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The economist argument long standing on world oil markets is that fungibility is a given because a producer would always want to get the best price for their product. But really they want to maximize everything - economics, security, political alliances, other trading agreements, etc.
Any student of world history before World War II will know that the more common trading relationships were either between military and political allies or master & servant type relationships where the master protected the servant from outside invaders (when it suited them). Even in the post WWII era the cold war and other political conflicts have caused the severing of economic ties between rivals.
My first thought after I realized the full impact of peak oil at the international level, was that the world oil markets would collapse and become regionalized or based on political / military / economic blocs. Oil will become too valuable a resource to export to one's rivals. Furthermore, the USA's hegemony is very tenous right now. Once other regional powers start assert themselves one of the first things they will do is seek to control the regional bloc's oil market.
Global Events Magazine
Edited by W. Joseph Stroupe with the mission of explaining correctly world events via strategic analysis & forecasting
Evidence for credibility among those with expertise in this arena?
May you live to see the end of the world and the lights in the skys of heaven fall to the ground and shake your faiths and may the noise you hear be the death of your heart as you fear the death of all, May you fear death now, and fear death in the future. May you cry at night and nash your teeth and suck your toothless gums in fear.
Quote,,,, Me,,, Right now,,,, a Poem of pain of Peak Oil failings.
Hey it might be a curse, it might be a joke, you might want to flame me, After all I am a pyro, send me e.mail and don't clutter the forum up.
Don't read my posts again, I tell you, don't you might go blind, deaf and dumb all at once.
Have a good day, I am going to be Post in the open tomorrow, see you on the downside I am going to enjoy the falling off this cliff or the slow ride down, or the steady even plat-toe of level travel.
What are you going to do?
I suppose that there are two models: (1) Available exports always go to the highest bidder and (2) Available exports go to preferred buyers, not just to the highest bidder.
I suppose that we will see something in between these two extremes. In any case, the US is in trouble with either model.
Regarding #1, exporters are going to wonder about the wisdom of exchanging BTU's of energy for dollars.
Regarding #2, we can't take on the whole world. What do we do? Threaten to nuke anyone who cuts in on our "rightful" share of total world petroleum exports?
The analogy has been used thousands of times, but I think that we (regarding our auto/real estate driven economy) are in the last stages of Tulipomania here in the states--right at the point when the Dutch began to realize that the world would not beat a path to their door offering ever higher prices for tulips. Increasingly, the US economy is going to be restructured into an economy focused on meeting needs--and not wants (like Tulips and McMansions, with SUV's out front.)
The collision of personal and gov't US debt./ declining energy suplies/ dollar devaluation will start to gain momentum.
I hate the thought of what we are in for.
Pres. Carter was so vilified - how he looks now...
My buddy thinks that in 2-4 years we are going to be demanding another GW...
The 4 horsemen and will I live long enough to see it? Probably...
Jeffery - I admire your courage. Best of luck to you and your family in the coming years.
Thanks for the kind words. We are in for "interesting times."
Things are going to get very interesting when things get actually bad. And we'll elect our Hitler or Mussolini, and people will natter on about how this has never happened before, first time in history, etc.
Model 1 describes a free market. Model 2 describes a command economy.
The only way you can convince a company not to maximize its profits is to remove the profit motive by directing its operations to satisfy criteria besides profit. Keeping oil at home to satisfy domestic needs will amount to accepting a lower price than might be available on the world market. The only way I can see of doing this is by nationalizing the oil companies.
Am I missing something? Is there any other way to accomplish this short of outright nationalization?
Even if there is, I expect we will see a wave of nationalizations sweep the industry as the decline starts to bite.
I would add a third model to the #1 and #2 above, and this has an impact on the "export land" model. The #2 above says "Available exports go to preferred buyers, not just to the highest bidder." In the export lands model the domestic users are considered the "preferred buyers". But the problem with this, and with many assumptions I've seen in discussions here about geopolitics, is that it is assumed that a "country" is a unified block acting as one individual, or family, or tribe, would. In reality, TPTB in a given country may see their own interests as higher than that of "the peasants" within their borders, and may see certain other, nonlocal, world powers as the "preferred buyers".
Of course, keeping the peasants from turning to barricades and pitchforks is part of the calculations of TPTB, but only part, and they only need to dedicate part of the oil and gas towards that end. Thus model #3 is that "preferred buyers" are chosen on a playing field that may ignore national boundaries.
That plan may or may not suceed. E.g., in Nigeria TPTB rake in the billions while the peasants only get oil stains on their clothes (when they wash them in the river). But this arrangement is getting more and more tenuous. So the question is: who will win this game, fascism/organized crime or local popular pressure.
As for the USA, I think it is clear that TPTB care not for the locals. Their plan, as brought into action over the last 20 years or so, was to move manufacturing elsewhere, eventually impoverishing the locals (once their purchasing power is no longer needed to keep the global rich getting richer). Now, even our fertilizer is made overseas, where the natural gas is.
The answer is an export duty. In Russia if you want to export a ton of crude oil you must pay $237.6 to the state budget (from December 1 it will be $180.7), thus the internal price is much lower. If the government want to increase internal supply it can raise a duty to the prohibitive level.
That plan, for some strange reason (sarcasm), is not working very well. And now since we bet the whole bank and political capital on that game, the other pathways to securing energy resources have all been cutoff. Russia watched it all and let it happen, all the while moving their chess pieces into position against western oil companies, unruly neighbors siding with the West, and building alliances with emerging, sympathetic economies (i.e., China).
So, BushCo has played it's game, short of nuclear confrontation, and has gotten us...further in debt and more relient on a southern neighbor that is losing ground on the energy treadmill, finding it hard to keep its own population in check.
Oil in the ground is like money in the bank - you don't have to spend it today.
They sell NG to friendly ex-bloc countries at below market prices. And the opposite is true, when the relationships are more beligerent, they cutoff/reduce supply.
Venezuela is another obvious example of #2 as well.
=======It's all about population!
I wonder if he has changed his mind a tad since the time he was knocking Peakists and peddling abiotic oil?
http://www.multi-science.co.uk/whycarbon.htm
And if he was the man who adivsed Tony Benn and UKGOV on Energy in the early days of the North Sea, then that tells me why we are up shit creek without a paddle.