They are so not done with us.
Seriously, when will we stand up and fight? The police state is moving out OWS protestors from city to city, Big Oil is unveiling it's latest screwing of the American Public, and here we sit taking it like we get paid for it.
By the way, Happy Holidays. Plan to pay 30% more for that Thanksgiving trip you're taking.
$200 Crude in 2012?
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It now appears, however, that Goldman might just have been early in its prognostication, rather than simply wrong. Oh, I know, light, sweet crude is currently trading near $100 a barrel, and it would require a host of major events to drive it to double that level, especially during 2012. But almost unnoticed is a price increase by nearly a third in just the past month. And far more important, it seems that a number of game changers can -- and probably will -- occur as we move into the impending new year. I'm wagering that a host of the potentially catastrophic events could involve Iraq and its neighbor to the east, Iran. The result, almost certainly, would be a steep escalation of crude levies.
Swimming in oil?For now, energy affairs in war-torn Iraq are progressing swimmingly. The country's production has grown by leaps and bounds since major oil companies from around the world -- beginning with a BP-led (NYSE: BP ) consortium, and later including ExxonMobil (NYSE: XOM ) and Royal Dutch Shell (NYSE: RDS-B ) -- began accepting the government's unusual contractual terms and started reinvigorating its major (albeit waning) fields. Indeed, with help from Schlumberger (NYSE: SLB ) and its oilfield services compadres, the companies have boosted Iraqi production from a couple of million barrels a day to 2.6 million daily barrels in just over a year.
Even more impressive are the seemingly reasonable notions that the country could reach 9 million barrels a day within a few years. That number assumes, however, that the companies are able to plug away unabated. And therein lies the rub. Indeed, a number of emerging speed bumps will need to be negotiated to prevent production from actually reverting to previous levels and world crude prices from making the Goldman Sachs folks appear amazingly prescient.
Questionable pullout and the lurking dangers
- Last month, President Obama announced a complete pullout of all
U.S. forces from Iraq, thereby making room for as many Iranians as that
country's President Ahmadinejad wishes to deploy to his neighbor's
territory. The Wall Street Journal called the announcement "a
disappointment for U.S. defense officials." There's likely a stronger --
and more appropriate -- term than "disappointment" for those officials,
who likely were discharging volumes of smoke from their ears, as were
the members of Congress who'd demanded that Iraq "tap its oil resources
to pay some of the U.S. war costs," a demand that the White House not
surprisingly refused to support.
Nevertheless, watch for dangerous developments from a combination of the two primarily Shiite-populated "I" countries. It seems that the potential for a progressively closer relationship between the pair -- they're already tending to be mutually supportive on regional issues -- is enhanced by Prime Minister Nouri al-Maliki's having resided in Tehran while Hussein was in power. As a result, he retains a number of contacts in the dangerous land of Ahmadinejad. - Further, ExxonMobil has ruffled feathers in Iraq by becoming the
first member of Big Oil to reach an agreement to search for oil and gas
in the country's semi-autonomous Kurdistan region. The Kurdish area is
thought to hold as much as 45 billion barrels of oil and 200,000 billion
cubic feet of gas, amounts approximately comparable to those in Libya.
But while the new deal obviously will provide a substantial opportunity for Exxon, it has sufficiently raised the dander of Iraq's central government -- which reportedly sent three letters admonishing the big company before its Kurdistan agreement was signed -- that it could ultimately endanger Exxon's license to perpetuate its current work on southern Iraq's giant West Qurna field. Beyond that, the Kurdistan Regional Government may have held discussions with Chevron (NYSE: CVX ) , which is not currently involved elsewhere in Iraq, and Italy's Eni (NYSE: E ) , which is.
Obviously, the primary concern involves the potential for widespread conflicts between the companies working in Iraq and those that wish to spread their efforts to the Kurdistan region. According to the Iraq Oil Ministry's Abdul Mahdi al-Ameedi, "Exxon should choose between either continuing with its deal with the Kurdistan Regional Government or lose its contract in southern Iraq." - Clearly more danger lies in Iran's development of nuclear
weaponry, which -- if it weren't already widely known -- was documented
last week in a United Nations report. As part of an effort to provide a
regional counter to the rogue nation, the U.S. is in the process of
formulating a deal to provide the United Arab Emirates (U.A.E.) with
thousands of "bunker buster" bombs, among other munitions.
At the same time, the Obama administration is reportedly preparing to fortify the six members of the Gulf Cooperation Council (Saudi Arabia, Bahrain, Oman, Qatar, U.A.E., and Kuwait). Beyond that, concerns are mounting almost daily regarding the potential of Israeli airstrikes (with or without U.S. support) against Iran's nuclear facilities. - And finally, within Iraq, minimally publicized Shiite-Sunni
factionalism appears to run the risk of spilling over into a renewed
civil war with the attendant danger of possibly drawing in Shiite Iran
and Sunni Saudi Arabia -- neither of whom are especially fond of each
other to begin with. The normal factionalism has been intensified by the
Shiite Maliki's determination to purge the nation's security and
intelligence forces of those who served in Saddam Hussein's
Sunni-dominated regime.
At the same time, with the U.S. about to complete its role as a peacekeeper in the country, Maliki has yet to fill a number of ministry posts, given his concern about a coup emanating from potentially disloyal security units. As such, he remains personally in charge of the ministries of defense, interior, and national security.
And so it goes.