Re: Oil and overproduction 3

[Charles Jannuzi <b_rieux@xxxxxxxxx>]

A previous piece of text to start off my
discussion:

>>Mark, in his exuberance, mocks the notion of
the
Russian oil reserves. The
Kazak side of the Caspian sea, indeed, and who
really wants to build a
pipeline across Afghanistan? But the biggest
energy resource in terms of
reserves in Russia has never been oil, it's been
gas. They don't have clue
now, with the destruction of the old Soviet
institute on energy research
connected to the Ministry  of Forestry and Mining

(now a 'state owned'
private enterprise) about what's in Siberia and
the Far East. Should the
reserves there of NG (and oil for that matter) be

a 'zero'? Hardly. It's a
question of exploration<<

What about non-Russian Caspian Gas in a pipeline
across Afghanistan? Certainly makes more sense
than a proposal from Exxon to take a pipeline
from Turkmenistan all the way across China to
China's east coast, doesn't it (though Chinese
construction interests are enthusiastic about the
idea)? (BTW, an historical note. The Soviet Union
tapped extensively into Caspian natural gas, so
these are hardly virgin reserves.)

I always argued that the US war in Afghanistan
never had much of anything to do with high-priced
Caspian oil deals, though this is not so clear
cut as it sounds (since some oil is already being
tapped in the region, and more is certainly part
of the future plans).

In terms of military planning, the US war in
Afghanistan was basically a bunch of equipment
and ideas they had been getting ready for an
attack on Hussein, including the special
bunker-buster bombs (almost as powerful as
mininukes) they dropped on mountains in order to
impress us that they were destroying Pancho Bin
Laden in his bunker complex (which largely never
existed in the first place, though I'm sure the
bombing helped wipe out the natural environments
of those mountains).

That doesn't mean Afghanistan never had a place
on national security state maps. It's location is
just too strategic. And US military and
intelligence involvement there goes way way back,
such as when Pres. Carter decided to give the go
ahead to arm the mujahadeen so as to bog the
Soviet Union down in a Vietnam-style conflict.
Also, the US had long been planning to do
something about adopted Afghan, Pancho Bin Laden,
who, if nothing else, sure had a big mouth,
eagerly taking credit for nearly every terrorist
operation ever pulled off against the US from the
mid 90s until 9-11. For another thing, Bin Laden
actually seemed to stand in the way of Saudi
influence via Pakistan in the entire region
because he claimed to be more legitimate in his
religion and lifestyle than the Saudi rulers
were. Most importantly, Afghanistan was long a
key part of a Turkmenistan-Afghanistan-Pakistan
natural gas pipeline plan, which I cover in
greater detail further down.

Companies that provide infrastructure and
'turnkey' construction--Shaw Group, Groupe
Genoyer (owned by Carlyle Group),
Halliburton--are true camp followers of any US
war (indeed they often provide infrastructure of
the US military itself). And the sort of company
that can put together complete construction
packages for oil development and transport can
also do so for natural gas and for chemical
production. They seek profits, of course, and the
best way to do that is to get someone else to pay
for things like the development of new oil and
gas fields or pipelines carrying the stuff to
market. Even western oil companies, which inflate
their stated reserves all the time, and certainly
value them with the idea that oil is worth more
than it has been during the past 10 years, would
be reluctant to take on the costs of developing
most Caspian oil and gas. Projects with that
level of uncertainty over such a long time, even
carried out through consortia, would hurt their
bottom line; it would hurt their ability to pay
their shareholders; it would hurt the value of
their shares and total capitilization; it would
hurt their ability to raise money on stock and
bond markets, etc.

There is a fairly practical plan to go ahead with
a gas pipeline across Afghanistan; Turkmenistan
(major backers of the Northern Alliance--right up
to supplying troops), Afghanistan and Pakistan
inked a deal last May. The basic idea that Unocal
Karzai and his US board of directors came up with
was that if you could get gas to markets in S.
Asia and E. Asia (liquefied and transported on
ships to S. Korean, Taiwan, and Japan), you could
use the project to pay for the reconstruction of
Afghanistan. Actually, all they did was revive an
old plan that Unocal had long cherished. In
addition to all the armed conflict going on in
Afghanistan, the other conflict was among big oil
companies such as Unocal and Bridas/BP over --and
then even Shell got in on it. See the timeline up
to 1999 here:

http://www.worldpress.org/specials/pp/pipeline_timeline.htm

And these also for background:

http://www.moles.org/ProjectUnderground/drillbits/971021/97102103.html

http://www.unocal.com/uclnews/97news/102797a.htm

This link has a map that will show you why an
Afghanistan route for pipelines makes more sense
than any other, especially if it's product from
Turkmenistan and it is going to be sold to S.
Asia or shipped to E. Asian markets. It also
shows that when the gas project got revived in
1999, Saudi Arabia's Delta Oil became the center
of it, so don't kid yourself in thinking S. A.'s
interest in S. Asia is just about spreading the
true religion (and the Mullah Omar was never a
Wahhabist, o.k.?).

http://www.eia.doe.gov/emeu/cabs/caspgase.html

This is also an interesting link--hey, it's nice
to see that the Dept. of Energy does a few other
things besides maintain the US's nuclear weapons
stockpile.

http://www.eia.doe.gov/emeu/cabs/caspian.html

-----------------

A $2-3 billion pipeline through Afghanistan is
still the plan. I'm sure the Japanese will be
forced to fund this in a major way, at least to
get it going--for example, they have been taking
ODA money out of SE Asia and putting it into
Afghanistan reconstruction efforts (hence the
involvement of the Asian Development Bank).

Here's the deal when it was worth 2 billion as
reported by UPI:

http://www.newsmax.com/archives/articles/2002/5/30/204011.shtml

Here is the latest manifestation; apparently
another 1 billion dollars was supposed to get the
Indians enthusiastic about it all.

http://asia.cnn.com/2002/BUSINESS/asia/12/27/turkmenistan.pipeline.ap/

----------

The dynamic we see in the perceived need to
interfere in countries as far apart as Venezuela
and Iraq does, I'm sure, have a lot to do with
oil, the idea of it, its control, its future
development, and ultimately its depletion and
exhaustion (but...). Perhaps Chavez's
calculations are like those of any nationalist
leader in a country that relies on exports of its
oil. Ultimately, every bit of oil pumped and
exported is oil that the country could have used
in the future for its own use but will never have
again.

But I highly doubt that most of the strategic
nationalist ideologues in either the US
government or the short-term capitalists of
fossil fuel-related companies are overly worried
about a new era of oil scarcity. Indeed, their
development and economic religions teache
otherwise.

Either new sources of oil and gas will come on
line, or capitalist economies will find or invent
alternatives as they become economically feasible
(i.e., not that much more than the prevailing
cost of oil and gas). This is what they believe,
or at least say they believe.

If the politicans and oil execs (often the same
thing, no coincidence) could think even that far
into what is admittedly the near future, they
might also worry about things like greenhouse
gases (one question you might ask about fossil
fuels is, Will we deplete them before we destroy
our own biosphere using them?). Clearly, it's not
possible for most of them to be what they are and
to be crippled with such doubt or anxiety.

OTOH, overall oil over-production might well be
behind US maneuvering. First, remember, it is
forces allied to US interests leading the shut
down of oil production in Venezuela (this works
out well for the US interests--higher oil prices
and they can blame it all on Chavez, so as not to
hear any complaints when they finally do get ride
of him) . Second, despite all the global
deregulation in energy markets going on, US oil
and energy capital--like most other US
companies--rely to quite an extent on making
their money in the energy-greedy US market. They
also still rely to quite an extent on domestic
oil and gas production, though a lot of this is
now inextricably tied up with Canada's and
Mexico's considerable resources.

A higher price for oil helps their profits
because much US oil is by no means cheap when
compared to oil produced in many other parts of
the world. A higher price for oil also helps them
to put together financing for more oil
exploration and development, both in North
America but elsewhere (how else are they going to
pay for more development in the Arctic?). Note
also just how reluctant the US government is to
tap into its huge strategic oil reserves whenever
a shortage in supply looms (I think Clinton did
it once back in the 90s when there was a bit of a
pinch in supplies and prices were skyrocketing).

Moreover, keeping oil supplies tight and prices
high has probably been discussed while economic
policy is being made, because Greenspan and the
Bush administration fear deflation, such as what
has occurred in Japan in the past decade (and it
could easily be argued that deflation in Japan is
caused by (1) an overly strong yen and (2) overly
cheap oil, made still cheaper by an overly strong
yen--though it should be remembered that the
strong yen is really what the US wants, for other
strategic economic reasons).

Of course, one place with the biggest promise of
very cheap development is Iraq, and the promise
of it being cheap is made even more attractive by
the idea that taxpayers in the US, Europe and
Japan will be paying for it. Right now Iraqi oil
is largely 'mediated' by the activities of
Russian oil companies, though more and more these
Russian oil companies are coming into the control
of much larger western ones. If there were a war
in Iraq, the west could actually lose Iraq's
significant supply, leading to a further
tightening of global oil supplies (already made
tight by the oil strike in Venezuela). So the
so-called benefits of cheap Iraqi oil might
actually disappear for 3-5 years in the aftermath
of a war there. Still, there would huge amounts
of profits to be made in the 'reconstruction' of
Iraq's 'infrastructure'--namely, gettings its oil
production back on line so an occupation or
control of Iraq could be run by the US with a
minimum direct cost to the US government.
Reconstruction of that capacity would be nothing
compared to trying to get oil out of the Arctic
or the Caspian.

A parallel is current Afghanistan. The rush to
get the gas pipeline built would be to realize
the goal of getting $300 million in transport
revenues going into the coffers of Karzai's
puppet regime in Kabul (so for example, Asian gas
consumers instead of US taxpayers will then pay
the Dyncorp goon squads who guard the sartorial
wonder from Unocal). Let's suppose they could
bring in the pipeline at $3 billion. Let's
suppose E. Asia really did sign on to getting gas
supplied from S. Asia. This is a deal you could
get investors to go for because, compared to so
many other possible deals, the possibility of
immediate payoff is so real you can almost smell
it.

One way the fossil-fuel and energy companies keep
the whole game going is to get others to pay for
their business ventures. Just like the true
capitalists they are, where they would be without
someone else's money backing up their
money-making ventures? A good source has been the
World Bank.

See
http://www.seen.org/PDFs/tnc_list_wb.pdf

Nothing like enrichment now and the immediate
bottom line to make you forget all your cares
away.

Charles Jannuzi
Fukuik, Japan

PS: one extra note about oil. I might have added
that in the agreements with North Korea, the US
also reneged on supplying oil in turn for the
nuclear reactors being shut down.



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