Sunday, September 03, 2006

An Oil-Centric View of the Economy, Politics and War

"Americans are paying $3.00 a gallon," I heard someone say, "in Europe they've been paying $4.00 a gallon for years."

WHY?

Europe was reconstructed, post-WWII, with a built-in high gasoline price structure - to reflect the relative value of the European economy to the rest of the world. Europe was re-building after total destruction.

$4.00 a gallon expresses the value of the regions' economy relative to the American economy at $1.00 a gallon(in our recent past experience).

The victors of WWII(August,1945) had to tie the American dollar to something tangible the real world. They announced the price they would pay for oil, a world price. At the same time they tied the value of the American dollar to the value of a barrel of oil ($35 American = 45 gallons of oil).

They could do this because they were the biggest buyers and they owned the most aircraft carriers.

They set the price low, and they wanted all they could get. Caveat emptor though: if supplies are curtailed the USA would consider that an Act of War. The fact that the US could declare this to be - and have it stick - was the Final Victory of WWII. The USA was the Empire du jour, if she choose that enterprise.

Four years later the world changed. The USSR, a country with the most men in uniform at the time, (5 million) achieved nuclear capability and rocketry. They thus became a de-facto Super Power along with China - shortly there after. The nuclear 'club' has expanded ever since.

The true value of nuclear weapons appears to be coming under some question though: China has said they believe the nuclear threat is that of a Paper Tiger. Apparently it is so; conventional proxy wars continue today as before, through the end of the so called 'Cold' war.

In 1999 real American debt was so high, its value was in question. A result of a concerted effort towards global dominance. This amounted to a revolution in world power. American power was no longer 'Super' with out the balancing terror of the opposite force.

The catalyst for this destabilization was China's new demand for oil which is in the process of changing the balance of power in the world. The relative rarity of the commodity is causing price fluctuations. Instead of a duality (two super-powers) we face an algorithm involving seven power centers: USA, UE, UK, Russia, China, India and Brazil.


This thing, it should not be spoken, least it be believed.


The US could not allow this to happen; firstly because of their incredible foreign debt, the cost of financing it would sky-rocket and hobble the economy; Secondly, it wasn't true , the US economy remained the most efficient and productive, and the largest by double.

One solution was to break OPEC's monopoly through conquest. Another has been the creation of a speculative price bubble, which oil companies and corporate banks are trying to maintain right now - to ensure a stable High-Oil price; since they can no longer maintain the Cheap-Oil model. A retreat for future gains.

The new players in the post cold war era are supporting the insurgency in Iraq. They hope to stale-mate the Bush Whitehouse's conquest plan, and use it as leverage, covertly, not publicly - as that would be an act of war they cannot win. They are forcing the Americans to address a realignment of power with-in a new international political reality.

Politics through the barrel of a gun. A proxy war in Iraq between the same old powers(and some new ones) who involved themselves in the last two world wars, tis time with Arab civilians and coalition volunteers as fodder. Now we see the reason there had to be a 9/11 pretext; The politics of fear and greed. There was no reason that this realignment needed be violent, except by an ascension to power of a Military Industrial/Political alliance in Washington.

The disgraced Neo-Con politician, and deep thinker, Newt Gingridge, as we watched Israeli air power in July 2006, "WWIII has begun" he said.

I love this guy!

Couldn't have said it better.













Newt Gingridge

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