Battling over the world's oil reserves

The US does not need to battle over Canada's oil reserves. Through NAFTA they are entitled to the same share as Canadians and at the same price! Maybe the US needs a Mideast Exploitation Free Trade Association (MEFTA)to put those Arab oil states in their proper place. This is from a UK socialist site.
Battling over the world's oil reserves
ALISTAIR TICE looks at the rivalry for access to the world's oil supplies and assesses the likely consequences for the world economy, and the continued dominance of US imperialism.
George Bush invaded Iraq for power, prestige and oil. Whilst the catastrophe of the occupation has dealt a huge blow to the prestige of US imperialism around the world and its power in the Middle East has been severely undermined, US and British oil companies are still set to get their hands on Iraq's oil.

Iraq's pro-western cabinet has approved a Hydrocarbon Law that will hand over long-term control of the country's untapped energy fields to foreign multinationals, with profit rates of up to 75 per cent! Iraq has the world's second largest known oil reserves and the Middle East currently supplies two-thirds of the world's oil.

Bush's war for oil was driven by his administration's close links to the major oil companies and by the United States' oil import needs. US oil production peaked in 1970 at ten million barrels per day (bpd); today it is less than five million bpd and the US consumes 20 million bpd. That is 25% of the world's oil consumption, yet the US only has 5% of the world's reserves.

Imports have risen from 36% of its oil needs in 1970 to two-thirds today. A recent submission to the Senate Committee on Energy and Natural Resources stated "there is no economically plausible scenario for a strategically meaningful reduction in the dependence of the Unites States and its allies on imported hydrocarbons during the next quarter century."

The major oil companies, mostly US-owned, are collectively known as 'Big Oil'. Closely connected to the Bush regime, many were originally based in the key oil state of Texas and are an essential element in the 'military-industrial complex'. Their profit-driven objectives have played a decisive role in Bush's aggressive, interventionist policy in the Middle East and Central Asia. Big Oil makes huge profits. In 2005, ExxonMobil became the world's biggest company, overtaking Wal-Mart. Five of the world's top ten corporations are now oil majors.

However, they face long term problems. Last year, the private oil corporations only replaced 75% of their reserves and now they only control 10% of world oil reserves.

State ownership
Despite two decades of neo-liberalism, national oil companies (wholly or partly state owned) control 90% of world oil reserves. And that share is rising.

On 1 May 2006, Evo Morales, the recently elected leftist president, announced the nationalisation of Bolivia's gas industry. Whilst it ended up as only partial state ownership, it was hugely significant after two decades of privatisation and was referred to as "the first nationalisation of the 21st century." Hugo Chávez, the radical president of Venezuela, has announced that by 1 May 2007, PDVSA (the Venezuelan state oil company) will take a 60% majority stake in the extra-heavy oil fields in the Orinoco Basin.

Vladimir Putin, the Russian president, has taken state-capitalist measures against the oil multinationals to increase his government's revenues and standing internationally.

Shell was forced to accept reduced shares in joint ventures in the giant Sakhalin oilfield. And now BP is under pressure from Gazprom, the Russian state gas company, over a new gas field project in Eastern Siberia.

The oil companies are having to accept lesser shares in future profits or risk expropriation and miss out altogether.

Even in the central African country Chad, last year the government created a new national oil company and threatened to expel Chevron for not paying taxes. In less than three years of exploitation of Chad's recently discovered oil resources, in a deal brokered by the World Bank, the foreign consortium had earned $5 billion for a $3 billion investment and Chad only got $588 million!

Globalisation
This retrenchment from globalisation is likely to increase with more governments nationalising or at least taking majority state holdings in their energy resources. Russia is now the world's biggest oil exporter (it overtook Saudi Arabia last year) and Gazprom is now the highest valued company outside the US.

But the Big Oil companies, and through them US imperialism, still control the international oil market: trading, transportation (tankers and pipelines) and refining. So Russia and China are trying to challenge their domination, and their state-owned energy companies could even make hostile takeover bids for Big Oil companies.

These would not be successful for political reasons. Last year for example, the US Congress blocked an attempted take-over of US energy company Unocal by the Chinese state oil company.

However, Russia and China have made a number of bilateral energy agreements and are planning to open their own oil and gas market exchanges to rival the US.

The world oil price peaked at around $80 per barrel last year but has now fallen back to $50-$60, still way above the $20 per barrel before the Iraq war started four years ago.

In the coming world economic slowdown or recession, the oil price is likely to fall further as energy demand falls, although probably not back to $20. However, any significant fall in the oil price below $50 a barrel will cause big economic and social problems for producer countries. It would also lead to another slump (as in the 1990s) in oil exploration and production (the economic viability of reserves is very much conditioned by the oil price) - paving the way for further shortages of supply and refining capacity later.

Would the leftist governments in Bolivia and Venezuela cut back on their social programmes for the poor or would they be forced into more radical policies of expropriation of capitalist interests?

Similarly, would Putin threaten to cut off western energy supplies if the west did not pay more for its gas and oil?

70% of Iran's state revenues comes from its oil exports so any fall in price would undermine President Ahmadinejad's already failing social promises and popular support. Saudi Arabia and the Gulf states too would face big social upheavals.

Whilst these would be the likely consequences of a fall in oil prices in the short term, in the longer run the price is likely to increase and could jump dramatically in response to internal crises.

The four biggest oilfields in the world (which account for 14% of world supplies) are all over 30 years old and in decline.

Saudi Arabia's Ghawar field, the world's largest, is over 50 years old and over half depleted (some observers say 90% depleted but the Saudi oil industry is shrouded in secrecy).

Daqing is the largest oil field in China and its major source of domestic oil; its decline will only make China even more desperate for imports. China is now the world's second biggest oil importer after the US, hence its deals with Iran, Sudan and Venezuela.

Last year, two senior US senators initiated a computerised simulation exercise called ShockWave to study the effects on the US economy if the oil price rose to $100 a barrel. Their inescapable conclusion was that it would lead to recession.

Many analysts believe that due to 'Peak Oil', prices could rise as high as $125-$150 a barrel. The Peak Oil theory is that a time will come when half the discovered and produced oil in the world has been consumed and after then the oil supply will decline. Some oil experts believe that time has already come, others that it may not be for another 30 years.

Either way, the reaction against neo-liberalism already evident in Latin America will spread to other continents as workers and poor people demand action against the super-profits of Big Oil.

There will be pressure from the masses for more windfall taxes and outright nationalisation.

The intensified rivalry between the declining and desperate US empire and energy-rich Russia and energy-hungry China will intensify, most immediately over Iran, and in Central Asia and Africa, leading to trade wars and further military conflicts.

As a consequence oil prices will become increasingly volatile, with falls and big rises, each with the potential to cause economic crises and social upheaval.

Just before the invasion of Iraq, media magnate Rupert Murdoch expressed his support for war to maintain oil prices at $20 a barrel and help sustain world economic growth (and his profits!). Like most things in his media, Murdoch got that one wrong and Iraq and oil will prove to be sources of world economic and political instability for years to come.

Blood for oil in Somalia

In the mainstream press the Somali conflict is all about the war on terrorism. As is often the case the war on terrorism is a cover to mask other aims.


More Blood for OilBy Carl Bloice01/16/07 "Black Commentator" -- -- Forget about all that stuff about Ethiopia having a 'tacit' o.k. from Washington to invade Somalia. The decision was made at the White House and the attack had military support from the Pentagon. The governments are too much in sync and the Ethiopians too dependent on the U.S. to think otherwise. And, it didn't just suddenly happen. Ethiopian troops, trained and equipped by the U.S. began infiltrating into Somali territory last summer as part of a plan that began to evolve the previous June when the Union of Islamic Courts (UIC) took control of the government. In November, the head of the U.S. Central Command, General John Abizaid (until last week he ran the U.S. military operations in Afghanistan and Iraq) was in Addis Ababa. After that, Ghanaian journalist Cameron Duodu has written, Ethiopia 'moved from proving the Somali government with 'military advice' to open armed intervention.' And not without help. U.S Supplied satellite surveillance data aided in the bombardment of the Somali capital, Mogadishu and pinpointing the location of UIC forces resulting, in the words of New York Times reporter Jeffrey Gettleman, in 'a string of back-to- back military loses in which more than 1,000 fighters, mostly teenage boys, were quickly mowed down by the better-trained and equipped Ethiopian-backed forces.' As with the U.S. invasion of Iraq, the immediate question is why was this proxy attack undertaken, in clear violation of international law and the UN Charter? And again, there is the official line, the excuse and the underlying impetus. The official line from Addis Ababa is that it was a defensive act in the face of a threat of attack from Somalia. There's nothing to support the claim and a lot of evidence to the contrary. As far as the Bush Administration is concerned, it was a chance to strike back at 'Islamists' as part of the on-going 'war on terror.' For progressive observers in the region and much of the media outside the U.S., the conflict smells of petroleum. 'As with Iraq in 2003, the United States has cast this as a war to curtail terrorism, but its real goal is to obtain a direct foothold in a highly strategic region by establishing a client regime there.,' wrote Salim Lone, spokesperson for the United Nation mission in Iraq in 2003, and now a columnist for The Daily Nation in Kenya. 'The Horn of Africa is newly oil-rich, and lies just miles from Saudi Arabia, overlooking the daily passage of large numbers of oil tankers and warships through the Red Sea.' In a television interview broadcast on the day of the full-fledged Ethiopian assault, Marine General James Jones (who ironically, like Abizaid, recently lost his position), then-Nato's military commander and head of the US military's European army, expressed his concern that the size of the U.S. army in Europe had 'perhaps gone too low.' Jones went on to tell the CSpan interviewer the US needed troops in Europe partly so that they could be quickly deployed in trouble-spots in Africa and elsewhere. 'I think the emergence of Africa as a strategic reality is inevitable and we're going to need forward-based troops, special operations, marines, soldiers, airmen and sailors to be in the right proportion,' said Jones. 'Pentagon to train sharper eye on Africa,' read the headline over a January 5 report by Richard Whittle in the Christian Science Monitor. 'Strife, oil, and Al Qaeda are leading the US to create a new Africa Command.' 'Africa, long beset by war, famine, disease, and ethnic tensions, has generally taken a backseat in Pentagon planning - but US officials say that is about to change,' wrote Whittle, who went on to report that one of former Defense Secretary Donald Rumsfeld's last acts before being dismissed from that position was to convince President Bush to create a new Africa military Africa command, something the White House is expected to announce later this year. The creation of the new body, he quoted one expert as saying, reflects the Administration concern about 'Al Qaeda's known presence in Africa,' China's developing relations with the continent with regards to oil supplies and the fact that 'Islamists took over Somalia last June and ruled until this week, when Ethiopian troops drove them out of power.' Currently, the US gets about 10 percent of its oil from Africa, but, the Monitor story said but 'some experts say it may need to rely on the continent for as much as 25 percent by 2010.' Reportedly, nearly two-thirds of Somalia's oil fields were allocated to the U.S. oil companies Conoco, Amoco, Chevron and Phillips before Somalia's pro-U.S. President Mohamed Siad Barre was overthrown in January, 1991. Lt. Cmdr. Joe Carpenter, a Pentagon spokesman, said the division for African military operations "causes some difficulty in trying to ... execute a more streamlined and comprehensive strategy when it comes to Africa." According to the plan, the Central Command will retain responsibility for the Horn of Africa for about 18 months while the Africa Command gets set up. The Pentagon's present Horn of Africa joint task force, headquartered in Djibouti, includes about 1,500 troops. African countries won't see much difference in the US military presence on the ground under the new command, Herman Cohen, assistant secretary of State for African affairs under the first President Bush, is quoted as saying. "They're already getting a lot of attention from the US military.' The Defense Intelligence Agency "has built up its offices throughout Africa in US embassies. Right after the cold war, they reduced a lot, but they've built back up." "When the Cold War ended, so too did the interest of the USA in Africa...for a while. Particularly following September 11, 2001, the interest of the Bush administration in Africa increased several fold,' says Bill Fletcher, Jr., visiting professor at Brooklyn College-CUNY, former president of TransAfrica Forum. 'Their interest was, first, in direct relationship to the amount of oil in the ground. Second, it was in relationship to a country's attitude toward the so- called "war against terrorism." Irrespective of the character of a regime, if they were prepared to provide the USA with oil and/or support the war against terrorism, the USA would turn a blind eye toward any practices going on.' "The second piece of this puzzle, however, is that the new interest in Africa was accompanied by a new military approach toward Africa,' says Fletcher. 'This included both the development of the so-called Trans Sahel project, which supposedly concerns training countries to fight terrorism, as well as the deployment of military bases and personnel to Africa. Specifically, and beginning around the time of the initiation of the Iraq war, US military planners began discussing relocating US forces from Europe into Africa, and specifically into the Gulf of Guinea region, a region rich in oil reserves. "It is clear, once again, that in all of this, the character of any regime is secondary to the regime's compliance with the interests of the Bush administration and their economic/strategic priorities. The net effect of this could be the introduction of US military personnel into extremely complicated internal struggles not only in the Gulf of Guinea region, but in other locations, e.g., Somalia, allegedly in the interest of fighting terrorism and protecting strategic oil reserves." Describing the Trans Sahel project, which covers a swath of North Africa, Foreign Policy in Focus commentator Conn Hallinan wrote recently, 'The Bush Administration claims the target of this program, called the Trans-Sahara Counter-Terrorism Initiative is the growing presence of al-Qaeda influenced organizations in the region. Critics, however, charge that the enterprise has more to do with oil than with Osama bin Laden, and that stepped up military aid to Morocco, Algeria and Tunisia will most likely end up being used against internal opposition groups in those countries, not 'terrorists' hiding out in the desert.' An apt example of how the charge of terrorism becomes cover for suppression of local democratic or leftist dissent is Nigeria. A major focus of U.S. oil interest is in that country and the Gulf of Guinea region. There, activists reflecting popular demand for retaining more oil revenues for local development and an end to environmental chaos, have been labeled 'terrorist' and are being brutally suppressed by a U.S. trained and equipped military.Southern Africa scholar George Wright observes that the development of military ties to government and 'rebel' groups in Africa, in pursuit of U.S. geo-strategic objectives, is long standing but has accelerating over recent years. Between 1990 and 2000, military arrangements were concluded between governments or opposition groups in 39 countries on the continent. These involved weapons supplies, military training, shared intelligence and surveillance. The aim, he says, has always been to secure neo-colonial relations with African countries. However, since 9/11, Wright says, the process has been accelerated and taken on an increasingly militarist character 'under the guise of fighting terrorism.' Fighting proxy war is credible as long as there is a chance of holding sway but history has repeatedly demonstrated when that doesn't work out, the end is often direct involvement. That explains why the 2007 U.S. military sets funding for Special Forces to increase by 15 percent. According to the 2005 Quadrennial Defense Review, these Special Forces 'will have the capacity to operate in dozens of countries simultaneously - relying on a combination of direct (visible) and indirect (clandestine) approaches.' The Ethiopian government has said it does not have the resources for an extended stay in Somalia even though the projection is that it will take many months to 'stabilize' the situation in the invaded country. As of this writing, the Bush Administration was having difficulty raising troops from nearby cooperative states to take over the job. Only Uganda seemed a sure bet. Assistant U.S. Secretary of State for Africa, Ms Jendayi Frazer, told journalists: "Ugandan President Yoweri Museveni promised U.S. President George Bush in a recent phone call that he could supply between 1,000-2,000 troops to protect Somalia's transitional government and train its troops. We hope to have the Ugandans deployed before the end of January.' Shortly after the invasion, Frazer told reporters there had been no request for U.S. troops or military assistance so far, but she did not rule out that it could be requested and supplied later if necessary. Later came quickly. On Sunday, U.S. AC-130 gunships began bombarding sites within Somalia and Hawkeye reconnaissance planes took to the air pinpointing locations for attacks by jet aircraft. Although the announced purpose of the bombing was alleged al-Qaeda personnel, media reports indicated the target were 'Islamic fighters', meaning troops of the UIC government. "The US has sided with one Somali faction against another, this could be the beginning of a new civil war ... I fear once again they have gone for a quick fix based on false information, one 'highly respected regional analyst' told the Times of London. 'If they pull it off, however, it could be a turning point. The stakes are very high indeed, now. I fear they are repeating the mistakes of the past, not only in Somalia but in Afghanistan and Iraq and will end up creating a new insurgency which could destabilize this entire region.'BC Editorial Board member Carl Bloice is a writer in San Francisco, a member of the National Coordinating Committee of the Committees of Correspondence for Democracy and Socialism and formerly worked for a healthcare union.