Hello! Oil Independent, Rich and Fat Saudi America
Introduction:
Tim Johnson on Mcclatchy DC wrote a piece Im posting below. This article is head on of where the US is and headed on the “National Security” problem of depending on oil from unstable places like the middle east. Despite all the crying and yelling from the Republicans in Congress the US has solved the problem of energy and oil. No body is dancing and celebrating because we are not 100% there yet and most important people can not be taking food stamps, meds, education and other things that cost money and the government has been helping but now with yells about a budget (if it was not the budget it would be something else) and how we can not afford our own. They say the money we have should go to the debt otherwise our kids will inherit nothing. That is an old song and a dance.
The truth is and someone that believe will not deny it. This is a matter how we think of us and our neighbors on the other side of town. There was and still is a belief that everyone needs to work and pull it self by their own bootstraps. This formula comes from the days in which you had Landlords as in ‘Lords’ that controlled the government because they were the ones with real money.
The money most of the time was not made by them but was inherited from the family. Having obtained wealth, who would want to share with the poor? So the myth came to be that the poor was poor because they were defective. They did not have the blood line that put them in place to inherit wealth. As the new world came to be and the Landlords diminished because the economy diminished for them and changed. No slaves meant no land. Land had to be sold and now you had more ‘common’ people with land and getting money from the new economy of the ‘Industrial Revolution.” As things developed and less people were needed to do jobs that machines could do cheaply and many times better, now you found this new class of people (middle class) with some money but loosing with when they had no jobs. No jobs, money gone back to being poor. This was going on until the oil shortages started occurring. Now we have under the excuse of democracy invading other countries that either had oil or where an impediment to us getting that oil. The poor were wanted to fight and now had jobs connected to cars, factories and anything connected to the modern economy of 1940-70.
The country as a whole did well even with expensive wars. We just printed our money and barrow. We borrowed not to feed anyone, but to fight for democracy (oil). Now that we see the end to this cycle of invading for oil we see an outcry that we have no money because we need to pay what we borrowed. No matter that as the nation gets out from underneath the importing of energy, the nation will be dancing on money. Those words are never said because then people won’t work so they can get $8000 a year for their families in an economy that calls for at least $20,000 for a single individual to live. Not save or travel around the world and shop at the best stores, but to managed to survive and pay a rent like in New York which is going now for $12,000-$15,000 year, very conservatively speaking.
The truth is and someone that believe will not deny it. This is a matter how we think of us and our neighbors on the other side of town. There was and still is a belief that everyone needs to work and pull it self by their own bootstraps. This formula comes from the days in which you had Landlords as in ‘Lords’ that controlled the government because they were the ones with real money.
The money most of the time was not made by them but was inherited from the family. Having obtained wealth, who would want to share with the poor? So the myth came to be that the poor was poor because they were defective. They did not have the blood line that put them in place to inherit wealth. As the new world came to be and the Landlords diminished because the economy diminished for them and changed. No slaves meant no land. Land had to be sold and now you had more ‘common’ people with land and getting money from the new economy of the ‘Industrial Revolution.” As things developed and less people were needed to do jobs that machines could do cheaply and many times better, now you found this new class of people (middle class) with some money but loosing with when they had no jobs. No jobs, money gone back to being poor. This was going on until the oil shortages started occurring. Now we have under the excuse of democracy invading other countries that either had oil or where an impediment to us getting that oil. The poor were wanted to fight and now had jobs connected to cars, factories and anything connected to the modern economy of 1940-70.
The country as a whole did well even with expensive wars. We just printed our money and barrow. We borrowed not to feed anyone, but to fight for democracy (oil). Now that we see the end to this cycle of invading for oil we see an outcry that we have no money because we need to pay what we borrowed. No matter that as the nation gets out from underneath the importing of energy, the nation will be dancing on money. Those words are never said because then people won’t work so they can get $8000 a year for their families in an economy that calls for at least $20,000 for a single individual to live. Not save or travel around the world and shop at the best stores, but to managed to survive and pay a rent like in New York which is going now for $12,000-$15,000 year, very conservatively speaking.
Oil Refinery in Detroit Getty Images/Fickr RM
“For the past 40 years, U.S. presidents have launched distant wars, allied with autocratic sheikhs and dispatched naval fleets to protect sea lanes, all for the imperative of keeping foreign oil spigots flowing.
That imperative has now subsided. Rather suddenly, the center of gravity of global energy production has swung toward the Americas as shale oil and gas fields in North Dakota and Texas hum with activity. America is moving to the fore as the world’s largest producer of petroleum and natural gas.
That change will reorder the globe in ways large and small.
U.S. experts say it will prolong the United States’ position as the predominant global superpower. Arab nations that shook the world with the 1973 oil embargo almost certainly will be weakened. Russia will find its power ebb as European nations find alternate suppliers for natural gas. New energy technologies will reorder the scales of global winners and losers.
“There are not many times in history where you can see the balance of power shift,” said David L. Goldwyn, founder of Goldwyn Global Strategies, an energy intelligence consultancy in Washington. “We are going to see that.”
Coinciding with America’s shale oil boom, Goldwyn said, are cutting-edge technologies that allow new parts of the globe to tap into unconventional energy resources, including deep offshore natural gas beds. Places like Cyprus in the eastern Mediterranean, Mozambique in Africa and Colombia in South America hold promise with energy reserves.
“We’re really seeing the small ‘d’ democratization of access to energy in more countries and more places,” Goldwyn said.
There are skeptics, of course, whose doubts range from distrust of the geological forecasts to analysts who say an environmental disaster could derail the shale oil and gas boom, just as the 2011 Fukushima nuclear disaster in Japan sapped global enthusiasm for nuclear energy.
“The implications of the U.S. shale revolution are so great for its economy and security that you don’t want to kill it with stupidity,” said Robert A. Manning, an energy expert at the Atlantic Council, a public policy think tank on trans-Atlantic issues. He advocates more federal regulation on the process of extracting energy from hydraulically fractured shale formations, a process known as “fracking,” to ensure that environmental or other setbacks do not occur.
“If we find out that it’s causing earthquakes, or something else bad happens, you want to prevent that stuff,” he said.
Even doubters, however, are beginning to think the fracking boom may have long-range implications.
Chief among them is the Organization of Petroleum Exporting Countries, the energy cartel that for four decades was the arbiter of world energy supplies and prices. Just this month, OPEC reversed its previous view of the “marginal” nature of the U.S. fracking boom, acknowledging that energy supplies created by new technologies could cut sharply into the cartel’s market.
Throughout Africa, oil-producing states express alarm about the drop-off in their exports to the United States. The flow of Nigerian crude to U.S. shores hit 1.3 million barrels per day in 2007, but by August it had fallen to 77,000 barrels daily. African oil producers now ship more oil to Europe and China, but many there are concerned by the loss of a dependable customer.
Iraq, whose oil deposits were once thought likely to benefit U.S. oil companies, has found that Chinese, not U.S., companies are the ones interested in its oil bounty. American oil companies would rather drill at home.
Perhaps what is most alarming to some is that the shale revolution is likely to perpetuate U.S. dominance, not just in geopolitics but in the energy industry itself. While many countries also have massive shale reserves – China is the most notable, but Algeria, Argentina and Mexico are others – none is thought likely to be able to take advantage of those deposits easily, certainly not with the explosive growth seen in the United States.
Many factors give the United States a head start in exploiting energy locked in shale, including its access to cutting-edge technology and risk capital, clear private resource ownership and huge numbers of drilling rigs, most of them capable of the difficult horizontal drilling required in fracking.
“I’m very skeptical about the ability of any other country to replicate the drilling intensity” of the United States, said Leonardo Maugeri, a former executive at the world’s sixth largest oil company, Italy-based Eni, who is at the Belfer Center for Science and International Affairs at Harvard’s Kennedy School of Government.
Companies in the United States own nearly 60 percent of all active drilling rigs in the world, Maugeri said, a key condition for the continuous drilling needed for fracking.
“Texas is the most drilled state in the world,” Maugeri said. “To give you an order of magnitude, the number of wells drilled in Texas compared to Saudi Arabia is 1,000 to one.”
The ability of the United States to dominate the extraction of shale deposits at home raises another question, troubling to some: Will the United States become less interested in the global military role it plays now?
“One thing this may do is untangle the obsessiveness about Middle East oil, this whole idea that we have to somehow protect these sea routes at all costs,” said Mark Clinton Thurber, associate director of the Program on Energy and Sustainable Development at Stanford University.
Forty years ago, supertankers sailing through the Strait of Hormuz at the entrance to the Persian Gulf carried more than half the world’s crude. U.S.-allied petro states there grew rich, buying U.S. armaments and fighter jet squadrons. U.S. strategic interests led it to launch Gulf wars in 1991 and 2003.
The greatest symbol of U.S. presence and power in the region is the Navy’s 5th Fleet, docked in the tiny sheikdom of Bahrain. Comprising some 30 ships and 20,000 personnel, the fleet protects the Persian Gulf and the Red and Arabian seas.
Today, U.S. taxpayers foot the bill for Navy ships that largely protect supertankers headed to Asia. China overtook the United States as the largest importer of Persian Gulf oil two years ago.
That trend will surge, and “it’s going to raise all new questions,” said Amy Myers Jaffe, an expert on global energy production at the University of California, Davis.
“You have the Chinese and other Asians free riding on a U.S. security presence, and I’m not sure that’s sustainable,” said Manning of the Atlantic Council.
As Asian populations rise and economies grow, nations there should be recruited to help patrol sea lanes, said Charles K. Ebinger, director of the Energy Security Initiative at the Brookings Institution, a Washington think tank.
“I can envisage that as both India and China become maritime powers, that we have joint operations,” Ebinger said. “Let’s say that we are even thrown out of our base in Bahrain; I could see a rotational basis between the three great powers, China, India and the U.S.”
Some experts argue that the United States should not disengage from the Persian Gulf because U.S. interests there go far beyond energy supplies. The region is vital to efforts to contain nuclear proliferation and religious extremism, the protection of Israel remains a central U.S. interest, and while the importance of Middle East oil may be on the decline for the United States, any disruption there would send world prices skyrocketing – harming economies in Asia that are vital U.S. markets.
“The United States is so woven into the world economy that we need that energy flowing to Asia,” said Rachel Bronson, vice president of studies at the Chicago Council on Global Affairs and an expert on U.S.-Saudi relations.
Saudi Arabia, Washington’s most important strategic Arab partner, has sharply diverged from the Obama administration this year over whether to arm Syrian rebels and how to confront Iran’s nuclear program.
The Saudis still share strategic interests with the United States and continue to play a large global energy role for their ability to increase oil production so prices do not spike even as OPEC, the once-formidable cartel, has seen its production remain stagnant for 40 years. The 12-nation cartel now supplies 39.8 percent of world crude and liquid fuels production, down from 54 percent in 1973, according to the Energy Information Administration, the statistics branch of the U.S. Energy Department.
“OPEC’s going to be on the defensive,” said Jaffe of UC-Davis.
For the short and medium term, oil giants like Saudi Arabia and Kuwait may survive unscathed as they look to Asia, sending as much as 70 percent of their oil there. Smaller oil producers in North Africa and the Middle East, however, may encounter “power struggles or upheaval” as they face declining revenue, according to a report in February from Citigroup, the global financial concern.
Over the longer term, the outlook may be brighter. The Paris-based International Energy Agency forecast in a report this month that rising global demand would allow the Middle East to recapture its role as a key source of oil by the mid-2020s, primarily to meet surging demand in Asia while Europe and the United States reap benefits of improved energy efficiency.
Most U.S. experts concur that a big loser from the growth of the U.S. shale industry will be Russia, which has locked in Eastern and Western Europe as clients for its natural gas, leveraging the reliance on its supplies for political gain.
The Russian share of the European Union’s natural gas imports is expected to drop, however, from the current 34 percent to below 15 percent over the next 10 to 15 years, according to some analyses, replaced by supplies of liquefied natural gas from the United States.
“Russia is in big, big trouble,” said Ebinger of Brookings, noting that Moscow is losing revenue by subsidizing domestic consumption even as natural gas prices are under assault, slowly decoupling from decades of linkage to crude oil prices.
China, with its massive appetite for energy and pressing need to cut down on coal-fired power generation that contributes to pollution, has compelling reasons to extract more energy – if only it can corral the know-how and drilling muscle to do so.
According to a June estimate by the U.S. Energy Information Administration, China has the world’s largest recoverable shale gas reserves, nearly double of those in the United States. Its shale oil reserves are the world’s third largest after Russia and the United States, the EIA said.
But whether China will exploit those finds is uncertain. The country’s three major oil companies currently see greater profits for themselves working overseas rather than at home. And foreign companies are reluctant to work in China because of restrictive contracts and other conditions.
Chinese analysts have wrung their hands over the impact of the U.S. shale revolution, with one heavyweight pundit declaring that it will remold the world.
“This writer, as a diplomat who has over 40 years of experience in the Middle East, believes that the U.S.-initiated shale gas revolution will not only change the global landscape of energy distribution but will also change the world’s geopolitical layout. The United States will take a more dominant position in global energy distribution,” wrote Wu Sike, a senior statesman who used to be China’s envoy to the Middle East and is now member of a key foreign affairs committee.
Middle East turmoil, however, won’t end, and eventually, Wu writes, “The United States will become less and less reliant on Middle Eastern oil, until this reliance finally ends.”
Wu sees fracking as having “an insurmountable impact on the Middle East, the global economy and the world’s geopolitical map.”
Some U.S. analysts generally agree, and say the result of the U.S. shale revolution will be a strengthened economy and a turn-around morale in a nation that some felt was on the decline.
“As the United States’ imports shrink, and we are exporting less dollars abroad to pay for oil and gas, then our trade deficit will narrow,” said Jaffe. “We won’t be as badly disadvantaged compared to China anymore. And their economy is going to shrink some because they’re not going to be leading in petrochemicals anymore because some of the industry . . . is coming back to the United States.”
The February Citigroup report, titled “Energy 2020: Independence Day,” put it more simply.
“The United States should see its role in the world as a singular superpower enhanced and prolonged,” the report says.)
Introduction by Adam Gonzalez
Article written BY TIM JOHNSON
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