http://www.informationclearinghouse.info/article8411.htm

The USA's Global Resource War

"The Epic Struggle for World Hegemony"

By Nigel H Maund

03/30/05 -

Overview

The war for commodities is central to the scramble for political
hegemony and economic survival of the US as the sole world hyperpower
and determinant of the world to come according to its own model,
rather than face a world where this cultural, economic and political
hegemony is not only challenged but eclipsed by the growing industrial
and geopolitical might of Asia.

As a consumer of 25% of the world's annual oil output, and the world's
largest importer of oil, the US is absolutely central to oil
economics. Furthermore, given the geography and structure of the US
transportation and logistics system, no country's economy is more
vulnerable than the US to any serious dislocation in supplies or
sustained rise in price. Hydrogen or electric powered vehicles and
atomic fusion are years from becoming a commercial and technologically
viable alterative to oil, despite the increasing sums spent on R & D.

http://www.informationclearinghouse.info/article8411.htm

The USA's Global Resource War

“The Epic Struggle for World Hegemony”

By Nigel H Maund

03/30/05 -

Overview

The war for commodities is central to the scramble for political
hegemony and economic survival of the US as the sole world hyperpower
and determinant of the world to come according to its own model,
rather than face a world where this cultural, economic and political
hegemony is not only challenged but eclipsed by the growing industrial
and geopolitical might of Asia.

As a consumer of 25% of the world’s annual oil output, and the world’s
largest importer of oil, the US is absolutely central to oil
economics. Furthermore, given the geography and structure of the US
transportation and logistics system, no country’s economy is more
vulnerable than the US to any serious dislocation in supplies or
sustained rise in price. Hydrogen or electric powered vehicles and
atomic fusion are years from becoming a commercial and technologically
viable alterative to oil, despite the increasing sums spent on R & D.

Oil is only a part, albeit a big part, of the scramble for resources.
Other strategic minerals are also central to this great economic power
game such as: platinum, nickel, copper, cobalt, uranium, vanadium,
chromium, manganese, iron, molybdenum, tungsten and even such rust
belt metals as lead and zinc. Several vital elements the US has to
import. These are: platinum, nickel, vanadium, uranium, chromium and
iron and manganese. Three are vital for steel making: iron, nickel and
manganese. Vanadium can be added as an also ran to this mix.

China, with a population equal to 4 times that of the US, at 1.2
billion, has a potential demand that will put immense upward pressure
on the prices and demand for all commodities, to feed its unstoppable
growth. India, with a population of 1 billion people, is slowly
joining this race for development. SE Asian nations are already well
advanced along this path with Singapore (4 million); Taiwan (22
million) and Korea (47 million) leading the way, followed by Thailand
(61 million); Malaysia (20 million) and Vietnam (78 million) with the
Philippines (85 million) and Indonesia (220 million) as the economic
laggards. However, all these nations come within China’s growing
economic gravitational pull and influence, and all have significant
Chinese expatriate populations, which dominate their local economies.
Japan is beginning to rethink where it future lies. The post war world
has significantly changed, and, with it old paradigms. The future is
most assuredly China and greater Asia. The US has, to a large degree,
had its day. The “War on Terror” is nothing other than a massive,
albeit obviously transparent, smokescreen for the real war: “THE WAR
FOR RESOURCES AND THE ECONOMIC SURVIVAL OF THE UNITED STATES AS A
GLOBAL POWER”.

The hegemony of the United States Dollar as a global reserve currency,
in which the world’s commodities are traded, is fundamental to this
story. Given the massive indebtedness of the US at every conceivable
level, this currency is under huge potential threat, with massive
Asian influence in the form of dollar surpluses held as US T bonds. If
the dollar fails, so too will the United States, with all that this
means. Right at the root of the US’s survival strategy is control of
the world’s oil reserves. Without this, the dollar and the US are
assuredly in serious decline. No price, however vast in terms of blood
and treasure, is too high in this game of truly gigantic stakes.
Because of its failure to: adapt and reduce the massive over-
consumption of and dependence upon resources; develop its rail and
alternative infrastructure to roads; and the lopsided structure of its
car and truck driven economy, the US has quite literally no other
option. Sadly, to achieve its objectives, it has lost the moral high
ground and mortgaged the real meaning of Democracy, with unforeseen
consequences for the world and its own citizens.

The US and Israel have inspired terrorism by 55 years of their own
policies in the Middle East, rather than tackle the root causes of
such dissention, which they have no intention of doing as this will go
against their interests. Until Israel and its puppet states, the US
and UK, are brought to book by the world community the causes of world
terror will go unaddressed and continue into the distant future.
However, they all know this, and care little for the consequences for
ordinary people, as they invoke police state legislation and practices
to tackle a problem entirely of their own creation. Besides, its role
as a suitable smokescreen to enact global war could not be more
fortuitous, given their long term objectives of control of the world’s
oil reserves and Israeli “control by proxy” of a completely neutered
and divided Middle East.

The Great (Oil) Game

Oil, and energy in general, are rapidly taking centre stage in world
politics and economics. Indeed, the US administration started pursuing
these objectives in the 1930’s under Herbert Hoover’s Presidency.
Hoover needed no advice in this regard as he was a well travelled
consultant mining engineer. Daniel Yergin’s excellent short history of
oil, written in 1990, entitled “The Prize” is recommended reading.
Throughout the late 19th and 20th Century’s, Central Asia and latterly
the Persian (or Arabian) Gulf has been centre stage to what was
colloquially known as “the Great Game”, between Britain and the Czar’s
Russia in the period 1850 to 1900, then from 1930 to the present day
between the US, UK, Russia and China, with India and Pakistan now
playing lesser but increasing roles.

Oil in commercial quantities was first pumped in the US State of
Pennsylvania where George Bissell’s little consortium, spurred by
Professor Silliman’s discovery that rock oil could be fractionated
into a wide range of potentially very useful derivatives, financed the
drilling of a 60 ft rock drill hole, managed in the field by “Colonel”
Edwin Drake. Rock oil’s kerosene fraction replaced sperm whale oil as
a source of clean and bright illumination in lamps in homes throughout
America. Demand around the world skyrocketed and oil mania was
initiated. New oil fields were discovered and oversupply became a
major problem with wild gyrations in oil price dependent upon the
supply – demand equation and massive speculative activity.
Rockefeller's Standard Oil Company (SOHIO and SOCAL) rapidly, by both
highly organized, intelligent and sometimes unscrupulous business
practices, brought order and organisation to what had evolved as an
unregulated, shambolic, economic “free for all”, with rampant waste
and disorder in an increasingly vital industry. However, the abundance
of oil, and the development of the motor car in the US, in particular
Henry Ford’s Model T car, put the burgeoning, largely new immigrant,
US population on wheels, and made the US both the world’s largest
producer and consumer of oil and oil products. As the rise in oil
consumption grew exponentially, so did exploration and development.
New oil fields were discovered in Oklahoma, Texas and the Gulf states.
However, early production in the US was uncontrolled and primitive,
worsened by the ill conceived and often idiotic claim laws then in
force. Over pumping was rife, as competition between wells in very
close proximity resulted in a policy of “beggar thy neighbour” and
accelerate your “cone of depletion” fastest to get the most oil out
for yourself. Even worse than this was the flaring off of natural gas
caps to oil fields. Natural gas pressure is a vital feature in
ensuring the maximization of oil recovery in any given field. In
Canada’s Edmonton field, a town lit by natural gas street lights that
were never turned off, the recoveries were as low as 40% of total oil
in the field. The remainder is to this day unexploited.

The wasteful policies and poor technology of a juvenile industry,
combined with the rapid development of the US economy as the world’s
largest by the mid 1930’s, meant that the US’s best oil fields were
not exploited in the optimum manner to maximize production. The
majority of these fields were over-pumped and ruined. By the end of
WW2, during which the US had to open the oil spigot to the maximum to
support the war effort in the US and UK, US oil fields were in steady
decline having passed “Hubbert’s Peak”. The realization came home to
Harry S Truman and Winston Churchill that the new oil “centre of
gravity” was the Middle East. Control of Middle Eastern oil became
vital to the global strategies of both nations, in the cold war era,
as it was pivotal to the survival of their economies, political
influence and the survival of the “free world”.

Relationships with Arab nations in the post WW1 era were by and large
good. However, in 1948 the state of Israel was created, without any
effort to establish a similar state for the Palestinian people, who
were disenfranchised by the policies of the UK and US. Since then, US
relationships with Arab states have been increasingly determined by
the immensely, and increasingly powerful, Zionist lobby in the US, and
the security mania of Israel, to the point at which Arab states today
regard the US with extreme distrust, and as an Israeli puppet state by
proxy, which is a statement of truth, whether one likes it or not. The
House of Saud is hopelessly corrupt and politically weak. The Saudi
Royal Family is entirely a US puppet government sustained until the
oil runs out. After that, they will be thrown to the wolves and the
country will most likely fragment. The vast discrepancy between rich
and poor, combined with a bell shaped population profile, Wahibi
Muslim extreme religious conservatism, and high unemployment mean that
Saudi Arabia is becoming increasingly unstable, and potentially
politically volatile. Saudi Arabia has played the role of “swing
producer” on the world’s oil markets maintaining largely stable prices
for nearly 45 years. Any sudden disturbance to this delicate balance
could result in a panic situation in an increasingly nervous market
place.

The distribution of the world’s oil fields, both in terms of their
relative size and geography, is significant. Oil fields are
categorized into, at the top level: supergiant fields such as Saudi
Arabia’s Gawar and Majid e Sulieman field’s or Venezuela’s Lake
Maracaibo field. These are fields with reserves of more than 500
billion barrels of oil. All these fields were discovered before WW2,
and have been under accelerating and high sustained production, ever
since. Historically, there have been a mere 7 such field’s, 6 of which
lie in the Middle East: two are in Saudi Arabia; one is shared between
Kuwait and Iraq; two are in Iraq at Kirkuk and Mosul; and one is in
Iran. With control of the Saudi oil fields through Saudi ARAMCO
(although now Saudi controlled, American influence is still major) and
the House of Saud (Royal Family of + 8,000 members), and now Kuwait,
which is a client state of the UK and US, control of Iraq (US and UK)
and forthcoming “regime change” in Iran, the US – UK – Israeli
triumvirates objective becomes patently obvious; namely control of 6
out of 7 of the world’s supergiant oil fields. Venezuela’s President
Hugo Chavez is a major CIA target for “regime change”, the objective
being to secure the world’s last uncontrolled oil field outside the
Middle East. One could arguably add Alaska’s North Slope field to the
category of being the 8th supergiant field, this obviously being under
US control.

As a teenager, I remember experts on BBC TV warning of the coming oil
crisis in the late 1960’s. However, these fears seemed misplaced as
the impending crisis never eventuated. However, it is now apparent
that the dire forecasts of some 40 years ago are finally upon us. The
rapid and remarkable growth of China and SE Asia from peasant rural
economies to industrial and information based economies, is at last
exerting a massive demand pull on the world’s commodities, and
shipping fleets. The USA, having failed to implement any form of
energy and resource conservation, is a consumption junkie of “King
Kong” proportions. Far from heeding calls for conservation, the
populace are hooked on the latest gas guzzling SUV’s rather than fuel
economic compacts. However, the change, when it occurs, will be like a
liquid helium shower for the US citizenry. The sad fact is that all
the world’s major oil fields are at their peaks of production, or are
already over Hubbard’s famous peak for each field. Examples documented
in the technical literature, include Saudi Arabia’s giant 200 km long
Gawar field and Venezuela’s Maraciabo field. At the former, formation
water brines are migrating into the reservoir which is a clear signal
that productive capacity is in serious decline.

This means that, in a world of burgeoning demand, with China and India
demanding ever more to feed their growing economies, and the US and
Europe not cutting back on consumption, the much vaunted supply
crisis, predicted all those years ago, has at last arrived.
Furthermore, no supergiant fields have been discovered since Alaska in
the 1970’s. Moderate sized fields are being brought on stream at a
rate far below depletion of world reserves. The great hope for future
supplies lies in Central Asia and the Caucasus, and, dare one say it,
Antarctica. Tar sands and oil shales contain vast petroleum reserves,
notably in Venezuela’s Orinoco river basin and Athabasca, Canada,
amounting to some 500 times the current global resources of oil, are
another major option, however, to be developed and commercially
extracted they need a high sustained oil price of over US$ 100 to 120
per barrel. Such prices would cripple the global economy.

Oil resource poor Europe plays the role of passive compliance, not
wishing to do its own dirty work in the Middle East, and quite happy
for the US and UK to be its stooge, and stay out of the limelight and
its negative impact. Instead, Europe is quietly and rapidly moving to
oil and metal resource rich Russia and the former CIS Republics such
as Azerbaijan, Kazakhstan, Uzbekistan and Turkmenistan. The Caspian
and Northern Himalayas has moved centre stage in the search for major
new oil resources.

Lesser fields, but nonetheless significant, comprising cluster fields
in the 100 to 500 billion barrel range are those in the offshore Niger
delta, in unstable and volatile Nigeria; the Congo, offshore Gabon,
and offshore Angola. Libya’s fields in the Sahara have largely lain
moribund, in terms of modern development, under the control of the
famous and politically unstable and capricious Colonel. However,
moderation, and some no doubt hidden agenda, has caused him to woo the
international community, and to open up to foreign investment, into
which France, Italy, Germany and the UK have fallen over each other in
the scramble.

The Significant Other Factors

A further factor underpinning the US’s internal and global policies,
has been the increasing awareness of several very dangerous economic
developments for which it only has itself to blame. These largely
centre on poor US economic planning over the last 50 years, and the
greatest expansion of credit the world has ever seen. Unless the US
becomes a dictatorship, which is possible, this writer expects to see
the US suddenly remember one of its greater Presidents: Mr. Andrew
Jackson, who acted in the public interest and abolished the central
bank, putting America firmly back on the gold standard. When the
denouement of the epic debt bubble of Mr. Alan Greenspan finally
bursts, the US public will have a very rude awakening, and the Federal
Reserve Bank will be abolished by a furious public once and for all.
The name Federal Reserve Bank could not be more misleading. It is not
Federal. It is not a Reserve Bank. It was established following a
meeting of John Pierpont Morgan, Vanderbilt and Nelson Aldrich on
Jekyll Island in 1913 with the joint connivance of Woodrow Wilson’s
“advisor” (controller) Colonel House. The bank has a Board of
Governors appointed by its principal shareholders, who are plutocratic
merchant bankers, but now includes the Rothschild’s, Citibank
(Rockefeller is also head of the Council on Foreign Relations – CFR -
whose staff are present and dominate all US administrations; e.g.
Henry Kissinger), Bank of America and Salomon Brothers, etc. This is a
giant private bank, which not only issues all money in the US, but
underpins currency used for all international settlements and trading
all commodities; i.e., the US dollar. Notably, the Fed also handles
all US Tax receipts - corporate, government and private.

The boom and bust economic cycle is a function of how this institution
exercises its policies. Until 1982, the Fed exerted a modicum of
control, keeping money supply and credit issuance within some degree
of reason. However, under the Carter and then Reagan administrations
debt took off at a sprint to fund, amongst other things, Reagan’s huge
increase in the defence budget. Paul Volcker, then Chairman of the
Fed, put the brakes on by raising interest rates in a clear signal to
markets that enough was enough. However, under the kindly and very
accommodating Mr. Greenspan, the rate of debt issuance has moved into
overdrive, pumping up the stock market bubble of all time, and the
largest technical “head and shoulders” formation ever seen, by an
entire order of magnitude. This let the floodgates open to mergers and
acquisitions mania near the bubble top in 1997 to 2000 when corporate
piracy and malpractice were on an unprecedented scale. Valuations of
stocks lost all common sense financial reason. ENRON and WORLDCOM –
MCI were but the tip of a huge iceberg of corporate crime which was
rapidly covered up by the nervous markets hiding their immense basket
of dirty linen. Heaven forbid the public should find out that
corporate crime was systemic in the upper echelons of US society. The
most bizarre market was the NASDAQ where PE’s for many stocks such as
Amazon.com and Ebay.com were at mathematical infinity, the perfect
example of Greenspan’s “irrational exuberance” quote. When the bubble
burst in 2000 to 2001, the kindly Greenspan dropped interest rates
like a stone channelling the world’s trillions into Real Estate and
commodities markets and providing the basis to generate equity
bubble’s son, baby bubble which we are now about to see come apart.
This was great because the ever accommodative money lenders concocted
new derivatives variants, hedge funds “with whistles, bells and
dancing gals”, mortgage schemes that would turn any old style banker
white as a ghost. In the world of junk finance, junk food, junk
beverages, junk rap music, where junk status stocks are OK, we now had
junk mortgages. Junk, Junk, Junk, Junk and more Junk, in the land
where accountability and financial prudence no longer exists. Clearly,
the Government of the US is so corrupt and venal that no one cares a
damn any more. Certainly protecting the rights and assets of one’s
citizens is an idea that died with the Founding Fathers.

The entire post 2001 stock, bond market and real estate market boom
has been funded by an even greater expansion of FIAT credit that is
mind boggling in its audacity. This time Greenspan has really gone to
town. Not satisfied with his humungous equity bubble, he’s gone one
better to create the bond market (the carry trade gravy train) and
real estate bubble of all time. People trading properties have hit the
bonanza gold seam. Whilst real incomes have remained largely static,
amidst this vast asset inflation, everyone who “owns” Mc Mansion ATM
machine has the ability to generate cash out of space to keep on
spending and piling up more debt. All this is of course funded by the
Fed’s vast issuance of T Bonds, largely to Japan and China. This happy
little virtuous circle, where we buy your goods and you buy our junk
paper and take profits on the carry trade is just fine and dandy so
long as the spreads offset the massive currency losses in US
denominated paper. However, whereas the spreads between the short and
long duration bonds was 250 basis points, it has now narrowed to 50 to
70 basis points. If the happy little symbiotic relationship in the
markets suddenly unwinds, as seems likely, and the Mc Mansion funded
US consumer runs out of Mc Mansion funds to keep the tills ringing,
what then?

Just what is going to underpin the United States Dollar when all else
fails, a rapid rise in rates is not really palatable given the
horrendous consequences of rates at say 6% to 7 %, or more, needed to
support the dollar, so what else is there…………………OIL?????. Or, is the
US just going to go broke and declare all debts owed by it as defunct?
Except of course the banks will want your properties or other assets
back if you can’t repay the loans.

Nigel H Maund. BSc(Hons)Lond., MSc, DIC, MBA, MIMMM, SEG ( Email -
nhmgeol@yahoo.com.au )

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