American Account: Defeat in Iraq will lead to economic disaster for West

[NNN0LHI]

http://business.timesonline.co.uk/article/0,,8209-1111338,00.html

IF you have been following the news about oil prices you are probably totally confused or seriously misinformed. The situation is both much better and far worse than you have been led to believe.

Let’s start with the “better”. When prices hit $40 a barrel, motorists were upset — or so we are told. But Americans keep buying gas-guzzling sports utility vehicles, and filling their tanks with petrol that costs more than $2 a gallon (30p a litre). So talk of high prices causing consumers to sulk on their couches rather than drive long distances to visit granny this summer, or take a spin down to the shopping mall, seem overblown, especially as the economy gathers steam, jobs become more plentiful and incomes rise.

There is good reason for this lack of reaction. Petrol prices may seem high compared with a few months ago, but for a true picture we need to look back several years, and compare like with like. The Federal Reserve Bank of Dallas estimates that if we adjust for inflation, crude prices would have to rise to $75-$80 a barrel. and petrol to $3.50 a gallon, to be where we were in 1981. So oil and petrol prices are not devastatingly high by historical standards.

Two other facts have to be entered on the “better” side of the ledger. The first is that the drain of high oil prices on the American economy is not as great as press reports suggest. Almost half of America’s oil comes from domestic fields, meaning that a significant part of the higher price is paid by American motorists to American oil companies and their American shareholders and employees. And part of the rest is recycled to America when the Saudis drop by to denude Fifth Avenue, Madison Avenue and Rodeo Drive of their luxury goods, Arab students pay tuition fees in American universities, and Arab dictators and royals purchase Boeing 747s for their personal use and fighter planes to keep their militaries happy and loyal.

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[oblivious]

1. The man talks like a freeper.

That?s what is at stake in Iraq. If America retreats, the enemies of the West will believe that nothing stands between them and their ultimate goal of world domination and an end to modernity.

[sandnsea]

2. no oil will "end modernity"

Alot quicker than terrorists will. Do these people not get that? What if that's the whole point of the high oil prices, these countries are working WITH the terrorists. Bet that thought never entered their pin-headed little minds.

[oblivious]

5. Yeah, but it's always about the money.

Even if the entire Middle East and Caspian were to become Talibanised, they'd never stop selling oil. They have the millions and millions of unemployed young men to worry about. If they can give them jobs, their positions are safe. The taps will never close except in the cause of revolution, as is happening in Iraq right now.

[reprobate]

9. "The taps will never close" But of course they will.

This presupposes that oil is a never ending resource. That no matter how much is pumped out of the ground we can just keep pumping more and more.

Never heard of "peak oil"? Remember that petroleum is a finite resource. There is no more being made. The more that is pumped, the less is left to pump. The best minds in the field are predicting that peak oil, or the point where half of all reserves have been removed from the ground will occur within a decade. At that point it will be much more expensive to pump and buy. The question is at what price will it no longer be a viable fuel for transportation and energy.

Don't count on oil being availabe when your children are grown.

[jmcgowanjm]

11. Reports of IranOil being transhipped thru St Eustatius

just like Iraq Embargoed oil was.

Destination US.

A source in the intelligence community tells me that the U.N.
oil embargo of Saddam Hussein was worthless because
Iraqi oil was being shipped all these years to a Caribbean
island called St. Eustatius, unloaded into onshore tanks
and then reloaded into U.S.-bound tanker ships

http://www.nypost.com/business/23936.htm

Here’s what I think the truth is: We are all addicts of fossil
fuels in a state of denial, about to face cold turkey.

And like so many addicts about to face cold turkey, our
leaders are now committing violent crimes to get what little is
left of what we’re hooked on.

Kurt Vonnegut-The Master
http://www.commondreams.org/views04/0512-13.htm

[WVhill]

7. If the terrorists have a lick of sense they'll let capitalism

devour itself.

The oil traders are the unwitting dupes. Anytime there's a disruption or expected disruption in the flow of oil, the traders bid the price higher. All the terrorists have to do is continue the attacks on oil production or transportation facilities and oil prices will continue to rise. Throw in some instability in Nigeria, where we buy a lot of oil, and a Venezuela that balks and you have a recipe for upward spiraling oil prices.

No matter who is in office, whether it's a newly elected Kerry or a re-elected Bush, their approval ratings will be in the cellar. The terrorists can affect pricing no matter what the Saudis do. If Iraq falls under the influence of Iran and the House of Saud works in concert with Iran and Iraq to save their monarchy, I think you'll see the Palestinians get weapons they've never had before and the violence in Israel escalate way beyond anything seen lately. After Iran gets nuclear capability all bets are off.

The question is will Israel make a pre-emptive strike? If you think oil prices are high now, you haven't seen anything. Do I believe we will be in Iraq long into the future? Yep!

High energy prices can drastically reshape our way of life. If terrorism can be restrained we may escape major disruptions. If not almost anything you can think of will change. Transportation could end up being a major cost component of many items. The inflation caused by broad based price increases would devastate the poor and shrink the middle class.

Periodically civilizations go through transitions that test their mettle. Some have fallen. Some have survived but changed. We may be living in a time that will be regarded in the future as a golden age.

[wubbathompson]

6. and this isn't what most Islamic Terrorists want?

Of course they want the West to be defeated and start a total Muslim world domination without Christians and Jews. Hell, read some of their websites. It's their explicit stated goal.

[oblivious]

8. But they can't stop selling oil. They can only try to keep the price up.

I don't read jihad websites, but so what if it is their goal. We are at no risk of being conquered by these extremists. And if they ever did get power in their countries, I have no doubt oil would corrupt them as it does everyone else, and jihad would go out the window.

[jmcgowanjm]

10. If America advances, the West will believe that nothing stands

between them and their ultimate goal of world domination
and an end to modernity. All they need is control of what they
call “the oil weapon”, which can be used as a weapon of
mass economic destruction.

IGC Prez touched. Italy abandons Nasiriya Post
to AlSadr.
India Mumbai down >15%
(Hindu Party will not attend Gandhi's inauguration.)

Saudiis are pumping at capacity.-ASPO
Only 31 jobs created in 29 months.-ComstockFunds
(And that's if you believe BLS and not John Crudele
NYPost)

Backwardation of NYMEX oil
"Backwardation also persisted across the petroleum
complex, allowing investors to re-enter at lower levels upon
the monthly roll, which further boosted returns,"
GSCI said.

http://finance.lycos.com/qc/news/story.aspx?symbols=NYSE:GS&story=200405121408_RTR_N2W287183

The BigRollover approaches

[mhr]

3. He's Drinking The Koolaid - BTW, The Airlines Are Hurting Big Time

Most did not hedge for rising oil prices and their aviation fuel has gone through the roof!

[UpInArms]

4. seems like there have been

some sneaky changes to the way that the calculations are done - the 1982-84 base year was changed for a 2000-01 base year - but then we have been told that there is no (or low) inflation for that period -

now when it is "convenient" we are given inflationary numbers that are supposed to say - see! Gas is cheap!

:puke:

[jmcgowanjm]

12. Unleaded $1.97 in NWArkansas

For >80% of Americans, since 1973
they have not been able to keep up w/ inflation.

[Miss Authoritiva]

13. The meaninglessness of time-travel adjusted statistics

"The Federal Reserve Bank of Dallas estimates that if we adjust for inflation, crude prices would have to rise to $75-$80 a barrel. and petrol to $3.50 a gallon, to be where we were in 1981. So oil and petrol prices are not devastatingly high by historical standards."

Academic diddling with inflation-adjusted data is meaningless, unless you're actually able to zip back and forth through time to fill up the family's Vista Cruiser at the very best price in relation to your real-time income.