August 23, 2005

 

'FILL'ER UP':  THE GLOBAL ECONOMY IS NOT 'IMMUNE TO OIL CRISES'

 

KEY FINDINGS

 

**  A world-wide "tussle for oil" is "disturbing" and holds "many potential risks."

**  This "era of hydrocarbon inflation" could reach "100 dollars a barrel by 2008."

**  China, the U.S. and others have "economies that are growing and burning."

**  UN sanctions on Tehran would "really hurt," but are unlikely as "Iran plays a clever hand."

 

MAJOR THEMES

 

'Black gold...lubricant for economies'--  India's pro-economic reforms Financial Express asserted oil's importance to economies means energy decisions cannot be left "entirely to the private sector."  This point was buttressed by writers worldwide who noted that 90 percent of the "black stuff in the ground" is "dominated by nationalized oil companies."  In a world where "supply is bottlenecked" the risks of producers becoming more "authoritarian"--as in Chavez' Caracas--or simply more "ornery," are heightened.  Venezuela's liberal (anti-Chavez) El Nacional explained that a "reduction of four percent in the world oil supply could increase prices by 170 percent" and precipitate a "global crisis" in oil and gas markets. 

 

The world economy confronts 'higher oil prices'--  Given the already "massive increase in fuel prices," Germany's business-oriented Handelsblatt of Duesseldorf pondered where an "economic fatal zone begins."  Other outlets noted the "stifling grip of fossil fuels" that is now driving the "spiraling price of oil."  Currently, "the eurozone is struggling" said Ireland's center-right Independent, and Chennai's left-of-center News Today also observed that "oil prices are moving from one high peak to another" as crude has doubled in price this year.  In consequence, an Austrian analyst opined an "active economic policy is the order of the day."

 

'The lion of the Far East is already jumping'--  China's burgeoning needs drew prominent attention.  The independent Hong Kong Economic Journal remarked that "the second largest state-owned oil company in China--SINOPEC--bought a 5 percent share of one of Iran's biggest not yet exploited oil fields last year"; it held that U.S. and Japanese strategies "will affect...the exploitation of East China Sea" oil, something which, in turn, "will have direct impact on the success or failure of China's oil exploitation."  It stated also that U.S. actions pushed "China to seek oil from Iran, Sudan, Kazakhstan and Burma."  From another angle, Argentina's left-of-center Pagina 12 noted that Venezuela's threat "to cut the oil supply to the U.S. in order to shunt it to China."  India's nationalist Hindustan Times declared "too much bad economics and too much China has made a hash of the world's oil math."

 

'Economic prosperity in Iran,' oil and sanctions--  Analysts considered Iran's nuclear energy gambit, and agreed punitive sanctions were unlikely since the world's oil markets would have "trouble giving up a major producer such as Iran."  Jordan's influential Al-Dustour concluded Iran has taken "advantage of the appropriate moment in history" to add international complexity by reactivating its nuclear plant in Isfahan.  The outlet judged rising oil prices have fueled "prosperity" generating "revenue [that goes to] Iran’s military machine," and Italy's La Stampa reminded that "Russian companies are building nuclear plants in Iran for 800 million dollars."

 

EDITOR:  Rupert D. Vaughan

 

EDITOR'S NOTE:  Media Reaction reporting conveys the spectrum of foreign press sentiment.  Posts select commentary to provide a representative picture of local editorial opinion.  Some commentary is taken directly from the Internet.  This report summarizes and interprets foreign editorial opinion and does not necessarily reflect the views of the U.S. Government.  This analysis was based on 25 reports from 13 countries from August 6-23, 2005.  Editorial excerpts are listed from the most recent date.

 

EUROPE

 

BRITAIN:  "The UN Oil Slick: Another Damning Report From The Volcker Committee"

 

An editorial in the conservative Times stated (8/9):  "It is clear that for this scandal to have continued unchecked on Kofi Annan's watch diminishes his credibility, as does his reluctance fully to acknowledge that wider responsibility.  Europe has by and large been unmoved, because it expects little of the UN.  In the U.S., which, to its credit, has never settled for the 'Third World playpen' view of the global organization, Congress is insisting on a thorough cleaning of the stables.  These are the voices the UN needs, not the yawns of world-weary cynicism."

 

"Onwards And Upwards: U.S. Interest Rates Are Not Cose To Peaking Yet" 

 

An editorial in the independent Financial Times remarked (8/9):  "As housing flattens, private savings increase and the government continues its leisurely efforts to reduce the fiscal deficit, a year or two from now the U.S. will be looking to a pick-up in net exports to keep the economy running at full capacity.  If demand in Asia and elsewhere expands on cue, the U.S. will be able to rebalance domestically while keeping close to full employment."

 

GERMANY:  "Turmoil In Oil-Producing Ecuador"

 

Wolfgang Kunath noted in an editorial in left-of-center Berliner Zeitung (8/22):  "We must keep two different things apart:  On the one hand, we can certainly argue about whether multinational oil companies pay a fair price when they produce oil and natural gas in underdeveloped corners of the world…but it is a totally different story if the central governments of oil and natural gas possessing countries treat their distant oil-producing regions like internal colonies.  Then, one should not be surprised at clashes.  It may be possible that the use of the armed forces will restore production in a few regions but it will not resolve the problems.  Only one thing will help:  the government must become the advocate of ordinary people from which the people on site but also the country as a whole profit.  This would create stability and would contribute to stabilizing oil prices."

 

"Dangerous Resource"

 

Olaf Storbeck observed in an editorial in business daily Handelsblatt of Duesseldorf (8/17): "Oil is much too cheap.  Those who are traveling the United States these days can quickly get this impression.  It is true that the increase in fuel prices is the number one topic of conversation, but that is no reason for car drivers to switch off their engines at gas stations or McDonald restaurants....  Like U.S. consumers, the world economy also seems to cope with the massive increase in fuel prices....  There are plausible reasons why the economies have reacted in such a robust way to the increase in prices, but this does not mean that the global economy has become immune to oil crises.  The black gold continues to be the lubricant for the economies in the industrialized countries and the oil price is the most important price for a single commodity.   If the price stays at its current level, Germany, for instance, must spend 28 billion euros more for energy imports than last year.  And no one can exactly say where the economic fatal zone begins.  But one thing is certain. We continuously approach this zone."

 

"Bracing Climate"

 

Rudolph Chimelli argues in an editorial in center-left Sueddeutsche Zeitung of Munich (8/9):  "The third world war will not break out because Iran resumed operations at the nuclear power plant in Isfahan…but the climate is rapidly deteriorating....  But even if the dispute over Iran's nuclear policy is transferred to the UN Security Council, the Iranians rely on the UN to impose at worst a few toothless sanctions.  The only thing that would really hurt Iran would be an oil boycott.  But the western industrialized nations will hardly impose such a boycott because of their shortage of energy and rising oil prices."

 

ITALY:  “The Double Nuclear Challenge”

 

Maurizio Molinari in centrist, influential daily La Stampa (8/9):  “A double nuclear crisis is threatening the UN because Tehran has reactivated the plant in Isfahan....  The Security Council of a United Nations facing a credibility crisis will soon have to reach an agreement on how to convince Tehran and Pyongyang to give up its nuclear aspirations, but no one said it would be easy because, to give an example, Russian companies are building nuclear plants in Iran for 800 million dollars.”

 

AUSTRIA:  "Social Nostalgia"

 

Foreign affairs writer Wolfgang Greber commented in centrist Die Presse (8/16):  “The President of Venezuela, Hugo Chavez, is the new leftist icon. With his social programs such as free medical aid for the poor and land reforms, he won the hearts of the masses. His charisma reaches countries, which also have leftist governments.... Venezuela has ample oil reserves – and thus petrodollars that help to turn words into deeds and can be invested in friendly states. The oil also is insurance with regard to the North:  Venezuela supplies 15% of the U.S. oil demand--thus, the U.S. cannot afford to impose an embargo against Venezuela, as it did against Cuba.  However, for all his appeal, Chavez’ governing style has become more authoritarian--an effect that is bound to show in any state with a strong ideological basis.  Chavez secured his power to such a degree that is positively frightening:  He placed friends at the constitutional court, and dominates the military. Opponents are beaten up.  For all its admiration of Chavez, the European left must take note of the fact that he is not a democrat with a clean record.”

 

"Economic Crisis"

 

Ronald Barazon, chief editor for independent Salzburger Nachrichten wrote (8/10):  "An oil price of 64 dollars per barrel translates into economic crisis.  Active economic policy is the order of the day. The threat of economic decline is looming, especially in the euro zone which has been stuck in recession for the past four years. In times like these, politicians from Brussels to Paris to Berlin and Vienna are called upon to take effective and far-reaching measures.  However, they are doing no such thing....  In the U.S., the clocks once again tick differently.  That country, which has witnessed rapid growth for the past one and a half decades, once again shows an appropriate reaction:  President George W. Bush signed an energy law passed by Congress that mobilizes subsidies of 2 billion dollars for the oil industry, 1.5 billion for the nuclear industry and 2.7 billion for renewable energy.  These sums in themselves will not solve the problem.  However, they send the right signal to the energy industry that has been investing too little during those long years when the oil price was low."

 

HUNGARY:  "The Lion Is Jumping"

 

Columnist Pál Bokos asserted in left-of-center Népszava (8/17):  “Behind the Chinese and Russian rapprochement lays short-term and long-term interests: weapons and oil. We are talking about goods which are essential for the further prospering of the adult big lion among the Asian little lions…And then there is this military exercise with the name of 'Peaceful Mission', whose name is not even that misleading since the advancing of the Russia-Chinese fleet on the Pacific-Ocean has to do with everything but the war against terrorism and the ethnic disturbances [in Russia]....  It remains to be seen who the real competitor of America will be in the new century, Europe or the lion of the Far East which is not about to jump but is already jumping.”

 

IRELAND: "Iran Plays A Clever Hand In Uranium Dispute"

 

Lara Marlowe expressed the view in the center-left Irish Times (8/16):  “In the unlikely event the Security Council votes on the Iranian [nuclear] program, the best Washington could hope for would be a watered-down resolution that would neither authorize military action nor enact economic sanctions. With oil at $67 per barrel, no one wants to take Iranian crude off the market. Equally dangerous for Mr Bush, Iran exerts considerable influence in Iraq. The Dawa and SCIRI parties--the two main Shia Muslim groups in Iraq--were nurtured by Tehran for two decades.”

 

"Putting On The Brakes"

 

The center right, populist Irish Independent editorialized (8/9):  “Oil prices rose to nearly $64 a barrel yesterday, and pessimists forecast that they would hit $70.... The eurozone is struggling. The British economy, so strong for so many years, has lately shown signs of weakness.  A top Japanese businessman says the world economy can tolerate higher oil prices.  That is very questionable.  And one of the reasons why it is questionable is disturbing, not to say frightening.  The increases yesterday came about in part because of a British warning of imminent attacks on Westerners in Saudi Arabia. The threat was taken so seriously that the Americans closed their diplomatic missions in the country.  It hardly needs saying that the danger is not just a matter of some minor loss of production caused by actual attacks or the consequences of precautions taken by key workers in the industry. The Islamic fundamentalists know that one of the best ways to strike at the monarchy is to hit its main source of wealth, the oilfields.  Their capacity to inflict major damage is unknown.  But the threat of instability is certain.  King Abdullah will try to contain it with inch-by-inch reform, but reform could alienate the conservatives while failing to placate the radicals.”

 

“Desert kingdom That Has Become A Ticking Time-bomb”

 

Mark Dooley commented in the center-right, populist, weekly Sunday Independent (8/7):  “No world leader dared tell the truth about the terror tyranny that King Fahd ruled for 22 years until his death last Monday....  Fahd and his 7,000-strong royal family created and funded the lethal threat now confronting the West. Neither can it conceal that the playboy king left behind one of the planet's most evil and despotic states....  Imagine what would happen if zealots like Osama bin Ladin took control of 60 per cent of the world's oil reserves.  It is for that reason alone that we have a vested interest in keeping the new King Abdullah and his family in place.  But that does not mean that we can't demand immediate reform within the kingdom. While we might be dependent on Abdullah's survival, he is no less dependent on us.  And that is why we should insist that he cracks down on Saudis financing terror at home and abroad. If he did so, al-Qaida and Hamas would immediately collapse. But he must also cut the lifeline to those Saudi imams who pollute the minds of children from Lahore to London.  Most importantly, however, Abdullah must confront corruption and extend democratic reform across the state.  Only then will he win the confidence of ordinary Saudis who now see bin Laden as their true leader.  It is time to stop pretending that Saudi Arabia is our best friend in the Middle East.  If anything, the desert kingdom is a ticking time bomb that we ignore at our peril.”

 

MIDDLE EAST

 

ISRAEL:  "Sanctions On Iran"

 

Independent, left-leaning Ha'aretz editorialized (8/10): "Israel cannot remain apathetic to the worrisome developments to its east… Sanctions are not a miracle cure, especially given the state of the world's oil markets, which would have trouble giving up a major producer such as Iran.  But the international community must flash a 'stop' sign at Khamenei and Ahmadinejad.  The leaders of the West must remember that the perpetrators of the London terror attacks derived their extremist ideology from similar sources, and they must not allow the leaders of radical Islam to have nuclear weapons."

 

JORDAN:  "Iran Takes Advantage Of The Appropriate Moment In History"

 

Daily columnist Bater Wardam wrote on the op-ed page of center-left, influential Arabic Al-Dustour (8/10):   "Iran seems to be better placed politically now to enable it to impose its conditions and options even on the United States.  There is economic prosperity in Iran due to the rise of the world oil prices and the Americans and the Europeans know that the revenue from this prosperity is going to go Iran’s military machine....  The most important element, however, of Iran’s political and economic influence lies in Iraq.  The equation in post-occupation Iraq indicates very clearly to the neo-conservatives’ stupid policy, political shortsightedness and ideological blindness that have contributed to placing the decision-making process in Iraq under the Iranian influence." 

 

ASIA PACIFIC

 

CHINA:  "U.S.-Russia Star In A New Round Of Fights Over Central Asia"

 

Hong Kui commented in the China Radio International sponsored newspaper World News Journal (Shijie Xinwenbao) (8/9):  “Recently, the question of the U.S. military presence in central Asia has had several twists and turns.  It actually reflects a new round of fights between the U.S. and Russia over the area.  Since entering central Asia in the name of the War on Terror, the U.S. has influenced Central Asia’s political weather.  Its first means is promoting the expansion of democracy as a form of besieging Russia.  The second is controlling oil resources.  The third is consolidating and expanding U.S. military bases. The fourth is improving relations with India so that it can increase the U.S. influence there.  Russia also is taking many counter measures.  Last year, the U.S. could enter Central Asia as a country foreign to the region mainly because it had gained Russia’s help and support.  However due to the change in strategic interests of the two, Central Asia has become an eventful place again.”

 

CHINA (HONG KONG SAR):  "Record Oil Prices A Message For Action"

 

The independent English-language South China Morning Post said in an editorial (8/23):  "Crude oil prices have more than doubled this year, reaching a record U.S. $67.10 in New York last Friday.  With strong economic growth and demand cited by analysts for the rises, more records seem inevitable....  The need to pump more oil is at odds with increasing concerns about the role fossil fuels play in climate change.  While most governments agree that rising temperatures and unpredictable weather are the result of the burning of oil, coal and gas, they are reluctant to curb growth by restricting production and imports of such fuels....  The world's biggest energy consumer, the U.S., takes the approach of leaving it to companies themselves to take responsibility for cutting pollution outputs and has no national policy on seeking alternatives to fossil fuel.  The mainland, the second-largest and fastest growing consumer of oil and coal, has a 2010 target for producing 10 per cent of its energy through alternatives, but seems unlikely to meet such a goal because of its spectacular economic growth....  Building a society that looks to an energy-conscious future takes resolve.  Polluters must pay through taxes and fines, whether they produce electricity or have smoky exhaust pipes.  As in Singapore, vehicle licenses must be set at prohibitive levels and petrol taxed equally harshly.  Only then will notice be paid to the realities we face and a search for alternatives begin in earnest."

 

"Oil Crisis Fuels Sino-U.S. Conflicts"

 

The independent Chinese-language Hong Kong Economic Journal noted in an editorial (8/20):  "The second largest state-owned oil company in China--SINOPEC--bought a 5 percent share of one of Iran's biggest not yet exploited oil fields last year.  This March, SINOPEC agreed to buy 110 million metric tons of natural gas from Iran in the next 25 years, amounting to U.S.$20 billion.  China and Iran are getting closer in the scope of energy.  They are now gradually developing military cooperation.  Thus, if the resolution of imposing economic sanctions on Tehran is submitted to UN Security Council, people from all sides are concerned about whether China will 'support' Iran.  Iran's official news agency reported that when a Chinese military delegation visited Iran, the report used 'our common enemy' to describe the country possessing advanced military technology.  There are many countries that possess advanced military technology, but not all of them seem to be Iran's enemies.  Hence, which country they are referring to is actually vividly portrayed.  China may beg to differ in the saying of 'common enemy.'  However, the U.S. stopped China to struggle for energy in the open market, which urged China to seek oil from Iran, Sudan, Kazak and Burma.  It is likely that China and the U.S. may have conflicts over oil.  Thus, Chinese President Hu Jintao must work hard on settling the problem during his U.S. visit next month."

 

"U.S. intervenes In The East China Sea"

 

The independent Chinese-language Hong Kong Economic Journal noted in an editorial (8/9):  "Chinese oil enterprises have encountered many difficulties in their 'going out' plans.  Now, the most practical way is to exploit new oil resources is within the scope of its own territory.  The plan to exploit the East China Sea is, therefore, on the agenda again.  Everyone knows both China and Japan refuse to yield the right to exploit the East China Sea.  To complicate the issue more, the U.S. is ready to intervene in the East China Sea dispute.  The U.S. has two identities over the exploitation of the East China Sea.  In terms of U.S.-Japan relations, the U.S. is obviously inclined toward supporting Japan over the issue of the demarcation of the continental shelf of the East China Sea and over the sovereignty of Diaoyu Island.  However, a U.S. oil company is also involved in the exploitation of China's Chunxiao oil and gas field.  Will the U.S. administration put political interests before economic interests or vice versa?  Its choice will affect the progress of the exploitation of the East China Sea and it will have direct impact on the success or failure of China's oil exploitation....  In the tussle for oil, the U.S. has not only stopped mainland oil enterprises from acquiring overseas companies, but it also wants to get involved in China exploring for oil. Sino-U.S. 'friendly relations' have masked many potential risks."

 

"Political Hurdles For Chinese Companies"

 

The independent Chinese-language Hong Kong Economic Journal noted in an editorial (8/6):  "Yielding to the large political pressure from the U.S., CNOOC gave up on the idea of acquiring the California oil company--Unocal.  The anti-China powers in U.S. political circles have scored a victory.  However, this acquisition has affected areas such as politics, economics, foreign affairs, as well as energy.  CNOOC's setback may draw open the curtain for another fight between China and the U.S.  The Asian Wall Street Journal reported that CNOOC's bid for Unocal was doomed to fail two weeks ago.  The Chinese Central Propaganda Department immediately ordered mainland media to adopt the official version from Xinhua when reporting the news.  It is obvious that this move is to prevent anti-U.S. sentiments from getting out of control and creating trouble for Chinese President Hu Jintao during his visit to the U.S. next month.  The way China handled this case once again shows that the mainland sets many restrictions on sensitive issues.  From the diplomatic angle, Beijing avoids pouring oil onto the flames of the already tense Sino-U.S. relations."

 

"Collusion Between Officials And Businessmen Forcing CNOOC To Give Up The Acquisition Plan"

 

The mass-circulation Chinese-language Apple Daily News remarked in an editorial (8/6):  "CNOOC announced that it is giving up its planned takeover of Unocal.  One of the major reasons for the failure on the verge of success was that Chevron, which was interested in acquiring Unocal too, employed good political lobbyists to influence the U.S. Congress.  As a result, the U.S. Congress acted according to Chevron's request and tailor-made a bill to raise the acquisition cost for CNOOC.  Knowing that its bidding price was lower than CNOOC and its chances for buying Unocal was low, Chevron did not hesitate to use its political influence to lobby Congress to change the rules for its own benefit and to force CNOOC to give up its acquisition plan.  This is a very good example of collusion between officials and businessmen."

 

SOUTH ASIA

 

INDIA:  "Fill'er Up"

 

The nationalist Hindustan Times published (8/18):   "Oil prices are rising not because there isn't enough of the black stuff in the ground, but rather there isn't enough of the equipment needed to ready it for the market.  The bad news, say analysts like Ed Morse of Hess Trading, is that it could take three to five years for these headaches to be cured.  In that time, oil prices could rise by 10 dollars a barrel or more a year.  Nightmare: 100 dollars a barrel by 2008....  William Herbert of the consultancy Simmons & Company predicts global demand at 86 million barrels a day and supply between 2 and 4 million barrels less. This is the fallout of two disparate reasons.  The first and most important is almost two decades of under-investment in oil and gas worldwide.  Oil companies have gotten used to assuming it's a world of surplus oil. They were also burnt by spending too much on capacity in the eighties that wasn't needed.  Years of difficult environmental regulations, a lot of bad press and ornery governments who kept nationalizing oilfields have driven them to invest in stock buybacks rather than infrastructure.  It doesn't help that world oil is 90 per cent dominated by nationalized oil companies. They are notoriously bad at making new finds. One example is Russia where almost all new petroleum finds were thanks to the private firm Yukos. Now that Yukos is gone, Russian oil is a no grow zone. India's nationalized oil firms are no exception: India's oil production today is less than what it was in the Nineties.   The second reason is Chinese and Indian demand....  When it comes to consumption, the world's energy future is now in the hands of three nations: the United States, India and China. And all three are economies that are growing and burning.  Combine all these elements and watch the octane level rise.  Supply is bottlenecked.  Demand is open-ended -- barring another 9/11 or some other economic shock.  There are other twists in the plot.  For example, the petroleum products most in demand are those that are suffering the worst refining shortages: diesel, gasoline and jet fuel....  In the past, India's policy was to passively wait to be smeared by oil on the boil. Today, New Delhi at least talks loudly about energy security.  What is clear is that the government really has no clue how to align its domestic policies with the realities of the global energy market....  The real petroleum asset India has--though it's a dirty word in many circles--is Reliance Industries....  Any independent oil analyst you talk to rates Reliance a light-year ahead of its Chinese counterparts.  New Delhi should hold its nose and push Reliance as India's ambassador of energy.  What India needs more of and isn't getting is deregulation of its domestic petroleum sector.  Nothing has highlighted how nonsensical it is to talk about India having become a petro-power than the sight of four of its nationalized oil firms teetering on the edge of bankruptcy because of political squabbling over prices....  What is evident is that the world is entering a phase of high petroleum prices, a period that optimistically should run its course in three to five years.  It's not because petroleum is running out.  It's because of too much bad economics and too much China which has made a hash of the world's oil math.  India, still stuck in a time-warp where petrol is about politics rather than economics, is about as well prepared for this era of hydrocarbon inflation as it was when the 1973 oil shock deep-sixed its economy."

 

 "Oil Crunch”

 

The Chennai-based left-of-centre English evening News Today (8/18):  "India's scientist-President has a passion not for politics but for harnessing science to improving lifestyles of the poorer and economically disadvantaged sections of the society.  Last year's Independence Day address of President Kalam dealt with employment generation, this year's with energy independence.  The theme is quite topical. Oil prices are moving from one high peak to another higher peak with $67 a barrel level being hit now.  As pointed out by the President, India accounts only for 0.8 per cent of the world's known natural gas and oil resources while having 17 percent of the global population living in its territory.  In more recognizable terms, India has to pay Rs. 120, 000 crore for imports of these fuels. This is an unacceptable situation which is not irremediable, according to the President.  According to him, it should be possible for the Oil and Natural Gas Commission (ONGC) to raise its output to 50 million tonne within the next decade, placing part of the stress on diversifying renewable energy sources.  He sees energy Independence which can free the economy from the stifling grip of fossil fuels as a goal that can be achieved in 25 years, that is by 2030. This requires a national mission with funds guaranteed and leadership entrusted without delay as public-private partnerships to the present younger generation in their 30's.  All this apart, much more serious thought than in evidence now should be devoted to discovering alternatives to fossil fuels or by altering their composition. Ethanol mixed with petrol is one such.  It involves tangential issues on the economics of liquor trade which, however, should be easy to tackle.  The other alternative is bio-fuel.  Of course, using nuclear energy can be the choice for civilian purposes.  The debate over whether separation of civil and military facilities would or would not be possible is yet to blow over.  In any case, India should stand up to the hurdles, which the west can pose by utilizing its vast thorium deposits.  It is an idea supported by President Kalam.  Of course, India would have to produce ten times more of nuclear power than now to make an impact on shortages.  The journey here would be tough and may get prolonged by the play of Western (read U.S.) vested interest."

 

"Energy Security"

 

The pro-economic-reforms Financial Express editorialized (8/17):  "The Prime Minister as well as the President’s emphasis on energy security during their Independence Day speeches is not unexpected, given the spiraling price of oil. However, it reflects a certain misplaced priority in governance.  On the one hand, the government is seized with the issue of future contingencies that are likely to arise in the global oil and gas markets.  On the other, it is not addressing fundamental issues in the field of energy that are bleeding the country every minute. And, even the issue of energy security is being blown out of proportion....given how critical oil is to modern industrial economies, no country can afford to leave this entirely to the private corporate sector. The question is, where is the dividing line?  For, in a situation of acute global scarcity, despatch of oil supplies, especially in countries that are essentially dictatorships, will hardly be on contractual terms. Geo-politics, rather than commercial interests, will be the deciding factor.  So, given that we are scouting for oil in such countries, how will we enforce supplies in the event of a crisis? The argument gets more critical in the case of gas being sourced from overseas, that too without tying up the consumer end.... It is time, therefore, that the government looked inward and optimized its domestic resource utilization, backing it with a strong planning process.  Reaching out for elegant, but costly, overseas options in the name of energy security, is missing the wood for the trees."

 

WESTERN HEMISPHERE

 

ARGENTINA:  "Hugo Chavez, Made In U.S.A."

 

International analyst Claudio Uriarte opined in left-of-center Pagina 12  (8/14):  "Doesn't the current escalation in rhetoric between Venezuela and the U.S. seem a confrontation in mirror? Or, more precisely, isn't this escalation...allowed and even encouraged, although involuntarily, by the U.S.?...  The guiding line is oil, of which Venezuela is the U.S.' third largest supplier....   A high oil price is convenient for Chavez....  This is why he 'flirted' with Saddam Hussein shortly after taking over and this is why he is currently threatening to cut the oil supply to the U.S. in order to shunt it to China.  Chavez needs international tension to increase in order to favor an increase in oil prices.., and one can safely say that the current framework of tension in the Middle East and depletion in the capacity of the U.S. refineries' capacity favor Chavez. The U.S. accuses Chavez of providing a sanctuary for FARC activities, but the truth is that Venezuela has always offered a sanctuary for diverse Colombian guerrillas. The U.S. also accuses Chavez of promoting Evo Morales' election campaign in Bolivia, but the truth is that it was the U.S., and not Venezuela, who invented Morales, first by imposing a coca crop eradication policy on the Bolivia of Hugo Banzer...and then indirectly promoting (Morales') candidacy through a vociferous denunciation against him by the U.S. embassy in La Paz....  Also, Chavez has always received some help from blunt statements made by U.S. State Department officials such as Otto Reich and Roger Noriega, who made Cold-War styled warnings against what is objectively a small power."

 

VENEZUELA:  "Mr. Danger"

 

Political analyst Pedro Penzini López commented in leading liberal El Nacional (8/17): “The oil markets are at the mercy of the political stability in Venezuela, Nigeria and Iraq, as well as of the potential terrorist acts.  It is calculated that a reduction of 4 percent in the world oil supply could increase the oil prices by 170 percent, which translates into more than $100.  If Venezuela carries out an oil auto-embargo and cuts off the oil supply to the U.S. a global crisis would be created and the world would wonder who the real Mr. Danger is: Bush or Chávez?”

 

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