant.
Our elected officials knew that at some point those independent foreign central banks
would start getting edgy about buying more dollars to pay for America's war and deficits.
(The $650 Billion trade deficit is threatening the dollar.) So, which central banks can
America continue to use as the fall guys to buy the dollar? Why not the Gulf Oil states,
but where would they get the dollars to buy U.S. Treasuries? Well, with the Chinese
piling up dollars and growing like crazy, at some point the oil market had to tighten. It
was only a matter of time before the Chinese would start bidding up the price of oil.
The Asians, therefore, are hung out to dry when the price of oil rises because they have
to spend more of their dollars on oil.
As the price of oil goes up, extra money floods into the Gulf Oil Kingdoms. With
our Secretary of Defense putting troops all over the ground in the Middle East, and those
nimble aircraft carriers are near by and ready to deliver the "shock and awe of sudden
democracy" to the Gulf Monarchs, it's a sure bet that America's OPEC buddies will stash
their newly found Asian lucky bucks into good old American Treasury Notes.
With such a simple policy to fund our deficit for another year, it's no wonder
America can get by without any brain power at the Treasury Department. In effect, America
and our Gulf Arab allies just pulled off the biggest central bank heist in the history of
the world. The price of oil just went up 60 percent or more, which really cuts down to
size those $3.4 trillion of net foreign holdings of U.S. financial assets. As a loyal
American, we would like to cheer our government's deft move to pick the pockets of our
trading and financing partners. Moreover, America gets the Arabs to fund a large share of
our deficit, subsidize our interest rates, and help keep our taxes low for another year!
Surely, I can afford to buy another gas-guzzling Sport Ute, get a rifle, and wave a flag!
America is extracting Tribute on oil from the world. If the world wants Middle
Eastern oil, they can pay for it through the Saudi branch of the United States Treasury.
Why do the heads of Saudi Arabia, Kuwait, Abu Dhabi, Bahrain, Qatar, etc., hold dollars?
Because they want to keep the money and the power! (The ruling family of Saudi Arabia
controls 25 percent of the world oil reserves and is completely dependent on oil revenues
for its survival. Tens of thousands of Saudi princes live off lavish royal stipends).
Think of Arabia as a family firm. If the dollar goes down in value, the Saudi Royal Family
still gets to personally keep hundreds of billions of dollars. But, if they don't buy
dollars, why would America keep them in power? It would simply not be in our interests
to do so. Remember when Saddam Hussein talked about pricing Iraq's oil in Euros? "Shock
and Awe" quietly followed.
This program of oil for dollars and dollars for the U.S. Treasury deficit is the
simple tribute that we, as the Super Power, can expect. America is well paid for keeping
the world's supply of "black gold" safe and available to all. Unlike Vietnam - when
America was trying to finance guns and butter - getting others to pay now for our guns,
allows us to milk the oil out of the sand and turn it into butter!
The next question will be how the Asians respond to a 60 percent hike in the price
of oil? Please, stay tuned.
----- Original Message -----
From: "David Douthit" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Friday, April 08, 2005 1:04 PM
Subject: Re: [EN] Oil shortage???
> Mary,
>
> I have taken a quick look at the site and although it looks good on
> paper the math does not work.
> To reduce the USA's oil consumption to 5 million barrels of oil a day
> would require replacing virtually all vehicles with some form of
> alternative fuel.
>
> There are over 200,000,000 vehicles in this country. A DOE study
> released Feb. 8th stated that replacing half of these vehicles would
> cost over a trillion dollars (if they were even available)!
>
> Biofuels are a net energy loser as well as hydrogen (availablity on this
> large of scale is also very very doubtful). The concept of internal
> combustion engines surviving the coming oil crisis (except for trains
> and very large local transports) is worse than silly it is also a
> dangerous waste of resources, time and money.
>
> The fact that this process is "backed" by the DOD and by default major
> manufacturers of
> internal combustion demonstrates their bias.
>
> Mary please visit the following web site with a calculator in hand:
> http://www.peakoil.net
> http:www.peakoil.com <http:wwwpeakoil.com>
> http://www.eclipsenow.org
> http://www.endofsuburbia.com
>
> David A. Douthit
> Manager
> LoCan LLC
>
>
> Mary Betsch wrote:
>
> >I must take this opportunity to share some very insightful readings from
> > Amory Lovins of the Rocky Mountain Institute who recently spoke at the
> >State of the Rockies Conference on "Winning the Oil Endgame." You can
> >read about his innovations to eliminate/minimize the US dependence on
> >oil at www.oilendgame.com through manufacturing and government. The
> >entire book is available online or you can read the Executive Summary .
> >. . quite a fascinating read!
> >
> >Enjoy!
> >
> >
> >
> >Mary Betsch, CHMM
> >EH&S Manager
> >Sanmina-SCI Corporation Plant 432
> >702 Bandley Drive
> >Fountain, CO 80817
> >[log in to unmask]
> >Phone: 719.382.2446
> >Cell: 719.491.9825
> >Fax: 719.382.2494
> >
> >
> >
> >
> >>>>[log in to unmask] 4/8/2005 2:37:36 AM >>>
> >>>>
> >>>>
> >David,
> >
> >Why do you think that I forecast that oil prices may rise to $100/bbl
> >by
> >the end of 2005, over a year ago? I see that oil futures are well into
> >the upper 50s, and that means that those who buy futures today are
> >hoping to make a good profit when they sell in 6 months, including
> >accrued interests. So this means the purchasers expect the price to be
> >significantly higher that the current price - and they have factored
> >in
> >potential losses in case of their crystal ball making a mistake. So,
> >this autumn, there is a probability of upper $60s, and perhaps my gut
> >feeling of over a year ago of $100/bbl won't be far wrong by when the
> >cold sets in.
> >
> >$100/bbl will mean $3.50/USGal at the pump or more. Want to trade in
> >your SUV for a Prius? Do it now, before the market is flooded with
> >second-hand gas-guzzlers!
> >
> >Brian
> >
> >David Douthit wrote:
> >
> >
> >>Brian,
> >>
> >>The Federal Govenment is now forcasting an oil shortage the end of
> >>
> >>
> >this
> >
> >
> >>year! (see below)
> >>
> >>David A. Douthit
> >>
> >>===========================
> >>
> >>
> >>
> >>UPDATE: EIA Raises Forecasts For China, World Oil Demand
> >>
> >>(Updates to add increase to 1Q 2006 oil demand.)
> >>
> >>NEW YORK -(Dow Jones)- The federal Energy Information Administration
> >>
> >>
> >on
> >
> >
> >>Thursday again raised its forecasts for Chinese oil demand, changes
> >>
> >>
> >that
> >
> >
> >>boosted the outlook for world oil consumption as a whole.
> >>
> >>The upward revisions in the EIA's monthly oil-market outlook
> >>
> >>
> >reinforce
> >
> >
> >>how demand - already so strong that it has pushed producers and
> >>
> >>
> >refiners
> >
> >
> >>to the limits of their capacity - continues to grow robustly despite
> >>soaring prices.
> >>
> >>Acknowledging the pressure demand is putting on markets, the EIA,
> >>
> >>
> >the
> >
> >
> >>statistics arm of the U.S. Department of Energy, now sees U.S.
> >>
> >>
> >benchmark
> >
> >
> >>oil prices holding above $50 a barrel through 2006.
> >>
> >>"Several factors have contributed to the recent high crude oil
> >>
> >>
> >prices
> >
> >
> >>and are likely to keep prices at or near present highs," the EIA
> >>
> >>
> >wrote.
> >
> >
> >>"First, worldwide petroleum demand growth is projected to remain
> >>
> >>
> >robust,
> >
> >
> >>despite high oil prices."
> >>
> >>While Chinese oil demand - like overall world consumption - isn't
> >>expected to grow as fast as it did in 2004, it is seen growing
> >>
> >>
> >faster
> >
> >
> >>than expected early this year. The EIA revised its forecasts for
> >>
> >>
> >Chinese
> >
> >
> >>oil demand in the second and fourth quarters up by 100,000 barrels a
> >>
> >>
> >day
> >
> >
> >>in each case, to 7.4 million and 7.7 million barrels a day,
> >>
> >>
> >respectively.
> >
> >
> >>The agency left its outlook for full-year Chinese demand and demand
> >>growth unchanged.
> >>
> >>In line with those increases, the EIA boosted its forecasts for
> >>
> >>
> >second
> >
> >
> >>and third quarter world oil demand by 100,000 barrels a day, to 83.1
> >>million and 84.6 million barrels a day, respectively.
> >>
> >>The agency raised its forecast for demand in the fourth quarter by
> >>200,000 barrels a day, to 86.8 million barrels a day. Demand in that
> >>quarter was already expected to test producers' ability to pump more
> >>oil. The new forecast leaves fourth quarter demand 700,000 barrels a
> >>
> >>
> >day
> >
> >
> >>over projected supply.
> >>
> >>And the stress won't end this year. The EIA also raised its forecast
> >>
> >>
> >for
> >
> >
> >>first quarter 2006 oil demand by 300,000 barrels a day, to 86.9
> >>
> >>
> >million
> >
> >
> >>barrels a day, slightly pulling up the outlook for demand growth that
> >>
> >>
> >year.
> >
> >
> >>
> >>
> >>"Projections for 2005 and 2006 call for worldwide growth averaging
> >>
> >>
> >2.2
> >
> >
> >>million barrels per day, or 2.6 percent, per year, down from the
> >>3.4-percent growth in 2004," the EIA said.
> >>
> >>Weaker than expected demand for gasoline in the U.S. this summer was
> >>
> >>
> >the
> >
> >
> >>exception to the EIA's upward revision. The EIA now sees gasoline
> >>
> >>
> >demand
> >
> >
> >>of 9.34 million barrels a day in the third quarter, 80,000 barrels a
> >>
> >>
> >day
> >
> >
> >>below its previous forecast. The change pulled the forecast for
> >>
> >>
> >overall
> >
> >
> >>U.S. oil demand in the quarter down by 30,000 barrels a day, to
> >>
> >>
> >20.95
> >
> >
> >>million barrels a day.
> >>
> >>Nevertheless, growth in gasoline demand will be strong enough to
> >>
> >>
> >push
> >
> >
> >>prices to new records, with the EIA forecasting summer prices of
> >>
> >>
> >$2.28 a
> >
> >
> >>gallon on average from April to September, up 38 cents from last
> >>
> >>
> >summer.
> >
> >
> >>"Despite high prices, demand is expected to continue to rise due to
> >>
> >>
> >the
> >
> >
> >>increasing number of drivers and vehicles and increasing per-capita
> >>vehicle miles traveled," the EIA said.
> >>
> >>-By Andrew Dowell, Dow Jones Newswires; 201-938-4430; andrew.dowell@
> >>dowjones.com
> >>
> >>DowJones Newswire
> >>
> >>
> >>
> >
> >_____________________________________________________________________________
> >Scanned by Sanmina-SCI eShield
> >_____________________________________________________________________________
> >
> >
> >
> >
>
|
