The third world war is about oil and trade. Three major blocks have emerged. The first is the Americans with some allies like Australia, Japan and so on. The second is BRIC (Brazil, Russia, India and China). The third is the European Union.
The triangle of international politics is complex and a diplomatic challenge for all head of states. For example India is the process of a tug of war between the Bush led Americans and the Putin led BRIC. China is definitely in BRIC quarter.
Russia is leading the BRIC with its big oil reserve. Brazil is in similar situation as India but they are leaning towards BRIC because of Chinese imports of Brazilian grain and other agricultural products.
India is scared to antagonize the Americans. They love earning American dollars and Euros by exporting English speaking educated bodies or services to the West. But the heart of India is with the BRIC. Self respect and independence is very important in India.
If you leave out the Indian oligarchs in the field of call centers, Information Technologies who make money by exploiting young educated people (a modern version of high tech slave trading), the rest of the country is pro-BRIC.
India is also concerned about the ‘Pakistani nuisance effect” – Pakistan is not really a threat in any sense but can be a perpetual nuisance to deal with. For earning easy money based on H1 temporary work visas in America and so called providing outsourcing services and keeping Pakistani ambition in check, India just cannot antagonize the Americans.
Also these Indian oligarchs fund the election of all the political parties.
The Indian oligarchs control all the political parties. And as long as Americans keep providing outsourcing money to these oligarchs, India will stay neutral.
China is different story. They like to sell to the Americans and the Europeans but do not like to be dominated by them. They are spearheading an outright oil competition with America and India. They are happy with their fantastic balance of trade; sky rocketing foreign exchange reserves and they believe they can conquer the world once they have enough energy resources under their control. Lot of companies stampeded into China to make money with cheap labor, they are realizing that there is no way you can make money there. For communist China it is a one-way door. All direct investments are welcome in but do not ask for taking profit out.
Russians are still recovering from the century old communism. They are being pushed by the Americans in Ukraine, in Iraq, in Georgia and so on. They are planning to use oil as a weapon. They have oil – lots of it. They also have solid customer next door who can be an excellent provider of trade and finance – China. Russia’s covert nationalization of Yukos oil company and subsequent decision to sell parts of the same to China and possibly India just proves what we are talking about.
The Europeans are watching the world war of oil and trade nervously as it unfolds in front of their own eyes. Philosophically they are in tune with America and the allies. The recent Iraq war created some dampening of relations but as time goes by, they will get realigned with America and the allies. They are also wooing India on their side promising outsourcing contracts – knowing very well Indians love quick money the easy way and the Indian Government are run by the so called human trading oligarchs.
China has become the second largest oil consuming country in the world. (USA is the Number One. There is a growing recognition in the United States that China's growth has been a major factor in reinvigorating the global economy, including the US economy. Chinese economic development is increasingly seen as a positive factor for the US - especially as there is a good deal of Chinese investment in US debt as well as increasing orders for US commodities from China. So, in short, there is some fear here that problems with energy supplies in China may lead to an economic slow-down that will in turn dampen the US and global economies.
*China's oil strategy not conflicting with US interest
Chinese demand for the Alberta oil sands -- the second largest reserve of crude on the planet -- puts the United States in the difficult position of balancing its commitment to open markets with its desire for secure supplies of energy, says Alberta's new envoy to Washington.
Canada is the No. 1 exporter of crude oil and petroleum products to the United States, which is the world's biggest importer and consumes a quarter of the planet's daily production. China recently became the No. 2 importer, moving past Japan. In 2003, Canada produced 2.39 million barrels of crude a day, exporting almost two-thirds of that -- 1.55-million barrels -- to the United States.
*China's oil sands role tests U.S.
"A key driver in China's relations with terrorist-sponsoring governments is its dependence on foreign oil to fuel its economic development. This dependency is expected to increase over the coming decade."
A key component of China's strategy to guarantee access to Persian Gulf oil is the special relations it has cultivated with Saudi Arabia. The ties with Riyadh go back to the mid-1980s when China sold Saudi Arabia intermediate range ballistic missiles. Since then, the relations have grown closer.
*Fueling the dragon:China's race into the oil market
Q. In general, is there a consensus about how long known projected reserves will last?
A. There is a huge concern about that, because the question is not how much oil there is out there, the question is how much cheap oil there is out there. If oil gets too expensive, then it economically it won't be worth using it. The question is at what point we run out of cheap oil and the price of oil will climb to a level that it will not be economical to extract and produce and use it.
There is a very fierce debate among geologists about when we will reach the point that they call "the peak." This is the point that you have depleted 50% of the global oil endowment, and after you reach this point of 50% the price never goes down. Some people say we are very close to peak, others say we are 20 years from peak, some even say we are 30 years from peak.
But no matter who you talk to, in historical terms it will happen before the middle of this century. It's going to be quite soon; maybe not tomorrow, but in the foreseeable future we're going to reach peak.
*China and US should set up a strategic dialogue on energy issues
Look at this imbalance: The average American consumes 25 barrels of oil a year. In China, the average is about 1.3 barrels per year; in India, less than one.
So as the 2.4 billion Chinese and Indians move to improve their living standards, they're going to want more oil - likely more than can be produced.
*China's risky scramble for oil
The United States imports more oil from Colombia and its neighbors, Venezuela and Ecuador, than from all of the Persian Gulf.
*The New U.S.-British Oil Imperialism
Oil is at the heart of the crisis that leads towards a US war against Iraq. For more than a hundred years, major powers have battled to control this enormous source of wealth and strategic power. The major international oil companies, headquartered in the United States and the United Kingdom, are keen to regain control over Iraq’s oil, lost with the nationalization in 1972.
Few outside the industry understand just how high the stakes in Iraq really are and how much the history of the world oil industry is a history of power, national rivalry and military force.
Why Iraq’s Oil is so coveted by the big companies
Oil in Iraq is especially attractive to the big international oil companies because of three factors:
(1)high quality/high value product
Iraq’s oil is generally of high quality because it has attractive chemical properties, notably high carbon content, lightness and low sulfur content, that make it especially suitable for refining into the high-value products. For these reasons, Iraqi oil commands a premium on the world market.
Iraq’s oil is very plentiful. The country’s proven reserves in 2002 were listed at 112.5 billion barrels, about 11% of the world total. With little exploration since the nationalization of the industry in 1972, many promising areas remain unexplored. Experts believe that Iraq has potential reserves substantially above 200 billion barrels. The Energy Information Administration of the US Department of Energy has estimated that Iraqi reserves could possibly total over 400 billion barrels. If new exploration fulfills such high-end predictions, Iraq’s reserves could prove close to those of Saudi Arabia, now listed at 260 billion barrels but likely also to go considerably higher as well.
The Department of Energy assessment says that:
Iraq contains 112 billion barrels of proven oil reserves, the second largest in the world (behind Saudi Arabia) along with roughly 220 billion barrels of probable and possible resources. Iraq’s true potential may be far greater than this, however, as the country is relatively unexplored due to years of war and sanctions. Deep oil-bearing formations located mainly in the vast Western Desert region, for instance, could yield large additional oil resources (possibly another 100 billion barrels), but have not been explored.” (http://www.eia.doe.gov/emeu/cabs/iraq.html)
(3)exceptionally low production costs, yielding a high per barrel profit
The US Department of Energy states that “Iraq’s oil production costs are amongst the lowest in the world, making it a highly attractive oil prospect.” This is because Iraq’s oil comes in enormous fields that can be tapped by relatively shallow wells, producing a high “flow rate.” Iraq’s oil rises rapidly to the surface, because of high pressure on the oil reservoir from water and from associated natural gas deposits.
*Oil is at the heart of the crisis that leads towards a US war against Iraq
Wednesday, February 16, 2005
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