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The “Oil War”

“Did you know there’s an oil war? And the war has an objective: to destroy Russia,” said Venezuelan President Nicolas Maduro in a live television speech last week. “It’s a strategically planned war … also aimed at Venezuela, to try and destroy our revolution and cause an economic collapse.” It’s the United States that has started the war, Maduro said, and its strategy was to flood the market with shale oil and collapse the price.

Russia’s President Vladimir Putin agrees. “We all see the lowering of oil prices.” he said recently. “There’s lots of talk about what’s causing it. Could it be an agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.” The evil Americans are at it again. They’re fiendishly clever, you know.

We are hearing this kind of talk a lot these days, especially from countries that have been hit hard by the crash in the oil price. Last Thursday Brent crude hit $55 per barrel, precisely half the price it was selling for last June. The Obama administration’s announcement last week that it is preparing to allow the export of some US oil to foreign markets may send it even lower. (US crude oil exports have been banned since 1973.)

When the oil price collapses, countries that depend very heavily on oil exports to make ends meet are obviously going to get hurt. President Putin, who has let Russia get itself into a position where more than half its budget revenue comes from oil and gas sales (some estimates go as high as 80 percent) is in deep trouble: the value of the rouble has halved, and the economy has already slipped into recession.

Venezuela, where government spending is certainly more than 50 percent dependent on oil exports, is in even deeper trouble – and, like Putin in Russia, President Maduro of Venezuela sees this as the result of an American plot. Various commentators in the West have taken up the chorus, and the conspiracy theory is taking root all over the developing world.

So let us consider whether there really is an “oil war”. The accusation is that the United States is deliberately “flooding the market” with shale oil, that is, with oil that has only become available because of the fracking techniques that have become widespread, especially in the US, over the past decade. Moreover, Washington is doing this for political purposes, not just because it makes economic sense for the United States to behave like this.

In order to believe this conspiracy theory, however, you really have to think that a rational US government, acting in its own best economic interests, would do the opposite: suppress the fracking techniques and keep American oil production low, in order to keep its imports up and the oil price high. But why on earth would it want to do that?
You will note that I am going along with the notion (a necessary part of the conspiracy theory) that all important business decisions in the United States are ultimately made by the US government. That is ridiculous, of course, but we don’t need to refute this delusion in order to settle the question at hand, so let it pass.

Hydraulic fracturing (“fracking”) as a means of recovering gas and oil, particularly from shale formations, has its roots in early attempts dating back as far as 1947, but it was the development of cheap and reliable techniques for horizontal drilling in the late 1980s that slowly began to transform the US oil industry.

By 2012, over a million fracking operations had been performed in US wells – but in 2012, last year’s events in Ukraine were unforeseen and the United States and Russia were still on relatively good terms. Many oil-exporting countries were worried by the prospect that rising US oil and gas production would shrink American imports and thereby cut their own profits, but it was still seen as a supply-and-demand problem, not a strategic manoeuvre.

The operators wanted to make a profit, and Washington liked the idea that rising US domestic oil production might end the country’s dependence on imported oil from unstable places so much that it gave tax breaks and even some direct subsidies to the companies developing the fracking techniques. But that’s no more than what any other government of an oil-producing country would have done.

So did the US develop fracking to hurt its enemies? The dates just don’t work for Russia: fracking was already making US production soar years before Washington started to see Moscow as an enemy. As for Venezuela, it continues to be the fourth-largest exporter of oil to the United States, at a time when the glut of oil on the market would let Washington cut Venezuela out of the supply chain entirely.

And Barack Obama is not opening the flood-gates for massive American oil exports that will make the oil price fall even lower. The US still imports a lot of oil, and will go on doing so for years. He has only authorised the export of a particular kind of ultra-light oil that is in over-supply on the domestic market: only about one million barrels of it, with actual exports not starting until next August.

If this is a conspiracy, it’s a remarkably slow-moving one.
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To shorten to 725 words, omit paragraphs 8, 9 and 12. (“You…industry”; and “The operators…done”)

Torture and the CIA: Time to Move On?

When somebody says it is time to move on, it means there is something deeply embarrassing that they don’t want to discuss in public. President Barack Obama said that about the Senate Intelligence Committee’s report, published on Tuesday, about the Central Intelligence Agency’s use of torture in the years after 9/11.

He put the best face on it after Senator Dianne Feinstein’s committee released the 528-page report anyway, talking about how “part of what sets us (Americans) apart is that when we do something wrong, we acknowledge it.” But as recently as Friday US Secretary of State John Kerry urged Feinstein not to release the report now on the grounds that the “timing” was wrong. When would it be right, then?

Feinstein ignored him because she knew (as did he) that if the report was not put out now, it never would be. Next month a new Congress will take office, and the majority on the new Senate Intelligence Committee will be Republicans. They would certainly make sure that it never sees the light of day.

But there is one Republican Senator, at least, who thinks differently. John McCain, who ran against Obama in the 2008 presidential election, said bluntly that torture “rarely yields credible information….What might come as a surprise, not just to our enemies, but to many Americans, is how little these practices did to aid our efforts to bring 9/11 culprits to justice and to find and prevent terrorist attacks today and tomorrow.”

McCain was severely tortured himself while a prisoner-of-war in North Vietnam in 1968, and eventually made an anti-American propaganda “confession”. As he later said: “I had learned what we all learned over there: Every man has his breaking point. I had reached mine.” But then, he knows more about this subject than any other American politician, and probably more than any CIA torturer. They were never at the receiving end.

Even McCain, however, confined himself to saying that torture was not a useful instrument of American policy. He avoided talking about the more important fact that it is also a grave crime under international law, because that would mean admitting that senior officials in former president George W Bush’s Republican administrations who authorised the torture in 2002-06 – possibly even including Bush himself – should face prosecution.

Almost every senior American politician will avoid talking about that. The debate in the United States will be between those who insist that the waterboarding, regular beatings, “stress positions”, ice baths, sleep deprivation, “rectal feeding”, and other torture techniques used on captives in the CIA’s “black sites” yielded useful information and saved American lives, and those who say that it was all pointless and useless.

The Senate committee’s report provides fuel for this debate, examining twenty cases of counterterrorism “successes” achieved by torture that the CIA has used to justify its actions. Even now, CIA Director John Brennan defends the torture, claiming that “the intelligence gained from the programme was critical to our understanding of al-Qaeda.” But the committee concludes that not one case produced unique or otherwise unavailable intelligence.

But this is all beside the point. The law doesn’t say that torture is a crime unless it produces useful intelligence, any more than it says that murder is a crime unless it is profitable. It simply says that torture is a crime, always and in any circumstances. As it should.

The American Civil Liberties Union, to its credit, says that the attorney general should appoint a special prosecutor to conduct “an independent and complete investigation of Bush administration officials who created, approved, carried out and covered up the torture programme….In our system, no one should be above the law, yet only a handful of mainly low-level personnel have been criminally prosecuted for abuse. That is a scandal.”

But the discussion about punishing the people who committed these crimes will mostly be conducted outside the United States, and it won’t be conducted by governments. The several dozen American allies that were accomplices in the CIA’s “Rendition, Detention and Interrogation” programme, have all exercised their right to have information about their collaboration removed from the report.

The debate will therefore have to take place in the media and in the international organisations. United Nations Special Rapporteur on Human Rights and Counter-Terrorism Ben Emmerson, for example, said in Geneva that senior officials from the Bush administration who planned and sanctioned these crimes must be prosecuted, as well as CIA and US government officials responsible for torture such as waterboarding.

“As a matter of international law,” Emmerson said, “the US is legally obliged to bring those responsible to justice.” Well, yes, but you would be wise not to hold your breath while waiting for this to happen. So far, only one former CIA official, John Kyriakou, has been jailed in connection with the torture programme – and he was prosecuted for confirming to reporters that the CIA was waterboarding prisoners.
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To shorten to 725 words, omit paragraphs 8 and 10. (“The Senate…intelligence”; and “The American…scandal”)

Oil: Blind-sided by Technology

“The price of oil will hit its floor and it will rise again,” President Nicolas Maduro assured Venezuelans, whose shaky economy depends critically on a high oil price. “Venezuela will continue with its social plans. Venezuela will move forward.”

No it won’t, and neither will Russia, Iran, or Nigeria. The only major oil exporters that are not in deep trouble are the Arab countries, whose governments have some room for manoeuvre because of low production costs, relatively small populations, and big foreign currency reserves.

Since June the cost of a barrel of Brent crude, the benchmark for world oil prices, has fallen by almost a quarter, from around $110 a barrel (where it was stuck for the past four years) to just above $80 a barrel. Last month, for the first time in decades, Nigeria exported no oil at all to the United States. Even at a big discount, Americans just don’t need it. And the main reason for all that is fracking.

American production has almost doubled in the past five years thanks to the new drilling technologies, and the United States overtook Russia last year to become the world’s largest producer of oil and gas combined. (Saudi Arabia comes a distant third.) With production soaring and world demand for oil stalling due to slow economic growth, a collapse in prices was inevitable. The question is how far they will collapse, and for how long.

The answer is probably not much further, for the moment – but they could easily stay down in the $75-$85 range for a couple of years. The reason for that is that the “swing” producers (mostly Arab), who could theoretically push prices back up by cutting their own production, have clearly decided not to do so.

Their concern is for the long-term power of the OPEC cartel, which used to be strong enough to set the price of oil. That never will be true again unless they can drive the (mainly American) frackers who are causing the over-supply of oil out of business.

Saudi Arabia and its allies are hoping that a prolonged period when the price of a barrel of oil is lower than the cost of getting that barrel out of the ground by fracking will ruin this new industry and bring back the Good Old Days. Dream on.

The Saudi strategy won’t work because some 98 percent of US crude oil and condensates has a break-even price of below $80 per barrel. Indeed, 82 percent of American production would still be turning a profit at $60 per barrel.

Even with its massive foreign currency reserves, Saudi Arabia probably cannot afford to keep the oil price low enough for long enough to break the American frackers. (Its own break-even price for conventional oil is $93 per barrel.) And the Iranians, Nigerians, Venezuelans and Russians, who depend on oil revenues for at least half of their national budgets, will be screaming for higher prices before they face riots in the streets.

So this is not a transient event; it’s a revolution. The Organisation of Petroleum-Exporting Countries (OPEC) came into its own when the United States ceased to be the dominant global producer in the early 1970s. With the re-emergence of the United States as the biggest producer, OPEC’s clout is bound to shrink – so oil prices will probably stay well below $100 a barrel for the foreseeable future.

This will be a great boon for countries that depend heavily on imported oil, like India and China. It may eventually liberate the United States from its compulsion to intervene repeatedly in Middle Eastern disputes that are really none of its business. And it may be a disaster for repressive and/or corrupt regimes in countries like Russia (break-even price $105 per barrel), Nigeria ($119), Venezuela ($121) and Iran ($140).

It also means that worries about “peak oil”, and the underlying calculation that the world had only about forty years’ worth of proven oil reserves left, can be set aside for a while. We are already up to 53 years of reserves, and we are finding new oil faster than we are using existing reserves.

Of course, a broader view of our situation would find little reason for rejoicing in all this. Our global civilisation depends on fossil fuels for 85 percent of its energy, and our annual emissions of carbon dioxide and other greenhouse gases are still rising.

Just another twenty-five years of that will deliver us to the “point of no return”: 450 parts per million of CO2 equivalent in the atmosphere. That would raise the average global temperature by 2 degrees C, and trigger natural sources of warming that it will be impossible for us to turn off again. Runaway warming is not a happy prospect, so it is unseemly to celebrate the news that we have even more oil to burn – and cheaper oil, at that.

On the other hand, it would be entirely appropriate to celebrate the news that other new technologies may open up a better escape route from fossil fuels. Solar power, wind power, nuclear fission, and hydro power all have a role to play in that task, but the Holy Grail for half a century has been fusion power. It may be much closer than we thought.
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To shorten to 725 words, omit paragraphs 11, 12 and 15. (“This will…reserves”; and “On the other…thought”)

Gwynne Dyer is an independent journalist whose articles are published in 45 countries.

THIS ARTICLE MAY ALSO BE USED AS THE FIRST OF A TWO-PART PIECE CALLED “GLOBAL ENERGY: BLIND-SIDED BY TECHNOLOGY”. In that case, this part would be sub-titled “FRACKING”, and the second part “NUCLEAR FUSION”. If you wish to use it that way, but still want the shorter length, THEN OMIT PARAGRAPHS 6, 11 AND 12 from this article..  (“Their…concern”, and “This will…reserves”

Recognising Palestine

It’s a slow process, this business of getting recognised as an independent state, but the Palestinians are making progress. In September of last year, Mahmoud Abbas, the long-overdue-for-an-election president of the Palestinian National Authority, was given permission to sit in the “beige chair”, the one that is reserved for heads of state waiting to go to the podium and address the UN General Assembly.

And now, another Great Leap Forward. On Monday, the British Parliament voted by 274 to 12 to recognise Palestine as a state. It was a private member’s bill, however, and ministers in Prime Minister David Cameron’s cabinet were ordered to abstain. The bill cannot compel Cameron to actually recognise Palestine, a decision which the British Government will only take “at a moment of our choosing and when it can best help bring about peace.”

More hot air and empty symbolism, then, or so it would seem. But the parliamentary vote is better seen as a very large straw in the wind. After half a century when Israel could count on reflexive support from the United States, Canada and the big Western European countries no matter what it did, public opinion in the countries of the European Union is shifting.

Until recently, the only EU members that recognised the State of Palestine were ex-Soviet satellites in Eastern Europe that had done so when they were Communist-ruled. But early this month the newly elected Swedish government declared that it would recognise Palestine, and other parliamentary votes on the question are coming up in Ireland, Denmark, Finland and, most importantly, France.

They will probably all vote yes. As Matthew Gould, UK ambassador to Israel, said on Israeli radio after the vote in London: “I am concerned in the long run about the shift in public opinion in the UK and beyond towards Israel. Israel lost support after this summer’s conflict (in Gaza), and after the series of announcements on (expanding Israeli) settlements (in the West Bank). This parliamentary vote is a sign of the way the wind is blowing.”

Official Israel is busily pretending that this does not matter, but it does, in two ways. One is the diplomatic reality that soon nothing may stand between Palestine and full membership of the United Nations except a lone, naked US veto in the United Nations Security Council, which may have to be repeated on an annual basis.

That will be one consequence of the way the wind is blowing, but much graver for Israel is the reason why it is blowing in that direction: patience with Israeli Prime Minster Binyamin Netanyahu’s perpetual delaying tactics is close to exhausted in most Western electorates. Among the young it has already run out completely.

Most people in Israel believe that Netanyahu has absolutely no intention of allowing the emergence of a genuinely independent Palestinian state in the West Bank and the Gaza Strip, the one-fifth of colonial Palestine that was not already incorporated into Israel at the end of the 1948 war. Indeed, much of his electoral support comes from Israelis who trust him to prevent such an outcome.

Netanyahu can never state his purpose openly, of course, because that would alienate Israel’s supporters abroad, who generally believe that peace can only be achieved by the “two-state solution” that both sides signed up to 22 years ago in the Oslo Accords. Those supporters used to be willing to turn a blind eye to his actions so long as he gave lip-service to the Oslo goals – but that faith is now running on fumes in the British House of Commons.

Sir Richard Ottaway, the chair of the Select Committee on Foreign Affairs and a lifelong supporter of Israel, told the House: “Looking back over the past twenty years, I realise now Israel has been slowly drifting away from world public opinion. The annexation of the 950 acres of the West Bank just a few months ago has outraged me more than anything else in my political life. It has made me look a fool and that is something I deeply resent.”

The erosion of support for Israel has been slower in the United States, where open criticism of Israeli actions in the media is rare and Congress is still (in the crude phrase of Washington insiders) “Israeli-occupied territory.” But it is happening even there – and among the younger generation of Americans the decline has been very steep.

In a Gallup poll conducted last July, in the midst of the most recent Gaza war, more than half of Americans over the age of 50 said that Israel’s actions (which eventually killed over 2,000 Palestinians) were justified. Just a quarter of those between 18 and 29 years old agreed.

In both cases these generations will probably stick to their convictions all of their lives – but generational turnover will ensure that the opinions of the younger group ultimately prevail. It was presumably Israel’s actions and positions over the past ten years that shaped the opinions of the younger Americans. Another ten years like that, and even the United States may have a majority that wants to recognise Palestine.
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To shorten to 725 words, omit paragraphs 3 and 10. (“More…shifting”; and “Sir…resent”)