Tag Archives: Oil

Iran Is China’s Secret Weapon for Killing off the US Dollar’s Global Reserve Status, by Federico Pieraccini

The bulwark of the US dollar as the world’s reserve currency is the oil trade, which heretofore has been conducted almost exclusively in dollars. China seeks to change all that. From Federico Pieraccini at strategic-culture.org:

There is a strong current of change affecting the international political arena. It is the beginning of a revolution brought on by the transition from a unipolar to multipolar world order. In practice, we are faced with the combination of several factors, including the application of US tariffs on Chinese exports, Washington’s sanctions on Iran, US energy self-sufficiency, the vulnerability of Saudi industrial facilities, and Iranian capabilities for resisting US attacks, as well as its exportation of large quantities of gas and oil to China. Everything converges on one factor, namely, the looming decline of the US dollar as the global reserve currency

We have recently been witnessing events of considerable importance in the Middle East, almost on a daily basis. The tensions between Washington and Tehran are fueled above all by the Trump administration’s need to placate most of the US deep state, wedded to neoconservativism, who march in lockstep with Trump’s financiers from Wahhabi Saudi Arabia and Israel.

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The G-7 Blues, by James Howard Kunstler

Extended supply lines and the global economy’s dependence on fossil fuels creates an unstable situation prone to dramatic dislocations. From James Howard Kunstler at kunstler.com:

What’s at stake in all these international confabs like the G-7 are the tenuous supply lines that keep the global game going. The critical ones deliver oil around the world. China imports about 10 million barrels a day to keep its operations going. It produces less than 4 million barrels a day. Only about 15 percent of its imports come from next door in Russia. The rest comes from the Middle East, Africa, and South America. Think: long lines of tanker ships traveling vast distances across the seas, navigating through narrow straits. The Chinese formula is simple: oil in, exports out. It has worked nicely for them in recent decades. Things go on until they don’t.

That game is lubricated by a fabulous stream of debt generated by Chinese banks that ultimately answer to the Communist Party. The party is the Chinese buffer between banking and reality. If the party doesn’t like the distress signals that the banks give off, it just pretends the signals are not coming through, while it does the hokey-pokey with its digital accounting, and things appear sound a while longer.

The US produces just over 12 million barrels of oil a day. About 6.5 million of our production is shale oil. We use nearly 20 million a day. (We’re not “energy independent.”) The shale oil industry is wobbling under the onerous debt load that it has racked up since 2005. About 90 percent of the companies involved in shale oil lose money. The capital costs for drilling, hauling a gazillion truckloads of water and fracking sand to the rig pads, and sucking the oil out, exceed the profit from doing all that. It’s simply all we can do to keep the game going in our corner of the planet, but it’s not a good business model. After you’ve proved conclusively that you can’t make a buck at this using borrowed money, the lenders will quit lending you more money. That’s about where we are now.

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Things to Come, by James Howard Kunstler

A dire political and economic confluence will soon put the US in a world of hurt. From James Howard Kunstler at kunstler.com:

“American exceptionalism has led to a country that is exceptionally un-self-aware.” — Peter Thiel

The economic contraction ahead will put this borderline psychotic country through some interesting ch-ch-ch-changes. Mr. Trump now fully owns the Potemkin status quo of record stock markets poised against a withering rot of human capital at the core of an industrial society in sunset mode. Leadership at every corner of American life — politics, business, media — expects an ever-higher tech magical updraft of fortune from an increasingly holographic economy of mere fugitive appearances in which everybody can get more of something for nothing. The disappointment over how all this works out will be epic.

Globalism is wobbling badly. It was never what it was cracked up to be: a permanent new plateau of exquisitely-tuned international economic cooperation engineered to perfection. It was just a set of provisional relations based on transient advantage. As it turned out, every move that advantaged US-based corporations blew back ferociously on the American public and the long-term integrity of the social order. Sinister as it seems, the process was simply emergent: a self-organizing evolution of forces previously set in motion. And, like a lot of things in history, it seemed like a good idea at the time.

“Off-shoring” US industry jacked up corporate profits while it decimated working class livelihoods. In return, that large demographic got “bargain shopping” at Walmart, a life of ever-upward revolving debt, and dead downtowns. The country got gigantic trade deficits and government debt loads. In effect, globalism compelled America to borrow as much as possible from the future to keep running things the way they were set up to run. Now, there is just suspicion that we’ve reached the limits of borrowing. Soon it will be a fact and that fact will upend everything we’ve been doing.

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US and Iran Stuck on Negotiation Ground Zero, by Pepe Escobar

War is good. Peace is good, What’s the difference? From Pepe Escobar at consortiumnews.com:

Donald Trump says he’s ‘okay either way’, whether there’s war with Iran and Tehran seems to be okay  with that too, warns Pepe Escobar.

All bets are off in the geopolitical insanity stakes when we have the President of the United States (POTUS) glibly announcing he could launch a nuclear first strike to end the war in Afghanistan and wipe it “off the face of the earth” in one week. But he’d rather not, so he doesn’t have to kill 10 million people.

Apart from the fact that not even a nuclear strike would subdue the legendary fighting spirit of Afghan Pashtuns, the same warped logic – ordering a nuclear first strike as one orders a cheeseburger – could apply to Iran instead of Afghanistan.

Trump once again flip-flopped by declaring that the prospect of a potential war in the Persian Gulf “could go either way, and I’m OK either way it goes,” much to the delight of Beltway-related psychopaths who peddle the notion that Iran is begging to be bombed.

No wonder the whole Global South – not to mention the Russia-China strategic partnership – simply cannot trust anything coming from Trump’s mouth or tweets, a non-stop firefight deployed as intimidation tactics.

At least Trump’s impotence facing such a determined adversary as Iran is now clear: “It’s getting harder for me to want to make a deal with Iran.” What remains are empty clichés, such as Iran “behaving very badly” and “the number one state of terror in the world” – the marching order mantra emanating from Tel Aviv.

Even the – illegal – all-out economic war and total blockade against Tehran seems not to be enough. Trump has announced extra sanctions on China because Beijing is “accepting crude oil” from Iran. Chinese companies will simply ignore them.

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U.S. Economic Warfare and Likely Foreign Defenses, by Michael Hudson

The rest of the world is not powerless in the fact of the US desire and policies designed to economically dominate the world. From Michael Hudson at counterpunch.org:

Today’s world is at war on many fronts. The rules of international law and order put in place toward the end of World War II are being broken by U.S. foreign policy escalating its confrontation with countries that refrain from giving its companies control of their economic surpluses. Countries that do not give the United States control of their oil and financial sectors or privatize their key sectors are being isolated by the United States imposing trade sanctions and unilateral tariffs giving special advantages to U.S. producers in violation of free trade agreements with European, Asian and other countries.

This global fracture has an increasingly military cast. U.S. officials justify tariffs and import quotas illegal under WTO rules on “national security” grounds, claiming that the United States can do whatever it wants as the world’s “exceptional” nation. U.S. officials explain that this means that their nation is not obliged to adhere to international agreements or even to its own treaties and promises. This allegedly sovereign right to ignore on its international agreements was made explicit after Bill Clinton and his Secretary of State Madeline Albright broke the promise by President George Bush and Secretary of State James Baker that NATO would not expand eastward after 1991. (“You didn’t get it in writing,” was the U.S. response to the verbal agreements that were made.)

Likewise, the Trump administration repudiated the multilateral Iranian nuclear agreement signed by the Obama administration, and is escalating warfare with its proxy armies in the Near East. U.S. politicians are waging a New Cold War against Russia, China, Iran, and oil-exporting countries that the United States is seeking to isolate if cannot control their governments, central bank and foreign diplomacy.

* Keynote Paper delivered at the 14th Forum of the World Association for Political Economy, July 21, 2019.

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Dulce et Decorum Est, by Alexander Aston

We may be approaching a historical juncture as important as that of 1914, when World War I started. From Alexander Ashton at theautomaticearth.com:

“Dulce et Decorum est” is a poem written by Wilfred Owen during World War I, and published posthumously in 1920. The Latin title is taken from Ode 3.2 of the Roman poet Horace and means “it is sweet and fitting …”. It is followed there by “pro patria mori”, which means “to die for one’s country”.

 

 

“The muffled tongue of Big Ben tolled nine by the clock as the cortege left the palace, but on history’s clock it was sunset, and the sun of the old world was setting in a dying blaze of splendour never to be seen again.”

– Barbara W. Tuchman, The Guns of August

Alexander Aston: If you have not read Barbara Tuchman’s The Guns of August you should do so, it is one of the great, accessible works of history. Tuchman details with great clarity the diplomatic failures, miscalculations and political logics that ensnared the imperial powers of Europe into the cataclysm of the Great War. It was the book that Kennedy drew upon when navigating the Cuban missile crisis. Just over a century since the guns fell silent in Europe, and nearly fifty years since nuclear holocaust was averted, the world is teetering on what might very well be the largest regional, potentially global, conflict since the second world war.

The United States is a warfare economy, its primary export is violence and it is through violence that it creates the demand for its products. The markets of the Empire are the failed states, grinding civil conflicts, escalating regional tensions and human immiseration created by gun-boat diplomacy. In true entrepreneurial spirit, the United States has repeatedly overestimated its abilities to control the course of events and underestimated the complexities of a market predicated on violence. However, since the beginning of the twenty-first century the American Imperium has proven itself as incompetent as it is vicious. After nearly two decades of intensifying conflicts, a fundamentally broken global economy and a dysfunctional political system, Washington has turned feral, lashing out against decline.

The points of instability in the global system are various and growing, and the only geo-political logics that the Imperium appears to be operating under are threats, coercion, and violence. It is at this moment, with the most erratic president in the country’s history, surrounded by some of the most extreme neo-conservative voices, that the United States has been belligerently stumbling across the globe. In the past few months we have witnessed a surrealistic reimagining of the Latin American coup, the medieval melodrama of Canadian vassals taking a royal hostage from the Middle Kingdom and British buccaneers’ privateering off the coast of Gibraltar. The Imperial system is in a paroxysm of incoherent but sustained aggression.

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The Missing Three-Letter Word in the Iran Crisis, by Michael Klare

There’s been an enduring constant in the US government’s Middle East policy: oil. From Michael Klare at tomdispatch.com:

Oil’s Enduring Sway in U.S. Policy in the Middle East

It’s always the oil. While President Trump was hobnobbing with Saudi Crown Prince Mohammed bin Salman at the G-20 summit in Japan, brushing off a recent U.N. report about the prince’s role in the murder of Washington Post columnist Jamal Khashoggi, Secretary of State Mike Pompeo was in Asia and the Middle East, pleading with foreign leaders to support “Sentinel.” The aim of that administration plan: to protect shipping in the Strait of Hormuz and the Persian Gulf. Both Trump and Pompeo insisted that their efforts were driven by concern over Iranian misbehavior in the region and the need to ensure the safety of maritime commerce. Neither, however, mentioned one inconvenient three-letter word — O-I-L — that lay behind their Iranian maneuvering (as it has impelled every other American incursion in the Middle East since World War II).

Now, it’s true that the United States no longer relies on imported petroleum for a large share of its energy needs. Thanks to the fracking revolution, the country now gets the bulk of its oil — approximately 75% — from domestic sources. (In 2008, that share had been closer to 35%.)  Key allies in NATO and rivals like China, however, continue to depend on Middle Eastern oil for a significant proportion of their energy needs. As it happens, the world economy — of which the U.S. is the leading beneficiary (despite President Trump’s self-destructive trade wars) — relies on an uninterrupted flow of oil from the Persian Gulf to keep energy prices low. By continuing to serve as the principal overseer of that flow, Washington enjoys striking geopolitical advantages that its foreign policy elites would no more abandon than they would their country’s nuclear supremacy.

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