Publish Deep Butter's Feeds on your site!

The following feedburner javascript code will publish The Deep Butter Index's feeds (headlines with links) anywhere on your site.

Download:

http://rapidshare.de/files/11216971/DBI_Javascript.txt.html


Example:



Read more!

Countdown To Energy War

Countdown To Energy War
by Jim Willie CB
Jim Willie CB is the editor of the "HAT TRICK LETTER"


Source

For specific detailed analysis of the Gold, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and Fed monetary policy, see instructions for subscription to my newsletter research reports, which include stock recommendations positioned to rise in the commodity bull market.

The conflict with Iran over their advancing nuclear program has moved gradually toward severe escalation. Iran's insistence to develop uranium enrichment facilities creates a supply fork. One tine extends legitimately to their electrical generating plants powered by enriched uranium. Another tine extends to a nuclear weapon arsenal, potentially. Russia has assured the West of its primary role to handle spent fuel, the key ingredient for weapon grade material. If the conflict ignites, expect a sudden $10 jump in the crude oil price, maybe even a $30 jump. Iran commands more control over the critical Strait of Hormutz than any other Persian Gulf nation, as Chinese Silkworm missiles are deployed in strategic emplacements. The energy war has numerous skirmishes afoot. However, Iran serves as the focal point for the detonation device on that war. Above board, the United Nations will be involved. Under the table, the Israeli military will be involved. Actual military action could close the Hormuz Straits controlling the Persian Gulf, where a large portion of world oil supply exits.

ALL THESE BATTLES ENSURE A PERMANENT ENERGY BULL MARKET, AS GEOPOLITICAL CONFLICT ENSURES A PERMANENT GOLD BULL MARKET.

And then there is Russia pulling rank over Ukraine, ending communist silly subsidies, which put Europe in the energy shadows. There is more to this story. And then there is Nigeria, whose offshore natural gasfields have been bid for by China and accepted. The West lost this one. And then there is Kazakhstan, which also has been secured by China. So much for the failed Unocal bid. The West might be in the process of losing the entire Caspian region. China has responded by focusing upon Central Asia, locking it down and thumbing their noses at North America. The lesson learned is that China has been given a message "Your money is no good, even though it is US$-based!" And then there is Iraq. The cost of the war might be far higher than originally believed, like near $2000 billion. One must count the lifetime health costs and expenses from prosthetic devices, as well as the lost economic costs from deaths. Worse, religious and sectarian battles might fracture the union, from either Shiite divisions with Sunnis, or else from Kurdish insistence on independence as seen with reluctance to share oil revenues.

The bidding wars have begun. The opening of the Iranian Oil Exchange has, in my view, prompted a massive propaganda campaign by the USGovt to muddy the waters. The US Military might not be capable to attack Iran directly, since Russia has promised military retaliation if foreign aggressors attack Iran. The more we see the United Nations dragged into the fray, the more you can be certain the USGovt feels powerless to face off Iran. The entire nuclear power, uranium enrichment, and proliferation arguments seem absurdly exaggerated. Putin has promised to handle all Iranian reprocessing of spent uranium, you know, the stuff that becomes weapons grade fuel. The timing next to the March launch of the Iranian Oil Exchange, with planned sales of crude oil and natural gas in euro denomination, seems suspicious. Sale of oil in euro currency represents such a grand threat to the Petro-Dollar superstructure system, that one must wonder if the financial challenge to the US$-centric world is construed as an assault worthy of military response. Count me as precisely one such observer. The importance of Saddam's sale of oil in euro terms is vastly under-appreciated, under-reported, and under-estimated.

THE GLOBAL PICTURE OF CONFLICT
A global energy war has begun, which will involve oil as its center and conflict over it both regionally and globally. The war will forge two-way and three-way partnerships. In the course of securing relationships built upon sales & supply contracts, large construction, production, and exploration contracts will guarantee and lock up the sale of output as a reward. Enormous capital requirements are outlined. Furthermore, risks abound, as some new prospective energy properties might contain large risks on cost assessment and time estimations. The extreme risk is for the USA to be locked out of all new marginal supply from East Asia to West Asia as far as to West Africa, and even to lose some of the current supply reaching the market. Over the course of the next two years, a global battle will surely erupt to secure the energy deposits, and to control shipping lanes. It will be a miracle if military conflict is averted in the battle for progressively more scarce energy supplies. In 2006, the severity and seriousness of the conflict will come front & center to the geopolitical stage.

It is the marginal newer discoveries which will be the immediate battleground, free from existing contracts. Big investment is needed for many scheduled projects. Much will be needed to build liquefied natural gas (LNG) port facilities and virgin territorial development. With the Iraqi War the USA is distracted from securing any new supply beyond the traditional sources such as the Persian Gulf region. Piece by piece, the United States and European corporations are being either excluded (for political reasons) or losing out from negotiations. Some producing nations perceive a heavy political price, complete with a degree of subservience, for working with American corporations. The USA is not making the planned inroads in the entire Caspian region of former Soviet republics, nor in Iran. The USA might squander control of Afghanistan, with no benefit in the control of any nearby pipeline.

Iran is the clear pipeline winner in the Caspian region. Thus the propaganda against Iran in the news media. The United States will not control the Iranian oil pipeline, nor will Europe. Heck, nor will Russia, but Russia will be much better positioned than the West. By reporting the chants against Israel by newly elected Iranian leaders, and not reporting the bombing by Israeli black bag agents of Iran's largest oil facility last June 2005, the press has presented a bias. My purpose is to avoid politics and its assured controversy. My view is that Iranian leaders relish in whipping up crowds much like a high school pep rally, perhaps to divert attention away from the mullah corruption and prevalent poverty. Such are interpretations by a couple key Moslem friends of mine. Some Americans say we should nuke Iraq and Iran, but that does not mean our leaders are seriously considering such a lunatic maneuver. Well, maybe they are!!! My view is that the USA is boxed in, unable to challenge Iran directly, since Russia has promised military retaliation if aggression is taken against Iran. So the United States appears to have enlisted secretive (and surely effective) Israeli assistance. Make your own minds up on truth in reporting. My experience over the last three years has uncovered numerous salacious, exciting, and gripping stories which never make it to the US press & media, for some reason. My suspicions put forth many possible motives for news suppression. Control of public opinion is foremost among them.

RUSSIA & UKRAINE END SOVIET SUBSIDIES
The battle royal between Russia and Ukraine has many components. Almost nothing is properly reported in the lapdog US press & media. The skirmish extends the breakup of the Soviet Union empire, attempts to dissolve the old absurdly cheap subsidies to the Soviet Republics, while at the same time granting some legitimate revenue to producing former republics without the drag stench of heavy subsidized discounts. Such is the bilateral battle, whose additional motive is revenge for displacing the corrupt winner in summer 2004 of the Putin favorite, as populist leader Viktor Yushchenko was finally elected Ukrainian president. The re-election installation of the popular leader enraged Putin, who chose now as his time for revenge. Ukrainian leaders accuse Russia of attacking their economy in revenge for Ukrainian attempts to foster warm relations with the west. The hidden motive might be for Russia to enlist Europe, not without a risk of lost confidence in reliable supply, to engage Iran so that China does not solidify a lock with Iran instead. Russia and Iran collectively possess something like 35% to 40% of known global gas reserves (Russia 25% to 30% with Iran another 10%), which places these nations in a staggering dominant position globally. Some European countries get upwards of 50% of their gas from the Russian Bear. Putin wants Europe to get involved, and not be locked out like the diplomatically clumsy Americans. The Kremlin has driven a wedge not only between the Europeans and the Ukrainians, but between the Europeans and the Americans. Price of natural gas is the chosen weapon. Gazprom wanted a four-fold price rise, an end to imperial communist subsidies, but settled for a doubling in price with a beneficial provision for Russian-based supply. Ukraine agrees in principle to an increase in cost, but wants it phased in over time.

The populist "Orange Revolution" in Ukraine has put a coffin nail in the old empire, now to be seen as broken, whose fragments seek stability. With the Gazprom squabble, Yushchenko looks weak enough to lose political ground in upcoming parliamentary March elections. Legal warfare secured Yukos into the grand Russian state of owned energy monopolies, which includes Gazprom and whose strategic value is now utterly crystal clear. From its dominant lord position, Putin ordered a quadruple in the natural gas price to Ukraine, putting an end to Soviet-style subsidies. Why bother, if the renegade republic overrides the corrupted election, enforces democratic choices, and warms to Europe and the West? The price had been $50 per 1000 cubic meters ($1.42 per 1000 cuft), an absurdly low price not really emphasized in US press reports. Gazprom wanted $230 per 1000 cum, and settled for $95 per kcum. Even the desired higher price is only $6.55 per kcuft, well below the $9 to $10 market price, still a discount. Moscow and Kiev settled the matter by agreeing to a compromise five year contract. Under terms of that deal, natural gas from the Central Asian states of Turkmenistan, Uzbekistan and Kazakhstan will be transported through Russia, making up a mix that would supply Ukraine at a rate of $95 per 1000 cubic meters. Any Russian gas fed into that mix will be sold at the full Gazprom rate of $230. The Central Asians, who previously were restricted to sell natural gas only to the heavily subsidized Russian market, suddenly have gained a significant export market for their supplies. However, it comes at a political price to Europeans, since Central Asian output flows through Russia before reaching Ukraine. Thus, Europe has been drawn into regional politics.

The Ukrainian state gas and oil company Naftogaz saw fit to divert significant natural gas flows intended for Europe, which also depends heavily on Russian natural gas. A whopping 80% of those supplies cross Ukraine, so that the Russian cutoff hurt Europe rather than Kiev. Moscow accused the country of stealing $25 million worth of Russian natural gas destined for other countries. The Gazprom deputy chairman Alexander Medvedev accused Ukraine of siphoning off 100 million cubic meters of gas as it was directed through Ukraine on its way to other European destinations. The dispute resulted in Gazprom shutting off flows to Ukraine, but continuing in reduced shipments to Eastern Europe. Each of Slovakia, Hungary, Poland, and Austria reported up to 40% shortfalls in their oil supply from Russia. Supplies of Russian gas to Italy fell by 25%, according to Eni. Deliveries of Russian gas to France dropped up to 30%, according to Gaz de France. Moldovan reported its fuel supply also cut off.

From the beginning, the natural gas spat has been about much more than financial in annual energy sales. This squabble is over the orientation of Ukraine between West and East, and ultimately over the ability of Russia to regenerate its geopolitical fortunes. Moscow could not reliably exert control over Belarus either, since its primary water transport route, the Dnieper River, flows south to Ukraine. Besides, Belarus is nearly as well linked into Poland and the Baltics as it is to Russia itself. Furthermore, the Ukraine port of Sevastopol on the Black Sea has long been the only deep, warm-water port available to Russia. This conflict is more about control and power than money. Dmitry Medvedev is first deputy prime minister to Russia, a Putin protégé and (not coincidentally) the board chairman of Gazprom. The Ukraine natural gas crisis is his first Russian foreign policy initiative.

The geopolitical energy struggle has caught Europe in the Gazprom crossfire. The 25-year cold war between the United States and Iran has enabled China to gain a mutually beneficial commercial relationship with Iran. The US lacks diplomatic skill to the point that it has put the West at great risk. The Iraqi War is not only a sink for over $1000 billion in costs, but also a grand diplomatic cost. Putin is a master chess player. The many pipeline battles, with Turkey and Chechnya fought over, have placed Iran in central importance. Caspian republics are aligned with Iran. Enormous oil & gas supplies are being secured by China. If Europe aligns with the USA, they will be locked out. If they align with Russia, they will enjoy the bounty of Iranian energy supplies. Will Iran work closely with Europe or China? that is the question.

KAZAKHSTAN SELLS TO CHINA
Last month the state owned China National Petroleum Corp (CNPC) launched an oil pipeline running from Kazakhstan to northwest China. That pipeline will sidestep the geopolitical significance of the Baku-Tbilisi-Ceyhan oil pipeline backed by the United States, which opened this past summer amid big fanfare. The geopolitical chess game for the control of the energy flows of Central Asia spanning from the Atlantic to the China Sea is sharply evident in the latest developments. The politically charged angle comes from China considering a formal request to Russian companies to help it fill the pipeline with oil, until Kazakh supply is sufficient. An arc of influence built upon US military bases across former Soviet republics might be averted by such a Kazakh-China oil pipeline. The USGovt has targeted the region for democratic reform in order to facilitate energy contracts. The Kashagan in Kazakhstan is the largest new oil discovery in decades, greater in scope than the North Sea deposit. The republic has no ports, and oversees at least 35 billion barrels of oil reserves, perhaps 100 billion barrels. Their landlocked status urges a solution to secure pipelines and routes to the shipping seas. These events come after China completed a $4.18 billion takeover of PetroKazakhstan in recent months, another failure by the USGovt on the diplomatic and energy geopolitical arena.

Initially, half the oil pumped through the new 200k barrel per day pipeline is scheduled to come from Russia, as initial output ramps up from nearby Kazakh fields. The new China pipeline runs almost 1000 kilometers to take China a third of the way to Kashagan in the Caspian Sea. This is a major reason Washington has such a strong interest in supporting democratic regime change in the Central Asia region of late. In the next 10 years, Kazakhstan plans to almost triple oil production, prompting the landlocked nation to seek new export routes because the country wants to avoid pipelines through Russia and excessive Russian dependence. China is now among Kazakhstan's major target markets.

Best public estimates are that Kazakhstan has 35 billion barrels of discovered oil reserves, twice the amount in the North Sea, and may hold about three times more, according to a November Kazakh government report. German oil engineers have privately reported that recent drilling by Italy's AGIP, the current oil consortium leader for Kashagan, a huge field offshore Kazakhstan southwest of Tengiz, has confirmed enormous oil deposits there. Certain Caspian region deposits were downgraded in the last two years, much less than once thought. It seems Kazakhstan deposits are sizeable and very substantial.

Last October Beijing scored a second major geopolitical coup when China completed a $4.18 billion takeover of PetroKazakhstan Inc. It was undoubtedly sweet revenge against Washington for the blocking of the China acquisition of Unocal. US oil majors had made major efforts to lock up Kazakhstan oil after discovery of major oil offshore in the Kashagan field. They failed. One must wonder why the US continues to fail, and whether hegemony is real and resisted by the world. Perhaps the US exerts too much pressure for military cooperation, directly or implicitly. US laws sure don't help. Exxon Mobil was charged with bribery of Kazakh officials and a senior Mobil executive was later jailed on US tax evasion in New York tied to the Kazakh bribery payments.

DANCING WITH NIGERIA OFFSHORE
Time will tell whether OPEC might soon splinter on its outer non-Persian Gulf edges. Oil & Natural Gas Corp (ONGC), India's largest oil producer, has offered over $2 billion for a believed 45% stake in a Nigerian oil & gas field, a new sign of determination by Indian state owned energy companies to secure assets for the Indian booming economy. The Indian bid prevailed over the rival CNOOC offer, which failed to secure the Unocal deal last summer. The US Congress blocked the deal on national security concerns. China and India have emerged to work together in recent months, sure to keep down final contract prices. In December the two developing nations confirmed that China and India would bid jointly for a 38% stake in the Al Furat oil field in Syria, the first collaboration between the two giant economies in energy. India is Asia's fourth largest oil consumer. Ooops!! The Indian government blocked the deal on the grounds of commercially unviable. The Chinese National Offshore Oil Company stepped in to purchase the 45% stake for $2.27 billion. So India's loss is China's gain. Output is set for Western customers, not China, sure to relieve supply constraints.

The stake would be in the Akpo offshore field that is now owned by Nigeria's South Atlantic Petroleum Ltd. Scotland-based Wood Mackenzie estimated the Akpo recoverable reserves of light oil condensate at 620 million barrels, and natural gas at 2.5 trillion cubic feet. The field is expected to produce 225k barrels per day by Calgary-based Total Energy. In August, ONGC lost to Chinese rivals in bids for assets in Ecuador and Kazakhstan valued at a combined $5.6 billion. In August, India and China decided to jointly pursue such assets selectively. New Delhi hopes the arrangement will minimize the scope for competition between the two, which it says only ends up raising the acquisition price. But Indian officials have emphasized that the pact does not preclude their national oil companies from engaging in competitive bids against each other. CNOOC has won the Akpo property, which differs from past deals. The output is set for export to the United States and Europe, not to China. The position has been circulated that China might be motivated to relieve some Western constraints brought about by growing demand for energy from developing nations such as China & India.

Energy is crucial for India and its developing economy. With domestic oil production stagnating and consumption rising at about 7% a year, India imports more than 70% of its crude oil requirements. That strains the import bill at a time global prices are high. Indian officials say their goal is to minimize oil imports and to have "exclusive control" of at least 30% of its long-term requirements. India is "odd man out" in this Nigerian foray. One must wonder to what lengths nations will pursue energy assets. Royal Dutch Shell spent $1 billion in cost overruns over two extra years at the nearby Bonga deepwater oilfield. India saw red flags, so it seems. This cost overrun must have caught the attention of Indian leaders.

KURDISTAN WEALTH THREATENS IRAQI UNITY
Clashes over control of oil wealth have the potential of fracturing the uneasy fragile new parliamentary republic in Iraq. Newly defiant Kurdish (northeast province on Turkish border) leaders have seen fit to exploit their resource fortunes for the benefit of their people, at the risk of direct challenge to the upcoming Iraqi National Assembly. An exploration contract deal with the Norwegian energy firm DNO has taken the fledgling political leaders in Baghdad off balance. No formal approval has been granted. Other deals are in early stages. They fear a Kurdish maverick movement in their own local interest, to finance an independent state as part of an oil-led disintegration. Whether this Norwegian deal comes to fruition or not, the path has been laid for future deals. Iraq's neighbors have always harbored tensions and misgivings over a free Kurdish state. Roughly 20 million disenfranchised Kurds live in Turkey, Iran, and Syria, never to have enjoyed any sovereignty or self-interested power. Calling them home to a newly formed nation is the fear. Oil wealth could pave the path to a newborn nation. The potential exists for a fracture of Iraq. If religious sectarian conflict does not divide this unstable and war-torn nation, inequitable division of oil wealth might more clearly. Nothing much in life eclipses the importance to control either religious practice or wealth distribution.

The Kurds, long slighted and often having suffered in the past Iraqi dictatorship, have decided to flex their muscles and forge new contract relationships. It could be that Kurdish leaders see a ripe "payback" opportunity, motivated by a desire to remedy past crimes and deprivation which included incidents of genocide. The Iraq draft constitution was approved in an Oct 15th referendum. It stipulates vaguely that "the federal government with the producing regional and governorate governments shall together formulate [energy policy]." It makes ambiguous reference to providing compensation for "damaged regions that were unjustly deprived by the former regime" who were the aggrieved victims of crime and neglect. Kurdish leaders concede the sharing of existing production wealth. It is future oil discoveries that they wish to control and keep for their own regional development. The defiance is vivid in the words of Barzani. "The time has come that instead of suffering, the people of Kurdistan will benefit from the fortunes and resources of their country." Note the reference to the region, which they crave as a nation. This was a constant obstacle in the painstaking constitutional negotiations. Kurds want the power to make deals and control new revenue. Sunnis consistently voted against it. Such is the stuff of civil war. Makki, leader of the Iraqi Islamic Party, a Sunni Arab group, summed it up well. "This is unprecedented. It is like they are an independent country. This is Iraqi oil and should be shared with all the Iraqi partners." Counsel to Prime Minister Jafari said "We need to figure out if this is allowed in the constitution." Expect them to do battle as they learn.

My view is that the Kurdistan province will exploit its riches and oppose the oil-poor central region dominated by the Sunnis. Sharing oil wealth is most certainly not a high priority to Kurds, long oppressed. In the factional struggle, oil will not lubricate, but rather fracture the embryonic republic. The complexity of Iraq and its sects is mindboggling. They have Shiite domination in the south near the city of Basra, where enormous oil wealth has been a fixture for decades. A key port operates there, on the Persian Gulf. In the region around the capital Baghdad, Sunni and secular (non-religious) groups possess nearly nothing in oil wealth. For decades, the Kurds to the north and the Shiites to the south have regarded the controlling dictator operating out of the central region to be parasitic, violent, and evil with just cause. No reports have come out of Basra for secession and creation of an independent state. However, such is a vivid dangerous reality among Kurds, who want its sovereign nation of Kurdistan, nourished by oil wealth. Iraq will not be cemented into a strong union without numerous challenges, replete with calls for restitution for past crimes and neglect. The nation will instead be splintered quite easily along lines of religious differences to control lifestyle, and be pressured at the fault lines according to greedy self-interest to retain oil wealth.

BACK TO THE ENERGY BUSINESS
On the business side, the commercial reality, two phenomena strike the casual observer as important. In Alberta, property prices have shot up by triple since 2001. So not only are energy firms forced to endure higher diesel costs, and more arduous operational challenges from the northward move of the frozen tundra muskeg, but property acquisitions are escalating in cost. That smacks of irony, that energy firms are being hurt by high energy costs, on top of higher prices for energy property. They are somewhat victims of their own success. It only means that energy prices must go MUCH HIGHER in order to bring more supply to market, in order to meet the growing demand. Don't be deterred by unusually mild winter weather in the northern USA. My view is that the energy bull market is permanent.

In the Persian Gulf, grand expansion of port facilities continues. The Ras Laffan Industrial City in Qatar, when completed, will be the world's largest single source of liquified natural gas. However, a glut might be on the horizon for LNG vessels. Shipyards have orders for 126 carriers, enough to contain and transport 692 million cuft of natgas. The current world fleet of 184 carriers can move 770 mcuft. Profits measured by annual returns for crude oil measure 12% to 13%, much higher than the measly 3% to 5% returns available to LNG shippers.

Expect the entire world to be turned upside down in the year 2006. The United States continues to fight to recover from a trio of devastating hurricanes. The Gulf Coast energy producers report that 2 billion cuft per day of natgas output remains offline, and 400 thousand barrels per day of crude oil output remains offline. Central Asia has done battle over construction of oil pipelines, even as its flow is contracted for purchase. The edge of OPEC, such as Nigeria and perhaps later Mexico, might sell their output or their marginal supply to specific nations. Political alliance might very soon become far more important for securing energy supplies generally. Those nations with poor diplomatic ties and counter-productive initiatives might soon find themselves "outside looking in" like with Iran.

The big theme in my view for the new year will become taking energy source by source OFF THE MARKET as one location after another is secured through contract. The real battle is over new marginal supply from the newest deposits. Watch the passageways, the straits, the shipping lanes, the pipelines. Iran defends the Persian Gulf effectively. Other straits like near Indonesia are also important. The year 2006 is off with a bang, from Russia strongarming Ukraine and Europe, and from Iran defying the West. One might conclude that Russia is attempting, with minimal actual damage and disruption, to enlist European leaders to join the commercial contract process for gigantic Iranian energy supplies. Putin might want Europe to ignore unproductive political positions put forth by the USGovt and its leaders, who seem to have failed on the diplomatic front. Putin might want the West (Europe and United States) to GRAB THE IRANIAN NATGAS PRODUCTION, SO THAT CHINA DOES NOT SECURE IT FIRST. China is grabbing every loose energy deposit at the margin table.

The United States is totally preoccupied with Iraq and Iran. Is Iraqi oil output lower than before the war began in March 2003? The USA is not winning the energy war. We are far too concerned about the lifestyle of caribou and moose and polar bears, and far too little concerned about people, their homes and industrial sites. Progress for both development of Alaskan pipelines and oil discovery is woeful, if not embarrassing. Priorities might require a vast rework in 2006. The war slogan of "Freedom Isn't Free" should perhaps be replaced by "Energy Isn't Cheap" in my humble opinion, but then again, just a jackass talking.

THE HAT TRICK LETTER COMBINES MACRO ANALYSIS WITH INVESTMENTS.

January 16, 2006
Jim Willie CB
Read more!

Intelligence report: Wayne Madsen

January 16, 2006 -- Why is John McCain so supportive of Bush and Cheney after being so viciously attacked by them in the 2000 campaign? The answer to this question may partially rest in Navy records detailing the events that took place on the USS Forrestal in "Yankee Station" in the Gulf of Tonkin at the end of July 1967. The neo-cons, who have had five years to examine every file within the Department of Defense, have likely accessed documents that could prove embarrassing to McCain, who was on board the USS Forrestal on July 29, 1967, and whose A-4 Skyhawk was struck by an air-to-ground Zuni missile that had misfired from an F-4 Phantom. What have sealed Navy records given to the neo-cons to blackmail McCain? Plenty, according to eyewitness on the USS Forrestal.

According to an eyewitness to the Navy's worst fire disaster that killed 134 sailors and injured 62, McCain and the Forrestal's skipper, Capt. John K. Beling, were warned about the danger of using M-65 1000-lb. bombs manufactured in 1935, which were deemed too dangerous to use during World War II and, later, on B-52 bombers. The fire from the Zuni misfire resulted in the heavy 1000 pounders being knocked loose from the pylons of McCain's A-4, which were only designed to hold 500-pound bombs.

During the fighting of the fire and while VF-74 and VF-11 were still counting their dead, McCain was helicoptered off the Forrestal to the USS Oriskany, which suffered a major fire on October 27, 1966, that killed 44 sailors. In that event, thousand pound bombs were jettisoned away from the fire but the lessons of the Oriskany went unheeded by the Forrestal's officers, including McCain, who served with the VA-163 Saints on board the Oriskany when the fire on that vessel occurred. On October 26, 1967, McCain was shot down over North Vietnam during a bombing sortie from the Oriskany.


Click on Image

Aug. 29, 2005 -- Bush celebrating McCain's 69th birthday with a cake. Bush and his operatives may have more than a cake up their sleeves when it comes to McCain's Navy record prior to his time as a POW.

The unstable bombs had a 60-second cook-off threshold in a fire situation and this warning was known to both Beling and McCain prior to the disaster. On January 14, 1969, the USS Enterprise, steaming 75 miles southwest of Pearl Harbor, suffered a major fire. In that episode, similar unstable 1000-pound bombs detonated, killing 27 sailors and injuring more than 100. At the time of the Enterprise disaster, the Commander-in- Chief of US Pacific Forces was Adm. John S. McCain, Jr.,Sen. McCain's father.

At the time of the Forrestal disaster, Admiral McCain was Commander-in-Chief of US Naval Forces Europe (CINCUSNAVEUR) and was busy covering up the details of the deadly and pre-meditated Israeli attack on the NSA spy ship, the USS Liberty, on June 8, 1967. The fact that both McCains were involved in two incidents just weeks apart that resulted in a total death count of 168 on the Forrestal and the Liberty, with an additional injury count of 234 on both ships (with a number of them later dying from their wounds) with an accompanying classified paper trail inside the Pentagon, may be all that was needed to hold a Sword of Damocles over the head of the "family honor"-oriented (McCain's persona is supported by his book about his father and grandfather, both Navy admirals, titled "Faith of My Fathers") and the "straight talking" McCain.

The Bush administration and neo-cons may have uncovered reams of documents that throw cold water on that public perception.
Read more!

Iran issues stark warning on oil price

Iran issues stark warning on oil price
War of words over trade sanctions
Robert Tait in Tehran

The Guardian


Iran stepped up its defiance of international pressure over its nuclear programme yesterday by warning of soaring oil prices if it is subjected to economic sanctions. As diplomats from the US, Europe, Russia, and China prepared to meet today in London to discuss referring Tehran to the UN security council, Iran's economy minister, Davoud Danesh-Jafari, said the country's position as the world's fourth-largest oil producer meant such action would have grave consequences.


"Any possible sanctions from the west could possibly, by disturbing Iran's political and economic situation, raise oil prices beyond levels the west expects," he told Iranian state radio.

In a provocative move, Iran also announced plans yesterday to convene a "scientific" conference to examine the evidence supporting the Holocaust. The news comes weeks after President Mahmoud Ahmadinejad provoked a global outcry by describing the slaughter of 6 million Jews by the Nazis in the second world war as a "myth".

Mr Danesh-Jafari's comments echoed fears voiced by energy market analysts after crude oil prices last week rose above $64 (£36.50) a barrel as hopes faded of a diplomatic solution to the dispute.

Last week, Manouchehr Takin, of the Centre for Global Energy Studies, argued that crude prices could hit $100 a barrel if Iran stopped exporting. "Supply and demand are very tightly balanced," he said.

Mr Danesh-Jafari's warning added weight to veiled threats by Iran's president on Saturday. Iran had a "cheap means" of achieving its nuclear "rights", Mr Ahmadinejad said, adding: "You [the west] need us more than we need you. All of you today need the Iranian nation."

Recognising the danger, Gernot Erler, Germany's deputy foreign minister, said yesterday: "We are seeing desperate measures by Asian countries, mainly China, India and others, to get hold of energy resources, and for them Iran is a partner they can't do without." He said it was "dangerous" to put restrictions on trade relations "which could hurt one's own side more than the other side".

Iran's Islamic leaders insist that they want nuclear technology to satisfy its energy needs. The west suspects the intention is to produce a nuclear weapon.

But even amid the continuing rancour, some Iranian officials appeared to soften the bellicose stance. Calling for a return to negotiations, foreign minister Manouchehr Mottaki accused the west of over-reacting to Tehran's decision last week to remove UN seals and resume research at a nuclear plant in Natan, when Britain, France and Germany formally abandoned 2½ years of talks and demanded Iran's referral to the UN security council.

Although Britain has ruled out military moves against Iran, two American senators yesterday said the US might undertake a strike of "last resort" to prevent Iran obtaining nuclear weapons. The Republican John McCain told CBS: "Everything else has to be exhausted, but to say under no circumstances would we exercise a military option would be crazy." Democrat Evan Bayh urged diplomacy, but said there were elements of Iran's nuclear programme which, if attacked, "would dramatically delay its development".

White House spokesman David Almacy said: "The international community is determined not to let Iran develop a nuclear weapon. How we address that regime's continued non-compliance will be decided in the days and weeks ahead."

The UN security council issue will be the centrepiece of today's meeting, when EU and US officials will attempt to persuade their Russian and Chinese counterparts of the need for a referral, which could lead to economic sanctions.
Read more!

Spychips make Orwell's Big Brother seem relatively harmless

Spychips make Orwell's Big Brother seem relatively harmless
By Kellia Ramares
Online Journal Associate Editor


Spychips: How major corporations
and government plan to track your
every move with RFID
By Katherine Albrecht & Liz McIntyre
Foreward by Bruce Sterling, Wired.com
ISBN: 1595550208
Hardcover, 270 pp
Nelson Current, 2005

Marketers want to tag data to identify you and profile your possessions so they can target you with marketing and advertising material wherever you go. Government agents crave the power of hidden spychips to monitor citizens' political activities and whereabouts. And, of course, criminals can't wait to identify easy marks and high-ticket items by scanning the contents of shopping bags and suitcases at a distance. [authors' emphases]. --Katherine Albrecht & Liz McIntyre, Spychips, p 29.

RFID stands for Radio Frequency Identification. Organizations that promote RFID, which include companies whose names and brands you recognize, such as Wal-Mart, Gillette, Procter & Gamble, Intel, UPS and Benneton, as well as government agencies such as the Department of Defense and the Department of Homeland Security, want to implant an RFID tag on every item on earth.

Unlike current bar codes in which all similar items, e.g. 12 oz. cans of Coca-Cola, have the same number, RFID tags would give each individual item a unique identification number. Such tagging, combined with databases of purchasing histories tied to credit cards, ATM cards and supermarket loyalty cards, would create a system of universal product registration. "Spychips" explains what marketers, government agents and criminals are doing and could do in the near future with such a system.

Katherine Albrecht is the founder and director of C.A.S.P.I.A.N. (Consumers Against Supermarket Privacy Invasion and Numbering) and Liz McIntyre is C.A.S.P.I.A.N.'s communications director. The C.A.S.P.I.A.N. web site, which asks, "Is Big Brother in your grocery cart? " and the companion Spychips web site provide a lot of information about RFID and related strategies, as well as efforts by C.A.S.P.I.A.N. and other groups worldwide to derail the effort to make everything we carry, wear or drive traceable to us. The book "Spychips" is the natural continuation of their years-long efforts to inform the public about this global threat to privacy and liberty.

In "Spychips," Albrecht and McIntyre prove that the RFID industry's claims that their tags would not be used to track people are total lies. They do so by excerpting patent applications made by the some of the biggest proponents of RFID: transnational corporations such as IBM (patent application # 20020165758 -- IDENTIFICATION AND TRACKING OF PERSONS USING RFID-TAGGED ITEMS), Procter & Gamble (patent application #20020161651 -- SYSTEMS AND METHODS FOR TRACKING CONSUMERS IN A STORE ENVIRONMENT) and Philips Electronics (patent application # 6,611,206 -- AUTOMATIC SYSTEM FOR MONITORING INDEPENDENT PERSONS REQUIRING OCCASIONAL ASSISTANCE). Patents have been granted for some devices mentioned in the book.

A regimen of ubiquitous RFID does not stop at tagging things. The plans include tagging people. Already, the FDA has approved a subdermal RFID implant and, as Spychips graphically details, Persephone, Inc, a California-based company calls for surgical implantation of tracking devices in patent application # 2004174258 -- METHOD AND APPARATUS FOR LOCATING AND TRACKING PERSONS.

A major thesis of this book is that, contrary to the claims that RFID tags will make for a better world, the ubiquitous presence of spychips will only make the evils of the world worse. And in these times when we see people from Saddam Hussein to George W. Bush likened to Hitler, Albrecht's and McIntyre's imagining of what it would have been like for the Nazis to have had access to RFID is especially chilling:

In a world filled with RFID readers, the Nazis could have been far more efficient in depriving Jews of access to basic necessities and the stuff of daily life. RFID numbers encoded in their chips could mark Jews as social and technological pariahs, causing any doorway, elevator, or appliance equipped with RFID-based authentication to shut down when a Jew attempted to use it. In a cashless society where an ID swipe is required for nearly every activity, pay phones could be programmed to withhold dial tones, subway gates could remain firmly closed, and store equipment could refuse to ring up "Aryan only" foods like eggs and milk for the "wrong" kind of person. --Katherine Albrecht & Liz McIntyre, Spychips, p. 211

"Spychips" is a must read for anyone interested in preserving democracy, civil liberties, the concept of "innocent until proven guilty," and personal privacy. It is also a must read for people who want to be free from constant and intrusive marketing, and safer from criminals. The book will also be of interest to people concerned about abuse of technology, and people interested in Biblical interpretation. ("And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads. And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name." Rev. 13:16-17, quoted in Spychips, Chapter 14 Are You Next? p. 167).

That quote from the Book of Revelation reminds me of a bank commercial -- perhaps you've seen it -- where the customers stand passively in a long line after having had a barcode stapled to their foreheads. It's passivity that will make the scary world of ubiquitous RFID a reality, say Albrecht and McIntyre. Although RFID is already with us in forms such as "FasTrack" and "EZ-Pass" electronic toll collectors, the authors hope that the tagging of everything, and thus of everyone, can be stopped dead in its tracks with massive consumer action reflecting the very high level of consumer opposition to RFID. The chapter called "Pull the Plug: How you can help win the RFID war," recounts some anti-RFID victories, and lists a series of small, moderate and bold steps consumers can take to oppose RFID, as well as listing a number of "the worst of the spychippers," i.e., companies that deserve to be boycotted for their "past, present, or future plans to use -- or abuse -- RFID on consumer products."

The authors also promote their "RFID Right to Know Act," a piece of model legislation that would require the labeling of items containing RFID. Considering the federal government's promotion of RFID, well documented in "Spychips," and industry opposition to labeling legislation in other contexts, such as foods containing genetically modified organisms (GMOs) and dairy products containing growth hormones, the chances that an "RFID Right to Know Act" will be passed are probably somewhere between slim chance and fat chance. Nevertheless, the legislation is available at the Spychips web site where Albrecht and McIntyre keep news about consumer actions against spychipping companies and other information about RFID.

Interested consumers should read "Spychips" and go to the web site for more information. Then go out and rent a copy of the movie "Minority Report."

Read more!

How the natural-gas shortage is hurting the economy--and what it will do to your heating bills

The Next Energy Crisis?
How the natural-gas shortage is hurting the economy--and what it will do to your heating bills
By DAREN FONDA
Source


DANNY WILCOX FRAZIER / REDUX FOR TIMESTEAMED: Bob Horton may have to close his shop in Osceola, Iowa, if his heating bills don't fall

Bob Horton has survived the arrival of Home Depot and more economic downturns than he can remember. Yet this winter may be the last for his 40-year-old plumbing and heating supply shop in Osceola, Iowa, just south of Des Moines. The heating bill at his business soared to $602 last month, up from $250 a year earlier. He can't raise prices without losing customers, and he has tried everything to save energy, from installing insulation to heating with a high-efficiency furnace. "It's going to break us," he says of his fuel bills. "We can't pay the overhead."

This winter has been no colder than most, but it's leaving businessmen like Horton and homeowners across the country with a severe chill when they open their heating bills. The 62 million households that burn natural gas will spend 35% more this winter, according to the U.S. Energy Information Administration, with Northeasterners expected to pick up a record $1,276 average tab for the season. In the past five years, gas-burning homes have seen prices more than double. Those who rely on propane or oil for heat haven't fared a lot better. But the big crunch is in gas. Here's a guide to how that's hitting consumers and businesses, who's profiting and what you can do:

WHY IS MY GAS BILL SO HIGH? Natural gas used to be consumed mainly by firms making chemicals and other industrial goods. But in recent decades, electric companies, under pressure to pollute less, have embraced natural gas, which burns cleaner than coal or oil. Gas consumption by electric utilities has soared 76% since 1989. But unlike oil, easily transported and traded on global markets, gas poses logistical problems. It can't be shipped unless it's cooled and liquefied. For now, 85% of the gas we use is produced domestically. The rest arrives by pipeline from Canada, except for about 1% imported from such countries as Trinidad and Nigeria by tankers carrying liquefied natural gas (LNG). That equation is shifting. Production in the U.S. has slipped, down an estimated 5% in 2005, largely but not entirely because of storm damage to facilities in the Gulf. Meanwhile, Canada is consuming more of the gas it produces, leaving less to export. In short, we aren't getting enough gas to meet demand--a combustible formula for high prices.

WHAT'S THE IMPACT ON THE ECONOMY? High energy costs will shave up to half a point off GDP growth in 2006, predicts Stephen Brown, an economist with the Dallas Federal Reserve Bank--"a drag on the economy," he says, but not enough of one to tip us into recession. Still, slower growth means there will be pockets of pain. In Iowa, applications to the state's energy-assistance program are up 8%. Public schools, hit with high heating bills, are turning down the thermostat and spending less on field trips. David Callis, who grows corn, soybeans and wheat in Missouri, has seen the price of fertilizer, which is made in part from gas, rise 50%. Consumers, meanwhile, are paying more for items like paint and plastic containers. Sherwin-Williams recently raised the average price of a gallon of paint from $22 to $26. One beneficiary: makers of home insulation, whose business is thriving.

For some companies, the run-up in fuel prices is one more reason to ship jobs offshore. In the U.S. chemical industry, where 100,000 jobs have vanished since 2000, companies are building plants overseas, where natural gas goes for a small fraction of the price it commands in the U.S. Dow Chemical is constructing a $4 billion petrochemical plant in Oman, and CEO Andrew Liveris says the plant would have been built in Freeport, Texas, if not for the price difference. At PPG Industries in Pittsburgh, Pa., CEO Charles Bunch says he may have to close two North Carolina fiber-glass plants. "We've lost a lot of jobs to China because of the labor-cost difference," he says. "Now we're starting to lose jobs in energy-intensive sectors."

WHY DON'T GAS COMPANIES DRILL MORE WELLS? Oil and gas companies are flush with profits, so they could afford it. Exxon Mobil alone earned nearly $10 billion in the third quarter, a record for any U.S. firm. But companies seem more inclined to buy one another's assets and invest in proven reserves than go hunting for new sources. Conoco Phillips recently bid $35.6 billion for Burlington Resources, one of the world's largest natural-gas producers. In the contiguous 48 states, easily accessible fields are running full tilt. "We've had great success finding new reserves, but these are unconventional sources--low-permeability gas sands, shale gas, coal-bed methane," says Peter Dea, CEO of Western Gas Resources, a Denver-based gas producer. Longer term, more supplies are on the way. The U.S. Interior Department last week opened for exploration 389,000 acres of Alaskan tundra and shoreline, which officials estimate may contain 3.5 trillion cu. ft. of natural gas. Yet that's a pittance compared with the 22.3 trillion cu. ft. that the U.S. consumed in 2004. And two projects to transport gas from Alaska's North Slope and Canadian territories are in the works. One proposal entails building a $20 billion pipeline to Chicago, but that would take 10 years to complete.

WHAT ABOUT IMPORTING MORE LIQUEFIED NATURAL GAS? Energy companies would love to ramp up the trade in LNG, and European countries grew keenly interested after Russia and Ukraine got into a nasty spat over gas supplies a few weeks ago, roiling world gas markets. But there are tall hurdles. The U.S. has just five LNG receiving terminals, and while regulators in the U.S., Canada and Mexico have approved 15 more, the projects are hardly assured. Australian firm BHP Billiton, for one, wants to construct an offshore regasification plant the size of three football fields off the coast of Oxnard, Calif., but opposition is mounting. Activists raise concerns about pollution and potential harm to wildlife from such a large industrial operation. A spokeswoman for BHP says the LNG industry has never had a major spill (although an explosion occurred at an LNG production plant in Algeria in 2004).

WHAT CAN I DO? Energy experts say we could ease out of our gas crunch with realistic conservation efforts. Groups like the American Council for an Energy-Efficient Economy say we could cut natural-gas prices 20% in the next five years if the U.S. would, for instance, mandate efficiency targets for power plants and offer more financial incentives for renewable fuels like wind and solar. Even some industrial bosses are calling for more conservation to keep the economy humming. Says Liveris: "It's a shame the U.S. hasn't put in place these policies." As Americans are discovering, it's also costly.



With reporting by Wendy Grossman/ Houston, With reporting by Eric Ferkenhoff/ Chicago, Matt Kettmann/ Santa Barbara, Betsy Rubiner/ Des Moines

Read more!

The Proposed Iranian Oil Bourse

The Proposed Iranian Oil Bourse

Note from admin: I enjoyed reading the following article. However, the author completely bypasses the issue of Peak Oil, possibly because of a lack of understanding of the subject. Nonetheless, the basic premises of the article are sound and correct.

By Krassimir Petrov
I. Economics of Empires

A nation-state taxes its own citizens, while an empire taxes other nation-states. The history of empires, from Greek and Roman, to Ottoman and British, teaches that the economic foundation of every single empire is the taxation of other nations. The imperial ability to tax has always rested on a better and stronger economy, and as a consequence, a better and stronger military. One part of the subject taxes went to improve the living standards of the empire; the other part went to strengthen the military dominance necessary to enforce the collection of those taxes.

Historically, taxing the subject state has been in various forms-usually gold and silver, where those were considered money, but also slaves, soldiers, crops, cattle, or other agricultural and natural resources, whatever economic goods the empire demanded and the subject-state could deliver. Historically, imperial taxation has always been direct: the subject state handed over the economic goods directly to the empire.

For the first time in history, in the twentieth century, America was able to tax the world indirectly, through inflation. It did not enforce the direct payment of taxes like all of its predecessor empires did, but distributed instead its own fiat currency, the U.S. Dollar, to other nations in exchange for goods with the intended consequence of inflating and devaluing those dollars and paying back later each dollar with less economic goods-the difference capturing the U.S. imperial tax. Here is how this happened.

Early in the 20th century, the U.S. economy began to dominate the world economy. The U.S. dollar was tied to gold, so that the value of the dollar neither increased, nor decreased, but remained the same amount of gold. The Great Depression, with its preceding inflation from 1921 to 1929 and its subsequent ballooning government deficits, had substantially increased the amount of currency in circulation, and thus rendered the backing of U.S. dollars by gold impossible. This led Roosevelt to decouple the dollar from gold in 1932. Up to this point, the U.S. may have well dominated the world economy, but from an economic point of view, it was not an empire. The fixed value of the dollar did not allow the Americans to extract economic benefits from other countries by supplying them with dollars convertible to gold.

Economically, the American Empire was born with Bretton Woods in 1945. The U.S. dollar was not fully convertible to gold, but was made convertible to gold only to foreign governments. This established the dollar as the reserve currency of the world. It was possible, because during WWII, the United States had supplied its allies with provisions, demanding gold as payment, thus accumulating significant portion of the world’s gold. An Empire would not have been possible if, following the Bretton Woods arrangement, the dollar supply was kept limited and within the availability of gold, so as to fully exchange back dollars for gold. However, the guns-and-butter policy of the 1960's was an imperial one: the dollar supply was relentlessly increased to finance Vietnam and LBJ's Great Society. Most of those dollars were handed over to foreigners in exchange for economic goods, without the prospect of buying them back at the same value. The increase in dollar holdings of foreigners via persistent U.S. trade deficits was tantamount to a tax—the classical inflation tax that a country imposes on its own citizens, this time around an inflation tax that U.S. imposed on rest of the world.

When in 1970-1971 foreigners demanded payment for their dollars in gold, The U.S. Government defaulted on its payment on August 15, 1971. While the popular spin told the story of 'severing the link between the dollar and gold', in reality the denial to pay back in gold was an act of bankruptcy by the U.S. Government. Essentially, the U.S. declared itself an Empire. It had extracted an enormous amount of economic goods from the rest of the world, with no intention or ability to return those goods, and the world was powerless to respond— the world was taxed and it could not do anything about it.

From that point on, to sustain the American Empire and to continue to tax the rest of the world, the United States had to force the world to continue to accept ever-depreciating dollars in exchange for economic goods and to have the world hold more and more of those depreciating dollars. It had to give the world an economic reason to hold them, and that reason was oil.

In 1971, as it became clearer and clearer that the U.S Government would not be able to buy back its dollars in gold, it made in 1972-73 an iron-clad arrangement with Saudi Arabia to support the power of the House of Saud in exchange for accepting only U.S. dollars for its oil. The rest of OPEC was to follow suit and also accept only dollars. Because the world had to buy oil from the Arab oil countries, it had the reason to hold dollars as payment for oil. Because the world needed ever increasing quantities of oil at ever increasing oil prices, the world's demand for dollars could only increase. Even though dollars could no longer be exchanged for gold, they were now exchangeable for oil.

The economic essence of this arrangement was that the dollar was now backed by oil. As long as that was the case, the world had to accumulate increasing amounts of dollars, because they needed those dollars to buy oil. As long as the dollar was the only acceptable payment for oil, its dominance in the world was assured, and the American Empire could continue to tax the rest of the world. If, for any reason, the dollar lost its oil backing, the American Empire would cease to exist. Thus, Imperial survival dictated that oil be sold only for dollars. It also dictated that oil reserves were spread around various sovereign states that weren't strong enough, politically or militarily, to demand payment for oil in something else. If someone demanded a different payment, he had to be convinced, either by political pressure or military means, to change his mind.

The man that actually did demand Euro for his oil was Saddam Hussein in 2000. At first, his demand was met with ridicule, later with neglect, but as it became clearer that he meant business, political pressure was exerted to change his mind. When other countries, like Iran, wanted payment in other currencies, most notably Euro and Yen, the danger to the dollar was clear and present, and a punitive action was in order. Bush's Shock-and-Awe in Iraq was not about Saddam's nuclear capabilities, about defending human rights, about spreading democracy, or even about seizing oil fields; it was about defending the dollar, ergo the American Empire. It was about setting an example that anyone who demanded payment in currencies other than U.S. Dollars would be likewise punished.

Many have criticized Bush for staging the war in Iraq in order to seize Iraqi oil fields. However, those critics can't explain why Bush would want to seize those fields—he could simply print dollars for nothing and use them to get all the oil in the world that he needs. He must have had some other reason to invade Iraq.

History teaches that an empire should go to war for one of two reasons: (1) to defend itself or (2) benefit from war; if not, as Paul Kennedy illustrates in his magisterial The Rise and Fall of the Great Powers, a military overstretch will drain its economic resources and precipitate its collapse. Economically speaking, in order for an empire to initiate and conduct a war, its benefits must outweigh its military and social costs. Benefits from Iraqi oil fields are hardly worth the long-term, multi-year military cost. Instead, Bush must have went into Iraq to defend his Empire. Indeed, this is the case: two months after the United States invaded Iraq, the Oil for Food Program was terminated, the Iraqi Euro accounts were switched back to dollars, and oil was sold once again only for U.S. dollars. No longer could the world buy oil from Iraq with Euro. Global dollar supremacy was once again restored. Bush descended victoriously from a fighter jet and declared the mission accomplished—he had successfully defended the U.S. dollar, and thus the American Empire.


II. Iranian Oil Bourse

The Iranian government has finally developed the ultimate 'nuclear' weapon that can swiftly destroy the financial system underpinning the American Empire. That weapon is the Iranian Oil Bourse slated to open in March 2006. It will be based on a euro-oil-trading mechanism that naturally implies payment for oil in Euro. In economic terms, this represents a much greater threat to the hegemony of the dollar than Saddam's, because it will allow anyone willing either to buy or to sell oil for Euro to transact on the exchange, thus circumventing the U.S. dollar altogether. If so, then it is likely that almost everyone will eagerly adopt this euro oil system:

· The Europeans will not have to buy and hold dollars in order to secure their payment for oil, but would instead pay with their own currencies. The adoption of the euro for oil transactions will provide the European currency with a reserve status that will benefit the European at the expense of the Americans.

· The Chinese and the Japanese will be especially eager to adopt the new exchange, because it will allow them to drastically lower their enormous dollar reserves and diversify with Euros, thus protecting themselves against the depreciation of the dollar. One portion of their dollars they will still want to hold onto; a second portion of their dollar holdings they may decide to dump outright; a third portion of their dollars they will decide to use up for future payments without replenishing those dollar holdings, but building up instead their euro reserves.

· The Russians have inherent economic interest in adopting the Euro – the bulk of their trade is with European countries, with oil-exporting countries, with China, and with Japan. Adoption of the Euro will immediately take care of the first two blocs, and will over time facilitate trade with China and Japan. Also, the Russians seemingly detest holding depreciating dollars, for they have recently found a new religion with gold. Russians have also revived their nationalism, and if embracing the Euro will stab the Americans, they will gladly do it and smugly watch the Americans bleed.

· The Arab oil-exporting countries will eagerly adopt the Euro as a means of diversifying against rising mountains of depreciating dollars. Just like the Russians, their trade is mostly with European countries, and therefore will prefer the European currency both for its stability and for avoiding currency risk, not to mention their jihad against the Infidel Enemy.

Only the British will find themselves between a rock and a hard place. They have had a strategic partnership with the U.S. forever, but have also had their natural pull from Europe. So far, they have had many reasons to stick with the winner. However, when they see their century-old partner falling, will they firmly stand behind him or will they deliver the coup de grace? Still, we should not forget that currently the two leading oil exchanges are the New York's NYMEX and the London's International Petroleum Exchange (IPE), even though both of them are effectively owned by the Americans. It seems more likely that the British will have to go down with the sinking ship, for otherwise they will be shooting themselves in the foot by hurting their own London IPE interests. It is here noteworthy that for all the rhetoric about the reasons for the surviving British Pound, the British most likely did not adopt the Euro namely because the Americans must have pressured them not to: otherwise the London IPE would have had to switch to Euros, thus mortally wounding the dollar and their strategic partner.

At any rate, no matter what the British decide, should the Iranian Oil Bourse accelerate, the interests that matter—those of Europeans, Chinese, Japanese, Russians, and Arabs—will eagerly adopt the Euro, thus sealing the fate of the dollar. Americans cannot allow this to happen, and if necessary, will use a vast array of strategies to halt or hobble the operation's exchange:

· Sabotaging the Exchange—this could be a computer virus, network, communications, or server attack, various server security breaches, or a 9-11-type attack on main and backup facilities.

· Coup d’état—this is by far the best long-term strategy available to the Americans.

· Negotiating Acceptable Terms & Limitations—this is another excellent solution to the Americans. Of course, a government coup is clearly the preferred strategy, for it will ensure that the exchange does not operate at all and does not threaten American interests. However, if an attempted sabotage or coup d’etat fails, then negotiation is clearly the second-best available option.

· Joint U.N. War Resolution—this will be, no doubt, hard to secure given the interests of all other member-states of the Security Council. Feverish rhetoric about Iranians developing nuclear weapons undoubtedly serves to prepare this course of action.

· Unilateral Nuclear Strike—this is a terrible strategic choice for all the reasons associated with the next strategy, the Unilateral Total War. The Americans will likely use Israel to do their dirty nuclear job.

· Unilateral Total War—this is obviously the worst strategic choice. First, the U.S. military resources have been already depleted with two wars. Secondly, the Americans will further alienate other powerful nations. Third, major dollar-holding countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions. Finally, Iran has strategic alliances with other powerful nations that may trigger their involvement in war; Iran reputedly has such alliance with China, India, and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop and a separate pact with Syria.

Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between Scylla and Charybdis—between deflation and hyperinflation—it will be forced fast either to take its 'classical medicine' by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.

The Austrian theory of money, credit, and business cycles teaches us that there is no in-between Scylla and Charybdis. Sooner or later, the monetary system must swing one way or the other, forcing the Fed to make its choice. No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression and an adept Black Hawk pilot, will choose inflation. Helicopter Ben, oblivious to Rothbard’s America's Great Depression, has nonetheless mastered the lessons of the Great Depression and the annihilating power of deflations. The Maestro has taught him the panacea of every single financial problem—to inflate, come hell or high water. He has even taught the Japanese his own ingenious unconventional ways to battle the deflationary liquidity trap. Like his mentor, he has dreamed of battling a Kondratieff Winter. To avoid deflation, he will resort to the printing presses; he will recall all helicopters from the 800 overseas U.S. military bases; and, if necessary, he will monetize everything in sight. His ultimate accomplishment will be the hyperinflationary destruction of the American currency and from its ashes will rise the next reserve currency of the world—that barbarous relic called gold.

Read more!

Plugged in: Startup hopes to tap electricity from trees

Plugged in: Startup hopes to tap electricity from trees
By Christopher Calnan
Source

Don't tell MagCap Engineering's president he's barking up the wrong business model.

His Canton company claims to be developing a process of generating electricity from living trees and is working with an unidentified business in The Netherlands as a possible investor.

But local energy experts have questions about the concept behind the proposal.
MagCap Engineering LLC wants to patent a process that converts the natural energy of a tree to usable direct-current electricity, company President Chris Lagadinos said.

He expects to find investors to help pay for the research needed to figure a way to increase the tree power from less than 2 volts to 12 volts sometime this year, creating an alternative to fossil fuels.

Jim Manwell, director of the University of Massachusetts Amherst’s Renewable Energy Resource Laboratory, questioned the potential of MagCap’s plans. 'I'm wildly skeptical,' he said. 'I would need to see proof before I believed it. It strikes me as pretty questionable for a number of reasons.'

MagCap announced the project Dec. 20 and was subsequently inundated with inquiries, Lagadinos said.

'It’s been a zoo, the e-mails we’ve been getting — (we’ve) been swamped with contacts (from) all over the world. Most of them verified our results to find out we’re for real,' he said.

Lagadinos declined to name the potential investor. But he said the Dutch company is in the energy-storage business.

Lagadinos said he didn't know how much it would cost to develop the technology nor how long it would take to produce the 12-volt electricity. 'I'm hoping within 2006,' he said.

MagCap is developing the system with an Illinois-based inventor named Gordon Wadle. Wadle was not available for comment.

Dwayne Breger, manager of the renewable energy and climate change group at the Massachusetts Division of Energy Resources, said he has questions about the source of the energy and whether the process would damage trees.

'My reaction is that it sounds too good to be true,' he said. 'But I'm interested in seeing what they're able to come up with. What they need to demonstrate is that there's a sustainable energy source over time without a degradation to the tree.'
MagCap, which was founded in 1969, lists Raytheon Co., Thales Broadcast & Multimedia, Lockheed-Martin Corp. and British Aerospace as some of its customers.

Wadle became interested in the concept while studying lightning coming from the ground, 'which led him to believe that there's some type of power emanating from earth, which led him to trees,' Lagadinos said.

He said Wadle has worked on the project about one year and enlisted MagCap nine months ago. Lagadinos wasn’t sure why Wadle selected MagCap for the project.

Boston-based law firm Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC filed a patent application with the U.S. Patent and Trademark Office, Lagadinos said.

Mintz Levin patent attorney Jason Mirabito said he wouldn't have filed the application if he didn't have a reasonable amount of confidence in MagCap's concept. He filed the patent application in early December and expects the approval process to take about three years. Mirabito acknowleged the uniqueness of MagCap’s proposal.

'This is really something out of left field,' he said. 'In my 25 years of practicing patent law, I’ve never seen anything like this.'

Lagadonis said tests have generated 0.8 volts to 1.2 volts by driving an aluminum roofing nail half an inch into a tree attached to a copper water pipe driven 7 inches into the ground. But the electricity is useless because it's unstable and fluctuates.

The trick will be to learn how to filter and stabilize the electricity so it can be used to charge batteries, Lagadinos said.

'It’s a renewable source and it's an unlimited source,' he said. 'It's virtually untapped. The issue is clean energy and it's readily available. There are trees everywhere.'

Manwell said his skepticism is science-based.

'There's a fundamental law of physics,' he said. 'The energy has to come from somewhere.'


Read more!

Environment in crisis: 'We are past the point of no return'

Environment in crisis: 'We are past the point of no return'
By Michael McCarthy Environment Editor
Published: 16 January 2006
Source

Thirty years ago, the scientist James Lovelock worked out that the Earth possessed a planetary-scale control system which kept the environment fit for life. He called it Gaia, and the theory has become widely accepted. Now, he believes mankind's abuse of the environment is making that mechanism work against us. His astonishing conclusion - that climate change is already insoluble, and life on Earth will never be the same again.

The world has already passed the point of no return for climate change, and civilisation as we know it is now unlikely to survive, according to James Lovelock, the scientist and green guru who conceived the idea of Gaia - the Earth which keeps itself fit for life.

In a profoundly pessimistic new assessment, published in today's Independent, Professor Lovelock suggests that efforts to counter global warming cannot succeed, and that, in effect, it is already too late.

The world and human society face disaster to a worse extent, and on a faster timescale, than almost anybody realises, he believes. He writes: " Before this century is over, billions of us will die, and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable."

In making such a statement, far gloomier than any yet made by a scientist of comparable international standing, Professor Lovelock accepts he is going out on a limb. But as the man who conceived the first wholly new way of looking at life on Earth since Charles Darwin, he feels his own analysis of what is happening leaves him no choice. He believes that it is the self-regulating mechanism of Gaia itself - increasingly accepted by other scientists worldwide, although they prefer to term it the Earth System - which, perversely, will ensure that the warming cannot be mastered.

This is because the system contains myriad feedback mechanisms which in the past have acted in concert to keep the Earth much cooler than it otherwise would be. Now, however, they will come together to amplify the warming being caused by human activities such as transport and industry through huge emissions of greenhouse gases such as carbon dioxide (CO2 ).

It means that the harmful consequences of human beings damaging the living planet's ancient regulatory system will be non-linear - in other words, likely to accelerate uncontrollably.

He terms this phenomenon "The Revenge of Gaia" and examines it in detail in a new book with that title, to be published next month.

The uniqueness of the Lovelock viewpoint is that it is holistic, rather than reductionist. Although he is a committed supporter of current research into climate change, especially at Britain's Hadley Centre, he is not looking at individual facets of how the climate behaves, as other scientists inevitably are. Rather, he is looking at how the whole control system of the Earth behaves when put under stress.

Professor Lovelock, who conceived the idea of Gaia in the 1970s while examining the possibility of life on Mars for Nasa in the US, has been warning of the dangers of climate change since major concerns about it first began nearly 20 years ago.

He was one of a select group of scientists who gave an initial briefing on global warming to Margaret Thatcher's Cabinet at 10 Downing Street in April 1989.

His concerns have increased steadily since then, as evidence of a warming climate has mounted. For example, he shared the alarm of many scientists at the news last September that the ice covering the Arctic Ocean is now melting so fast that in 2005 it reached a historic low point.

Two years ago he sparked a major controversy with an article in The Independent calling on environmentalists to drop their long-standing opposition to nuclear power, which does not produce the greenhouses gases of conventional power stations.

Global warming was proceeding so fast that only a major expansion of nuclear power could bring it under control, he said. Most of the Green movement roundly rejected his call, and does so still.

Now his concerns have reached a peak - and have a new emphasis. Rather than calling for further ways of countering climate change, he is calling on governments in Britain and elsewhere to begin large-scale preparations for surviving what he now sees as inevitable - in his own phrase today, "a hell of a climate", likely to be in Europe up to 8C hotter than it is today.

In his book's concluding chapter, he writes: "What should a sensible European government be doing now? I think we have little option but to prepare for the worst, and assume that we have passed the threshold."

And in today's Independent he writes: "We will do our best to survive, but sadly I cannot see the United States or the emerging economies of China and India cutting back in time, and they are the main source of [CO2] emissions. The worst will happen ..."

He goes on: "We have to keep in mind the awesome pace of change and realise how little time is left to act, and then each community and nation must find the best use of the resources they have to sustain civilisation for as long as they can." He believes that the world's governments should plan to secure energy and food supplies in the global hothouse, and defences against the expected rise in sea levels. The scientist's vision of what human society may ultimately be reduced to through climate change is " a broken rabble led by brutal warlords."

Professor Lovelock draws attention to one aspect of the warming threat in particular, which is that the expected temperature rise is currently being held back artificially by a global aerosol - a layer of dust in the atmosphere right around the planet's northern hemisphere - which is the product of the world's industry.

This shields us from some of the sun's radiation in a phenomenon which is known as "global dimming" and is thought to be holding the global temperature down by several degrees. But with a severe industrial downturn, the aerosol could fall out of the atmosphere in a very short time, and the global temperature could take a sudden enormous leap upwards.

One of the most striking ideas in his book is that of "a guidebook for global warming survivors" aimed at the humans who would still be struggling to exist after a total societal collapse.

Written, not in electronic form, but "on durable paper with long-lasting print", it would contain the basic accumulated scientific knowledge of humanity, much of it utterly taken for granted by us now, but originally won only after a hard struggle - such as our place in the solar system, or the fact that bacteria and viruses cause infectious diseases.

Rough guide to a planet in jeopardy

Global warming, caused principally by the large-scale emissions of industrial gases such as carbon dioxide (CO2), is almost certainly the greatest threat that mankind has ever faced, because it puts a question mark over the very habitability of the Earth.

Over the coming decades soaring temperatures will mean agriculture may become unviable over huge areas of the world where people are already poor and hungry; water supplies for millions or even billions may fail. Rising sea levels will destroy substantial coastal areas in low-lying countries such as Bangladesh, at the very moment when their populations are mushrooming. Numberless environmental refugees will overwhelm the capacity of any agency, or indeed any country, to cope, while modern urban infrastructure will face devastation from powerful extreme weather events, such as Hurricane Katrina which hit New Orleans last summer.

The international community accepts the reality of global warming, supported by the UN's Intergovernmental Panel on Climate Change. In its last report, in 2001, the IPCC said global average temperatures were likely to rise by up to 5.8C by 2100. In high latitudes, such as Britain, the rise is likely to be much higher, perhaps 8C. The warming seems to be proceeding faster than anticipated and in the IPCC's next report, 2007, the timescale may be shortened. Yet there still remains an assumption that climate change is controllable, if CO2 emissions can be curbed. Lovelock is warning: think again.

'The Revenge of Gaia' by James Lovelock is published by Penguin on 2 February, price £16.99

The world has already passed the point of no return for climate change, and civilisation as we know it is now unlikely to survive, according to James Lovelock, the scientist and green guru who conceived the idea of Gaia - the Earth which keeps itself fit for life.

In a profoundly pessimistic new assessment, published in today's Independent, Professor Lovelock suggests that efforts to counter global warming cannot succeed, and that, in effect, it is already too late.

The world and human society face disaster to a worse extent, and on a faster timescale, than almost anybody realises, he believes. He writes: " Before this century is over, billions of us will die, and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable."

In making such a statement, far gloomier than any yet made by a scientist of comparable international standing, Professor Lovelock accepts he is going out on a limb. But as the man who conceived the first wholly new way of looking at life on Earth since Charles Darwin, he feels his own analysis of what is happening leaves him no choice. He believes that it is the self-regulating mechanism of Gaia itself - increasingly accepted by other scientists worldwide, although they prefer to term it the Earth System - which, perversely, will ensure that the warming cannot be mastered.

This is because the system contains myriad feedback mechanisms which in the past have acted in concert to keep the Earth much cooler than it otherwise would be. Now, however, they will come together to amplify the warming being caused by human activities such as transport and industry through huge emissions of greenhouse gases such as carbon dioxide (CO2 ).

It means that the harmful consequences of human beings damaging the living planet's ancient regulatory system will be non-linear - in other words, likely to accelerate uncontrollably.

He terms this phenomenon "The Revenge of Gaia" and examines it in detail in a new book with that title, to be published next month.

The uniqueness of the Lovelock viewpoint is that it is holistic, rather than reductionist. Although he is a committed supporter of current research into climate change, especially at Britain's Hadley Centre, he is not looking at individual facets of how the climate behaves, as other scientists inevitably are. Rather, he is looking at how the whole control system of the Earth behaves when put under stress.

Professor Lovelock, who conceived the idea of Gaia in the 1970s while examining the possibility of life on Mars for Nasa in the US, has been warning of the dangers of climate change since major concerns about it first began nearly 20 years ago.

He was one of a select group of scientists who gave an initial briefing on global warming to Margaret Thatcher's Cabinet at 10 Downing Street in April 1989.

His concerns have increased steadily since then, as evidence of a warming climate has mounted. For example, he shared the alarm of many scientists at the news last September that the ice covering the Arctic Ocean is now melting so fast that in 2005 it reached a historic low point.

Two years ago he sparked a major controversy with an article in The Independent calling on environmentalists to drop their long-standing opposition to nuclear power, which does not produce the greenhouses gases of conventional power stations.

Global warming was proceeding so fast that only a major expansion of nuclear power could bring it under control, he said. Most of the Green movement roundly rejected his call, and does so still.

Now his concerns have reached a peak - and have a new emphasis. Rather than calling for further ways of countering climate change, he is calling on governments in Britain and elsewhere to begin large-scale preparations for surviving what he now sees as inevitable - in his own phrase today, "a hell of a climate", likely to be in Europe up to 8C hotter than it is today.

In his book's concluding chapter, he writes: "What should a sensible European government be doing now? I think we have little option but to prepare for the worst, and assume that we have passed the threshold."

And in today's Independent he writes: "We will do our best to survive, but sadly I cannot see the United States or the emerging economies of China and India cutting back in time, and they are the main source of [CO2] emissions. The worst will happen ..."

He goes on: "We have to keep in mind the awesome pace of change and realise how little time is left to act, and then each community and nation must find the best use of the resources they have to sustain civilisation for as long as they can." He believes that the world's governments should plan to secure energy and food supplies in the global hothouse, and defences against the expected rise in sea levels. The scientist's vision of what human society may ultimately be reduced to through climate change is " a broken rabble led by brutal warlords."

Professor Lovelock draws attention to one aspect of the warming threat in particular, which is that the expected temperature rise is currently being held back artificially by a global aerosol - a layer of dust in the atmosphere right around the planet's northern hemisphere - which is the product of the world's industry.

This shields us from some of the sun's radiation in a phenomenon which is known as "global dimming" and is thought to be holding the global temperature down by several degrees. But with a severe industrial downturn, the aerosol could fall out of the atmosphere in a very short time, and the global temperature could take a sudden enormous leap upwards.

One of the most striking ideas in his book is that of "a guidebook for global warming survivors" aimed at the humans who would still be struggling to exist after a total societal collapse.

Written, not in electronic form, but "on durable paper with long-lasting print", it would contain the basic accumulated scientific knowledge of humanity, much of it utterly taken for granted by us now, but originally won only after a hard struggle - such as our place in the solar system, or the fact that bacteria and viruses cause infectious diseases.

Rough guide to a planet in jeopardy

Global warming, caused principally by the large-scale emissions of industrial gases such as carbon dioxide (CO2), is almost certainly the greatest threat that mankind has ever faced, because it puts a question mark over the very habitability of the Earth.

Over the coming decades soaring temperatures will mean agriculture may become unviable over huge areas of the world where people are already poor and hungry; water supplies for millions or even billions may fail. Rising sea levels will destroy substantial coastal areas in low-lying countries such as Bangladesh, at the very moment when their populations are mushrooming. Numberless environmental refugees will overwhelm the capacity of any agency, or indeed any country, to cope, while modern urban infrastructure will face devastation from powerful extreme weather events, such as Hurricane Katrina which hit New Orleans last summer.

The international community accepts the reality of global warming, supported by the UN's Intergovernmental Panel on Climate Change. In its last report, in 2001, the IPCC said global average temperatures were likely to rise by up to 5.8C by 2100. In high latitudes, such as Britain, the rise is likely to be much higher, perhaps 8C. The warming seems to be proceeding faster than anticipated and in the IPCC's next report, 2007, the timescale may be shortened. Yet there still remains an assumption that climate change is controllable, if CO2 emissions can be curbed. Lovelock is warning: think again.

'The Revenge of Gaia' by James Lovelock is published by Penguin on 2 February, price £16.99


Read more!

News

Energy:

Oil Market Analysts Issue Dire Warnings
Bolivia to Seize Oil and Gas Reserves, President-Elect Says
Countdown To Energy War
Gas prices experience spike throughout Texas (BizJournals)
World powers meet on Iran nuclear program - CNN


Economy:

Analysts: Growing Deficit Hobbles Economy - AP
Energy costs drive US inflation - BBC
Oil looms large over world stage - BBC
Hawaii home market cools - SF Gate
Power companies predict return of coal - FT
Sugar May Rise to 24-Year High on Ethanol Demand, Smaller Crops - Bloomberg
China´s mounting forex reserves create new problems - AFX
Iran wants OPEC output cut - AFP


Selected News Headlines:

Pakistanis Decry U.S. After Deadly Strike (AP)
Socialist Bachelet Wins Chilean Presidency (AP)
Poll: Concerns Shift From Economy to War (AP)
Read more!