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Huge story on global effects of oil prices in WaPo
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Huge story on global effects of oil prices in WaPo
by Waterthrush » Sat 10 Nov 2007, 08:31:39
Early this morning, the November 10 Washington Post is fronting its website with a large story on the effects of the ongoing wealth transfer from oil consumers to oil producers. Nowhere is peak oil mentioned by name - the closest acknowledgment is $this->bbcode_second_pass_quote('', 'T')his new high point in petroleum prices has arrived over four years, and many believe it will represent a new plateau even if prices drop back somewhat in coming months
and the piece is presented as a straightforward reporting of this "massive" transfer of wealth rather than an analysis.
But it is the frontpage header, and should lead to more analysis in the coming week, perhaps even a slight hint that things will get worse.
It's quite clear that the Bush administration has worsened the situation terribly, with their mockery of conservation, their failure in Iraq, and their hostility to alternative energy sources. I'm bitter that these 7 years have so weakened the US and strengthened the oil-rich countries, and that it's now too late for "preparations" - instead, we can only react. But I'm glad it's coming on his watch, and he will be saddled with this failure along with so many others.
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Re: Huge story on global effects of oil prices in WaPo
by dissident » Sat 10 Nov 2007, 12:27:04
More whinging from Pravda on the Potomac. Since when has it been the responsibility of producer nations to subsidize the consumer nations? If you don't like the price then that is too f*cking bad. Apparently all the blather about free markets and capitalism is a smoke screen for the commies that run America. And this is not such a wild claim considering that the key neocons that shape Bush's policies are a bunch of ex-Trotskyist dirtbags.
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Re: Huge story on global effects of oil prices in WaPo
by aflurry » Sat 10 Nov 2007, 12:58:08
$this->bbcode_second_pass_quote('dissident', 'M')ore whinging from Pravda on the Potomac. Since when has it been the responsibility of producer nations to subsidize the consumer nations? If you don't like the price then that is too f*cking bad. Apparently all the blather about free markets and capitalism is a smoke screen for the commies that run America. And this is not such a wild claim considering that the key neocons that shape Bush's policies are a bunch of ex-Trotskyist dirtbags.
dude... EVERY mention of the "free market" in American politics today is underneath a purely cynical money grab.
Chicago School free market fundies are either in cahoots or the perfect patsies. Either way they should tarred and feathered. Every single time a free market experiment blows up in their faces, they claim it was because the markets were never actually free.
That's because the free markets are a MYTH. Not only is the rationality of the market a myth, but the presumption of the necessity of market rationality lead to coersion. All of a sudden we find there are "rational" and "irrational" forms of human organization. And the irrarional ones need to be sprayed with firehoses.
It's complete tosh. All there are policies that will promote polarization of wealth and those that will promote equalization. And all this "free markets" wankery is purely of the first kind.
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Re: Huge story on global effects of oil prices in WaPo
by bonehead » Sat 10 Nov 2007, 13:05:11
Right now,it looks like the Bush presidential library will be an outhouse.
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Re: Huge story on global effects of oil prices in WaPo
by efarmer » Sat 10 Nov 2007, 17:19:18
The major media is not going to deliver this story as a scoop, it will be covered after it is irrefutable as if it was a natural disaster. This allows the present paradigms and systems to run as long as is possible and avoids panic and uncertainty right up until the time of consequences.
When media covers natural disasters, everyone immediately believes the story, determines how it impacts them personally, and decides if action on their part is required.
WTSHTF will be covered by the OSITYWKM* media barrage.
* Oh Sh!t, I Thought You Were Kidding Me!
"That will be $4.32, thanks for your order, please walk around to the drive up window."
When media covers natural disasters, everyone immediately believes the story, determines how it impacts them personally, and decides if action on their part is required.
WTSHTF will be covered by the OSITYWKM* media barrage.
* Oh Sh!t, I Thought You Were Kidding Me!
"That will be $4.32, thanks for your order, please walk around to the drive up window."
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Re: Huge story on global effects of oil prices in WaPo
by Chesire » Sat 10 Nov 2007, 22:46:13
$this->bbcode_second_pass_quote('bonehead', 'R')ight now,it looks like the Bush presidential library will be an outhouse.
Well you will need toilet paper
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Re: Huge story on global effects of oil prices in WaPo
by halcyon » Sun 11 Nov 2007, 13:28:03
Personally I think this falls more into the category of Middle-East bashing in preparation of geopolitical moves.
Works like this (cue Goebbels):
1. Find what you need and who you need it from (target)
2. Bargain and blackmail, if fails..
3. Prepare to gab it
4. In order to justify grab: insinuate, tar and destroy reputation of target and it's close allies
5. If you can't do it directly, try guilty by association: you want to attack some sheiks in the ME, make all sheiks in the ME look bad
6. Say it's about our freedom, your money and bad evil sheiks are against it
7. Continue preparations for the grab in the background
8. Poll, analyze and time your attack: Grab
9. Make sure you win, leave no people in position alive to talk and write history as you wish (you are the winner after all)
Now, why is there no wealth transfer from US to Middle-East?
1) Us is printing money that is worth zippo
2) Oil producers understand it and price their products accordingly
3) Oil producers who get paid in USD wants to swap their currency holding from toilet paper (aka USD) into something that might hold value for a while (euro, yen, swiss francs, etc)
4) Forex markets react accordingly to the influx of toilet paper in the market and price it lower
5) Repeat cycle from 1
So, while nominally ME is getting richer, in actual value they are not.
It would be interesting to see if ME is actually on the losing end in the current battle of USD price vs oil price.
Can they actually move up the oil price faster than the value of their USD payments depreciates?
If not, they are at the losing end of this financial battle: the transfer of wealth is then from ME oil kingdoms to US, not the other way around.
USD is waging war with toilet paper and even Sarkozy has noticed it, and he does not like what he sees.
This is of course a simplification, but that's roughly my take on things.
However, it makes a lot of sense to talk only about nominal figures like $100/barrel and the billions (of worthless toilet paper) accumulated by oil producers and label them rip-offs and whatnot.
It makes people angry.
And that, my dear fellows, sells more newspapers and hell of a lot more war than the truth.
Works like this (cue Goebbels):
1. Find what you need and who you need it from (target)
2. Bargain and blackmail, if fails..
3. Prepare to gab it
4. In order to justify grab: insinuate, tar and destroy reputation of target and it's close allies
5. If you can't do it directly, try guilty by association: you want to attack some sheiks in the ME, make all sheiks in the ME look bad
6. Say it's about our freedom, your money and bad evil sheiks are against it
7. Continue preparations for the grab in the background
8. Poll, analyze and time your attack: Grab
9. Make sure you win, leave no people in position alive to talk and write history as you wish (you are the winner after all)
Now, why is there no wealth transfer from US to Middle-East?
1) Us is printing money that is worth zippo
2) Oil producers understand it and price their products accordingly
3) Oil producers who get paid in USD wants to swap their currency holding from toilet paper (aka USD) into something that might hold value for a while (euro, yen, swiss francs, etc)
4) Forex markets react accordingly to the influx of toilet paper in the market and price it lower
5) Repeat cycle from 1
So, while nominally ME is getting richer, in actual value they are not.
It would be interesting to see if ME is actually on the losing end in the current battle of USD price vs oil price.
Can they actually move up the oil price faster than the value of their USD payments depreciates?
If not, they are at the losing end of this financial battle: the transfer of wealth is then from ME oil kingdoms to US, not the other way around.
USD is waging war with toilet paper and even Sarkozy has noticed it, and he does not like what he sees.
This is of course a simplification, but that's roughly my take on things.
However, it makes a lot of sense to talk only about nominal figures like $100/barrel and the billions (of worthless toilet paper) accumulated by oil producers and label them rip-offs and whatnot.
It makes people angry.
And that, my dear fellows, sells more newspapers and hell of a lot more war than the truth.
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Re: Huge story on global effects of oil prices in WaPo
by Petrodollar » Fri 16 Nov 2007, 12:09:03
Getting back to the Washington Post article, it is fairly well-rounded. The newspaper version of the article had some truly excellent and compelling graphs, which are unfortuanately missing from the online article. Here's 2 notable excerpts:
$this->bbcode_second_pass_quote('', 'H')igh oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone.
{note: here's the ripple effects in a "pre-peak oil" mindset...}The consequences are evident in minds and mortar: anger at Chinese motor-fuel pumps and inflated confidence in the Kremlin; new weapons in Chad and new petrochemical plants in Saudi Arabia; no-driving campaigns in South Korea and bigger sales for Toyota hybrid cars; a fiscal burden in Senegal and a bonanza in Brazil. In Burma, recent demonstrations were triggered by a government decision to raise fuel prices.
In the United States, the rising bill for imported petroleum lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance its competing goals of fighting inflation and sustaining growth.
High prices have given a boost to oil-rich Alaska, which in September raised the annual oil dividend paid to every man, woman and child living there for a year to $1,654, an increase of $547 from last year. {note: I think this is quite interesting, and I wonder how the politcal dynamics will change in Alaska in the post-peak oil enviroment} In other states, high prices create greater incentives for pursuing non-oil energy projects that once might have looked too expensive and hurt earnings at energy-intensive companies like airlines and chemical makers. Even Kellogg's cited higher energy costs as a drag on its third-quarter earnings.
$this->bbcode_second_pass_quote('', 'H')igh oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone.
{note: here's the ripple effects in a "pre-peak oil" mindset...}The consequences are evident in minds and mortar: anger at Chinese motor-fuel pumps and inflated confidence in the Kremlin; new weapons in Chad and new petrochemical plants in Saudi Arabia; no-driving campaigns in South Korea and bigger sales for Toyota hybrid cars; a fiscal burden in Senegal and a bonanza in Brazil. In Burma, recent demonstrations were triggered by a government decision to raise fuel prices.
In the United States, the rising bill for imported petroleum lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance its competing goals of fighting inflation and sustaining growth.
High prices have given a boost to oil-rich Alaska, which in September raised the annual oil dividend paid to every man, woman and child living there for a year to $1,654, an increase of $547 from last year. {note: I think this is quite interesting, and I wonder how the politcal dynamics will change in Alaska in the post-peak oil enviroment} In other states, high prices create greater incentives for pursuing non-oil energy projects that once might have looked too expensive and hurt earnings at energy-intensive companies like airlines and chemical makers. Even Kellogg's cited higher energy costs as a drag on its third-quarter earnings.
...but the Post's most informative reporting in this article pertains to Russia's newfound wealth and political/economic indepdendence..
$this->bbcode_second_pass_quote('', 'R')ussia, the world's No. 2 oil exporter, shows oil's transformational impact in the political as well as the economic realm. When Vladimir Putin came to power in 2000, less than two years after the collapse of the ruble and Russia's default on its international debt, the country's policymakers worried that 2003 could bring another financial crisis. The country's foreign-debt repayments were scheduled to peak at $17 billion that year.
Inside the Kremlin, with Putin nearing the end of his second and final term as president, that sum now looks like peanuts. Russia's gold and foreign-currency reserves have risen by more than that amount just since July. The soaring price of oil has helped Russia increase the federal budget tenfold since 1999 while paying off its foreign debt and building the third-largest gold and hard-currency reserves in the world, about $425 billion. {note: by paying off its debt, Russia doesn't need to acquire as many dollars, which is the transaction currrency for the IMF...}
"The government is much stronger, much more self-assured and self-confident," said Vladimir Milov, head of the Institute of Energy Policy in Moscow and a former deputy minister of energy. "It believes it can cope with any economic crisis at home."
With good reason. Using energy revenue, the government has built up a $150 billion rainy-day account called the Stabilization Fund.
"This financial independence has contributed to more assertive actions by Russia in the international arena," Milov said. "There is a strong drive within part of the elite to show that we are off our knees."
The result: Russia is trying to reclaim former Soviet republics as part of its sphere of influence. Freed of the need to curry favor with foreign oil companies and Western bankers, Russia can resist what it views as American expansionism, particularly regarding NATO enlargement and U.S. missile defense in Eastern Europe, and forge an independent approach to contentious issues like Iran's nuclear program.
...here's a brief mention of how Japan is dealing with the high crude prices...
$this->bbcode_second_pass_quote('', 'H')ighly developed consumer nations have been better able to adapt. In Japan, which relies on imports for nearly 100 percent of its fuel, nearly everyone is a loser -- with the big exception of Toyota.
Yet Japan has been weaning itself off oil for years. It now imports 16 percent less oil than it did in 1973, although the economy has more than doubled. Billions of dollars were invested to convert oil-reliant electricity-generation systems into ones powered by natural gas, coal, nuclear energy or alternative fuels. Japan accounts for 48 percent of the globe's solar-power generation -- compared with 15 percent in the United States. The adoption rate for fluorescent light bulbs is 80 percent, compared with 6 percent in the United States.
Still, rising fuel prices are pushing up the prices of raw and industrial materials, as well as food, which relies on fertilizers and transportation. Because of rising wheat prices, Nissin Food Products, the instant-noodle industry leader, will increase prices 7 to 11 percent in January, the first price hike in 17 years.
...and the article rightfully addresses how violence is creeping into Chinese society due to escalating oil prices...
$this->bbcode_second_pass_quote('', 'I')n China, the government increased domestic pump prices on Oct. 31 by nearly 10 percent with shortages, rationing and long lines throughout the country. Violence broke out at some gas stations, including an incident last week in Henan province in which one man killed another who had chastised him for jumping to the front of a line for gas.
A scarcity of diesel fuel even hit China's richest cities -- Beijing, Shanghai and trading ports on the east coast -- which in the past have been kept well supplied. In Ningbo, a city south of Shanghai, the wait at some gas stations this week was more than three hours, and lines stretched more than 200 yards.
Rumors circulated that gas stations or the government was hoarding fuel in anticipation of further price increases, prompting the official New China News Agency to warn that anyone caught spreading rumors about fuel-price increases will be "severely punished."
Li Leijun, 37, a taxi driver, said he was so angry that he was unable to buy fuel that he argued with gas station attendants and called the police. "I still didn't get any diesel," he said.
Since shedding orthodox Maoist economic policies, China's leaders have unleashed decades of pent-up demand. China consumes 9 percent of world oil output, up from 6.4 percent five years ago, according to the International Energy Agency. Yet it still subsidizes fuel. As a result, consumption this decade has skyrocketed at an 8.7 percent annual rate despite soaring prices and concerns about the environmental impact of profligate fuel use.
....overall a good article, IMO...
