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Greenspan Issues Warning on Dollar
Any opinions on how this would affect AMEP's future if there was a sudden drop in the dollar and a corresponding stockmarket adjustment (sometimes called a crash)?
Greenspan Issues Warning on Dollar
By David Streitfeld and Jeffrey Fleishman
The Los Angeles Times
Saturday 20 November 2004
The Federal Reserve chairman is concerned that foreign investors may unload the U.S. currency because of the growing trade deficit.
Berlin - Foreigners will eventually sour on U.S. bonds and the dollar because of America's bulging trade and budget deficits, posing significant risks to the nation's economy, Federal Reserve Chairman Alan Greenspan said Friday in remarks that rattled financial markets.
Greenspan told a banking conference in Frankfurt, Germany, that international investors were likely to either unload their dollar-denominated investments or demand higher interest rates. Either scenario would present problems for an economy that is heavily dependent on foreign capital to fuel its free-spending ways.
Some countries have "defused" their trade deficits without significant consequences, Greenspan noted. But, he warned, "we cannot become complacent. History is not an infallible guide to the future."
The Fed chief's concern about the deficits is not new, but his remarks were interpreted by some traders as a warning that a day of reckoning was drawing closer. And they came against the backdrop of the dollar's continued weakness in international currency markets.
After Greenspan spoke, the dollar dropped to its lowest level against the Japanese yen in more than four years. The dollar also fell against the euro, which hit the highest point in its five-year history this week. The stock market fell sharply. The Dow Jones industrial average dropped 115.64 points, or 1.1%, to 10,456.91.
"Greenspan frightened the markets by raising the specter of a dollar panic," said Peter Morici, former director of the Office of Economics at the U.S. International Trade Commission.
The Fed chief also seemed to be practically guaranteeing higher interest rates, saying that investors who weren't hedged against a rise were "desirous of losing money."
Earlier this month, the Fed raised its benchmark short-term rate for the fourth time since June, to 2%. After the market digested Greenspan's latest comments on rates, which weren't part of his prepared remarks, yields on Treasury securities jumped. Another rate increase is expected at the Fed's next meeting Dec. 14.
But it was Greenspan's remarks on the dollar that sparked the most reaction.
The federal government spent $413 billion more than it raised through taxes in the fiscal year that ended Sept. 30. The current account deficit, the broadest measure of the nation's trade balance with the rest of the world, was a record $166 billion in the second quarter. The current account deficit is now approaching 6% of U.S. gross domestic product, another record.
Increasingly, the U.S. buys products from other nations, particularly China, but sells them relatively little in return. Foreign countries instead take their dollars and buy U.S. Treasury securities. These investments allow Americans to enjoy tax cuts, cheap imports and low interest rates in a time of war.
Even if the current account deficit stops increasing, Greenspan said in his speech, foreign investors are likely to realize they have put too many of their eggs in the dollar basket.
As a result, he said, they will "eventually adjust their accumulation of dollar assets or, alternatively, seek higher dollar returns to offset concentration risk."
As interpreted by Lehman Bros. chief economist Ethan Harris, Greenspan was saying what many economists and currency strategists have been saying recently: "The current account deficit is too big, and asking foreigners to lend us $600 billion a year to cover it is creating great risk for the dollar."
Harris, attuned to Greenspan's often-Delphic pronouncements, said he heard "a subtle language change" from the chairman's previous remarks on the subject.
"Before it was, 'There will be a day of reckoning but I don't know when,' " the economist said. "Now it's, 'There's going to be a day of reckoning and we're worried about it.' He's saying the market should worry now."
The Bush administration has been quietly supportive of the dollar's recent drop, which could shrink the trade deficit by making U.S. exports less expensive abroad and raising the price of imports. That's one reason almost everyone on Wall Street expects the decline to continue.
The question that divides them is whether the descent will be slow and orderly, or quick and panicky.
Joel Prakken, an economist with Macroeconomic Advisers, is in the first camp. "If you look around at the world's economies, there's really none better than ours," he said. "It's not like in the 1980s, when people thought the Japanese or the Germans were going to rule the world, and people wanted to invest in them."
Harry Chernoff, an economist with Pathfinder Capital Advisors, expects the situation to get more unpleasant.
"No nation in the history of the world has ever escaped this level of indebtedness - annual and cumulative - without a severe and totally involuntary adjustment," he said. "The only question is whether we manage our crisis into a catastrophe or whether the international financial community clamps down on us before we have the opportunity to make things even worse."
Morici, the former trade official, believes the fate of the dollar will be determined not in Washington, but in Beijing, because of the huge dollar sums China has accumulated.
"The Chinese have created a Frankenstein's monster. If they go cold turkey and stop financing the deficit, the dollar will collapse and they'll lose their export market, which will mean riots in the streets," said Morici, now a professor at the University of Maryland.
Alternatively, China can engineer an orderly revaluation of its own currency, which is tied to the dollar. One effect would be to moderately raise prices of Chinese exports. There's little evidence, however, that China is willing to do this anytime soon.
The European economic community, whose currency has risen 9% against the dollar during the last year, is getting impatient for action.
The dollar's fall is not on the official agenda for this weekend's summit in Berlin of leading economic ministers from the Group of 20, but it is definitely the hot topic. German Finance Minister Hans Eichel described the dollar's plunge against the euro as a "brutal development" that threatens the global economy.
The Group of 20 is composed of the seven top industrial nations and other strong and developing economies, including Mexico, South Korea, Russia and Argentina. Economic ministers heard Greenspan's speech as they began arriving.
The dollar's spiral "will have to be talked about," Eichel said in a radio interview, adding that the U.S., Japan and Europe should find a "common position" to bolster the dollar.
The likelihood of such an agreement is slim. Speaking in Poland earlier this week, U.S. Treasury Secretary John W. Snow blamed Europe for its slow economic growth and said intervention in the currency market was "non-rewarding at best."
Germany faces grim financial news. Economic growth is sluggish, consumer spending is down, and unemployment is above 10%. Economists fear that if the dollar continues to drop, making German goods more expensive abroad, exports from the troubled German car market will decline and the effect will ripple through the middle class.
Heinrich von Pierer, chief executive of Siemens, said that in recent months the German engineering giant had to raise prices by 30%. A German panel of economic experts recently estimated that a further 10% drop in the dollar would mean the German economy would shrink by nearly half of a percent.
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Sounds to me like you are trying to start a scam yourself and are using the boards to dig up ideas on how to do it?
Is that what you are up to?
Sounds to me like budding criminal that's not smart enough to figure it out for himself.
hmmmmmmmmmmmm.
JMO....
Oil Sabotage Threatens Iraq Economy, Rebuilding
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Of note in this article: Pipeline attacks are increasing and the ability to defend against attacks on the pipelines is almost non-existant. The ability of the US to control the ground in Iraq is disappearing rapidly. One of the best ways to determine how well the US is doing on the ground is by where the air strikes are occurring. When they occur in heavily populated areas then it is obvious that they have given up on winning the hearts and minds of the population and are involved in a last ditch effort to keep control. In the last week or so they have called in air strikes within a few blocks of the Green Zone, because (they claim) they were afraid to send in more troops because they could be ambushed. This indicates that within a few blocks of the fortress called the Green Zone they are losing control. Recently the officials in control of the zone have publicly stated that they do not have enough personnel to defend the Green Zone from infiltrators and have warned people to ONLY go out in groups if at all possible within the Green Zone itself ... Another bad sign.
Now to us investors/speculators, this is important in several ways which probably can best be described by the word SURPRISE -- and the markets don' t like surprises. Here are only a few of the possibilities:
No warning of Iraq falling apart in civil war. Our media is not reporting or analysing the situation in Iraq because of it's political impact. Sorta indicates that the media doesn't care much about the economic impact on the general population, doesn't it
Spread of pipeline and/or refinery attacks outside of Iraq is inevitable. The "new" terrorist we have created are getting smarter and are now using attacks as bait to get the US troops to leave the Green Zone fortress so they can ambush them. If there really are oil "experts" informing the terrorist how to destroy oil infrastructure then the US is even more vulnerable since the oil infrastructure there -- is not protected AT ALL.
I think the fabled "October Surprise" will not be directly against the USA but indirectly through a massive synchronized attack on the Saudi Arabian oil infrastructure and pipelines world wide which could send the "world" into a severe economic slump. The terrorist could care less, and in fact it would give them breathing room, if the world economy collapsed and the world powers didn't have the resources to harass them.
A US stock market mini-crash (or worse) is also inevitable unless a lot of financial and social common sense comes into play real soon (probability = 0 IMO). The most probable cause of a crash, other than terrorist attacks, would be the pricing of oil in Euros -- causing a ton of US dollars to be dumped for Euros -- sending the value of the dollar through the floor and the price of oil in the US to several times what it is today in (real dollars).
It is also possible, but unlikely, that the cost of the war on terror (or war for oil) and the very "un-conservative" financial actions of the current administration on top of the election of a "Democratic President" (currently I think that term is an oxymoron given what has happened to our freedoms in the last decade) would cause people to take their nose out of the TV and start to think about what the real situation was in the world today. This also could cause a "crash" of the economy but like I implied, the chance of the population comming out of it's coma is not very likely......
The stock price of local oil & NG producers , wildcatters, refineries (that weren't blown up and can get oil to process) and distribution companies will go up many times, regardless of their true value when the panic hits.
Otherwise, if you want to make money, you will have to short the market or go long certain commodities. IMO gold would be a good risk but copper a bad one... Any other opinions as to what would go up under these situations?
HARDCASE
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http://www.latimes.com/news/nationworld/iraq/la-fg-pipeline18sep18,1,7134530.story?coll=la-home-head...
By T. Christian Miller, Times Staff Writer
WASHINGTON -- The sharp rise in attacks on Iraq's oil pipelines in recent weeks has substantially impaired the country's production, dealing a blow to the economy and threatening the struggling reconstruction effort, U.S. and Iraqi officials say.
Insurgents are bombing pipelines and other parts of Iraq's oil infrastructure almost daily, another sign that the country's security situation is deteriorating beyond the control of U.S. military and Iraqi security forces.
U.S. and Iraqi officials said the strikes had reduced average daily oil production by nearly 100,000 barrels, resulting in losses of as much as $1 billion this year.
"The attacks are continuing, and they impose a big penalty" on oil production, said a U.S. official who is involved in the reconstruction effort. "The country has got to get rid of this security problem. It's pervasive, and they have to get over it."
There are no official numbers, but sabotage against Iraq's pipelines and related infrastructure has soared from an average of six attacks a month before the U.S. returned sovereignty to the Iraqis in late June to 19 a month in July and August, according to research by the Institute for the Analysis of Global Security, a Washington think tank.
Iraq's oil production had been the bright spot in faltering efforts to rebuild Iraq's shattered infrastructure. Although U.S. officials have had trouble delivering electricity and clean water to Iraq's population, oil production rose after the March 2003 invasion.
U.S. officials had hoped that by the end of this year, Iraq would be producing as much as 3 million barrels of oil a day, satisfying internal demand and bringing in billions of dollars to fund the government's operating costs and reconstruction efforts.
However, repeated assaults have reduced daily output to well below 2.5 million barrels, less than during Saddam Hussein's regime, U.S. and Iraqi officials said.
The attacks "have caused great damage," said Issam Chalabi, a former Iraqi oil minister and now a private consultant based in Jordan. "For the past month, particularly the last few weeks, every single sabotage has had an impact on production and export of oil."
Although record-high oil prices have helped compensate for the production decline, industry analysts expect Iraq to bring in far less oil revenue than the $15 billion previously projected for the year.
As a result, U.S. taxpayers may be forced to make up for shortages in revenue that Pentagon officials once promised would cover much of the reconstruction costs.
In an appearance before Congress in March 2003, Deputy Secretary of Defense Paul D. Wolfowitz said Iraqi oil revenue could bring in as much as $100 billion over two to three years.
This week, however, Bush administration officials asked Congress to divert $450 million earmarked for reconstruction to increase oil production. That's on top of $1.7 billion already devoted to rebuilding the industry.
"The premise was that we'd go to Iraq, and oil would provide the money. That's not what is happening, and somebody is going to have to pay," said Gal Luft, executive director of the Institute for the Analysis of Global Security.
Sabotage of the pipelines began soon after the invasion but was confined mostly to the north. Today, about 200,000 barrels a day move through the northern pipeline, a fraction of its capacity.
Since the United States restored Iraqi sovereignty, insurgents have turned their attention to the southern fields, which produce 90% of Iraq's oil.
The spread of attacks to the south has been accompanied by an increase in their sophistication, experts say. Insurgents have selected targets carefully, picking junctions of multiple lines or aging pipelines that are especially vulnerable.
Insurgents also have stepped up strikes against Oil Ministry personnel and other petroleum infrastructure. Last month, guerrillas believed to be linked to rebel Shiite Muslim cleric Muqtada Sadr set fire to the state oil company's southern headquarters in Basra. In April, suicide bombers in boats attempted to destroy Iraq's southern oil terminal.
The success of the bombings and the expansion of targets have signaled to some experts that the insurgents have inside help. Some of Iraq's 55,000 oil technicians and engineers who are disenchanted with the U.S. occupation may be providing instruction.
"A significant number are supplying information and intelligence to the various insurgents to blow up facilities," said Youssef Ibrahim, a director of the Strategic Energy Investment Group, an energy consultancy based in Dubai, United Arab Emirates. "It's part and parcel of the effort to bring down a government that they see as collaborators."
The effectiveness of the pipeline attacks also has led to worries that dissidents in neighboring Saudi Arabia, the world's largest oil exporter, could copy the strategy. "A simple attack produces a huge impact," said Mustafa Alani, a security analyst with the Gulf Research Center in Dubai. "It's cheap, easy and achievable."
With 40% of the world's oil transported by pipelines and global demand at an all-time high, an outbreak of pipeline bombings could have disastrous economic consequences, analysts said. "The world can live with Iraq pumping 2 million barrels per day. The world cannot live with pipelines popping all over the place," Luft said.
U.S. and Iraqi officials have been at a loss to determine how to contain the damage.
Iraq's 14,000-man force dedicated to pipeline protection has neither enough people nor equipment to effectively monitor the country's 4,300 miles of pipelines, security experts say.
Iraqi oil officials recently announced a deal with southern tribes to mount pipeline patrols. The tactic is controversial, however, because some tribal members are believed to be among the saboteurs.
Iraqi and U.S. officials hope that more effective patrolling and aerial surveillance will help stem the attacks.
But ultimately, it is all but impossible to stop an attacker with a few sticks of dynamite from doing serious damage, security experts said.
"At the end of the day, if they want to get to it, they'll get to it," Ibrahim said.
Re: Habanero
I agree with Drillbit. I too have been watching them for about 3 years.
You might trade it and make money, but whatever you do -- don't "believe" in them...
Drilbit, If you liked that one you will like these.
First signs of a global decline in oil?
http://english.aljazeera.net/NR/exeres/561306AC-83F7-4FCE-A7EE-3EDD1B5C6096.htm
By Adam Porter
Wednesday 25 August 2004, 10:31 Makka Time, 7:31 GMT
New statistics are claiming that oil production in 18 producer countries has passed its peak and is declining faster than previously thought: At about 1.14 million barrels a day.
As oil prices bounce around the $45 mark one of the main factors underpinning the price rise is the increasingly popular notion of oil ''depletion''.
This is the idea that certain countries' reserves of oil have fallen to such low levels that they can no longer produce at the volumes they once did.
British trade journal Petroleum Review has reviewed the 2003 Statistical Review of World Energy, put together by British Petroleum, to look for signs of depletion.
Its study claims that a large group of producer countries are now in decline - putting even more pressure on those countries who have spare production capacity.
There are several worrying aspects to this decline. The first is that added to the current increase in global demand, it means other countries must produce more just for the market to stay still.
Secondly, as those countries are forced to produce to their capacity, it only hastens the day when they too will have declining output.
Depletion speeding up
"What surprised me was the rate of decline among the 18 countries whose production is going down," Petroleum Review editor and oil analyst Chris Skrebowski told Aljazeera.
"For fourteen out of the eighteen countries the rate of depletion is speeding up. This has confounded a long held view that decline was a slow, gradual process.
"The first country to start to decline was the USA. It could be possible that because they have such a high skill base, so many wells and such cheap capital that they were able to slow their rate of depletion. Other countries cannot," he said.
Those 18 countries in decline amount to about 25% of the world's producers. They are losing about 1.14 million bpd.
This means that the other 75% have to increase output. Not only to add the extra barrels lost by the declining countries, but also to meet leaping global demand, about 2.4 million bpd in 2004.
That demand is set to continue its increase, forecast by the International Energy Agency to grow by another 1.8 million bpd in 2005.
"It's a crazy see-saw where the fulcrum, the pivot, is constantly moving across. Eventually it is going to get to a point where the see-saw can no longer balance," said Skrebowski.
Sudden decline
Another problem analysts are facing is that it appears countries can carry on expanding production until suddenly the decline sets in, never to be reversed.
"The UK expanded production each year until 1999," Skrebowski continues. "Since then it has gone down every year by 5%, then 6% then 8% and this year, 2004, it looks set to be higher. This is even with the best technologies and techniques available."
The country with the biggest rate of decline is Gabon. The impoverished west African state experienced an 18% drop in production year on year.
This is on a set of fields who only came on the market in the 1970s, having been developed by the French oil companies. Such a rate of decline could spell disaster for vulnerable African economies.
Geo-political factors
Of course these are the most obvious examples of depletion. The more intangible effects are geo-political.
"Depletion is not very exciting or special if it is just in one country, say the west of country X is going down but the east is going up. No one really cares about that except those directly involved.
"If, however, it is going down in 'stable' country X and up in 'unstable' country Y, then you get the geo-political dimension. What happens if declines in safe countries can only be offset by increases from those less secure?" Skrebowski asks.
Because that is exactly what may be happening. For example Petrologistics, an oil industry firm which tracks tanker shipments, reported that Saudi Arabian output actually fell by 400,000 bpd last month.
No more room
"There are serious questions being raised about the ability of Saudi Arabia to expand production. Plus places like Abu Dhabi and Kuwait have little or no room for movement as well. And you don't need very many large producers to peak to make things very difficult for the others," said Skrebowski.
"As well as the 18 in decline there are many others who have no further room to expand production by any significant amount. Mexico has some problems with expanding any further and they do not appear to have invested in any new exploration whilst China's figures claim they are still just increasing capacity. Yet at the same time even they have admitted their two main fields are in decline."
Without gigantic and costly investment, that would itself inflate prices, squeezing more oil out of the ground may prove hard. Petroleum Review's rigorous statistical analysis may just be the prologue to a bigger, more unsettling story.
"The phenomenon of multiple counties all declining is a new one for everybody. Up to 1990 only the USA and Romania had started declining. So, in the longer term, matching demand to the new capacity of producer countries may prove to be a very tough call, a very tough call indeed," predicted Skrebowski.
And that may prove to be an understatement.
Aljazeera
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Here are some related articles also -- Kitco aka hardcase:
Oil market outlook mired in confusion
http://english.aljazeera.net/NR/exeres/2BF5DADA-8763-4D3C-B41B-6BB17CC429E9.htm
The elusive truth about oil reserve figures
http://english.aljazeera.net/NR/exeres/8AEF2417-CBDF-4E99-A8D2-CAA5409C147E.htm
The end of plentiful, cheap oil
http://english.aljazeera.net/NR/exeres/416F7BA6-90FC-48E6-8F4C-CA30FDD6EB39.htm
Record oil prices v record production
http://english.aljazeera.net/NR/exeres/6AC1CD99-B5C3-4414-8E48-B0336E8A3217.htm
Oil market outlook: Conflicting statements add to price volatility by Adam Porter
http://english.aljazeera.net/NR/exeres/2BF5DADA-8763-4D3C-B41B-6BB17CC429E9.htm
1.3 Billion Reasons to Worry about Oil (and to expect the price to go up.....(
Newsday / Editorial
http://www.newsday.com/news/opinion/ny-vpuno153930201aug15,0,7835521.story?coll=ny-editorials-headli...
Sunday 15 August 2004
China to rival U.S. as oil guzzler.
American leaders have good reason to worry about the price of oil. Oil price shocks can play a decisive role in ending a presidency, as in the cases of Presidents Jimmy Carter and George H. W. Bush. The Nov. 2 election may well hinge on the cooling of the economic recovery caused by sustained high levels of oil prices. But that's not really what the next president should be so concerned about. The real oil shocks - much more damaging and sustained than ever before - will come a bit later, but much sooner than anyone had expected, from a part of the world not even discussed seriously in the current campaign: China.
With 1.3 billion people, a phenomenal rate of economic growth, and an insatiable consumer demand for cars, China will soon come into direct conflict with the United States over oil, the world's most valuable and increasingly scarce industrial commodity.
The pressure on supply will inevitably jack up prices to levels that would make today's motorists and electricity customers blanch.
The conflict is unavoidable. It could create geopolitical tensions and cause dramatic shifts in U.S. foreign policy that may overshadow today's preoccupation with global terrorism. And there are no easy solutions to avert it, only regrets over this nation's missed opportunities in decades past to develop viable alternative energy sources to lessen U.S. dependence on imported oil.
Any such program, initiated today, will take far too long to bear fruit in time to avoid an economic and political clash with China over oil.
Just a quick glimpse at the figures involved makes clear the dimensions of the problem. China's economic growth has bubbled along at a steamy pace of 8 to 10 percent a year for the past decade.
With that growth, private auto sales in that vast nation have skyrocketed from token levels 10 years ago - only 220,000 were sold as recently as 1999 - to nearly 2 million this year. Last year alone, China's automobile sales increased by a staggering 69 percent.
More cars than U.S. by 2030
It's estimated that China could have nearly 30 million automobiles by 2010. By 2030, China is expected to have more cars than the United States and import as much oil as the U.S. does today.
Already, China has overtaken Japan as the world's second biggest importer of oil, after the United States. And its appetite is huge and growing. As Daniel Yergin of Cambridge Energy Research Associates puts it, "China has gone from being a minor player in world commodity markets, if a player at all, to being the decisive dynamic factor today. In terms of oil, 40 percent of the entire growth in oil demand since the year 2000 has been China."
In this quarter alone, China's demand for oil is projected to increase 21 percent. That follows a 19-percent increase during the first quarter of this year.
Nor are Chinese consumers, especially those in the growing middle class produced by a booming technology sector, particularly interested in fuel-efficient small cars. Gas-guzzling sport utility vehicles are not simply an American passion. They are in great demand in China, too.
In a report from China broadcast on National Public Radio in June, a 35-year-old woman in Beijing, Sia Lan, an executive in China's expanding advertising industry, said she, like many other of her friends, prefers to drive SUVs. "I have a sedan car, too, which I used to drive to work because my Jeep guzzles a lot more gas," she said. "But I prefer my Jeep because I can see over all the other cars."
A Chinese environmentalist, Liang Congjie, is distressed by the implications. "If each Chinese family has two cars like U.S. families, then the cars needed by China, something like 600 million vehicles, will exceed all the cars in the world combined."
The prospect is daunting, not only for the effects it would have on the world's production of greenhouse gases to accelerate global warming, but also for the incredible pressure it would put on the world's oil supply.
Just 10 years ago, China was self-sufficient in oil and actually exported small quantities to other Asian nations. Now, imports account for more than one- third of Chinese oil consumption. And rather than relying on foreign oil companies to supply it with oil, China wants its own oil firms to go directly overseas to secure supply sources it can exploit itself.
Clash with U.S. in Mideast
This is where China's quest for more oil will come directly in conflict with the concerns of U.S. foreign policy - particularly in the Middle East.
During the Cold War, China stayed away from the Middle East. That region's geographic distance and political instability deterred it from securing ties with its major oil-exporting nations and, at least until a decade ago, the old China of ox carts and bicycles did not need to import oil.
But now the Middle East and relations with oil-producing nations have become key interests in China's foreign policy, perhaps second only to its obsession with Taiwan.
Exploring the world
Today, nearly 60 percent of China's oil imports come from that region. Through bilateral agreements, rather than international mechanisms, and using arms sales and dual-use technology transfers - nuclear equipment, guidance systems for missiles - to cement ties, China has obtained oil exploration and exploitation rights in some of the most turbulent nations in the Middle East and North Africa - Iran, Sudan, Libya, Algeria and, until the recent war, Iraq.
The case of Sudan, where international concern for the humanitarian disaster in the Darfur region is intensifying, puts China's role in perspective. It illustrates how Beijing's oil interests could come in direct conflict with U.S. policy.
Chinese troops in Sudan
While Washington has begged the world - and pressured the United Nations Security Council - to send peacekeeping troops to Sudan to quell the sectarian fighting that has put a million refugees at risk, China has already deployed 4,000 troops to Sudan. But those troops are there only to protect China's investment in an oil pipeline. China is concerned that civil unrest could wreck the oil project. It has actually been hostile to U.S. pressure to impose economic sanctions on the Arab government in Khartoum, a key Chinese client, buyer of Chinese arms and partner in oil exploration.
It was also telling that China was a major opponent at the Security Council of the war against Iraq, in large part because China had obtained prospective contracts with Saddam Hussein for exclusive exploitation of some oil fields. But perhaps the most worrisome prospect for U.S. policymakers is China's burgeoning attempt to secure ties with Saudi Arabia, the world's arbiter of the oil market, taking advantage of the Saudi regime's tensions with Washington since the 9/11 attacks.
All these are disquieting harbingers of Beijing's coming conflict with the United States over oil. It will come sooner than expected and the United States is not prepared for it. This president or his successor must, at the very least, alert the nation about its consequences, initiate a national conversation about it and encourage a program of energy conservation to alleviate the obvious economic pressures we will all face.
China's need for oil is the proverbial 800-pound gorilla in the room, and no one seems willing to confront it or even acknowledge it - until it's too late.
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America's Achilles' Heel
By Robert Bryce
Salon.com
Monday 16 August 2004
---- snip ----
Indeed, most of the news from Iraq's oil sector, despite some $2.3 billion in investment by the United States in the months since Saddam Hussein was deposed, has been bad. Recent figures show that oil production now approaches 2.3 million barrels of oil per day. Exports have reached about 1.9 million barrels per day -- a fraction of the amount Iraq was exporting in the days before the first Iraq war in 1991. Although the exports are far less than the Pentagon had hoped for, they are helping Iraq's nascent government stay afloat. And the new regime has been bolstered by record-high oil prices, which show no sign of abating anytime soon. On Aug. 13, prices for September delivery of light sweet crude hit a record high of $45.93 a barrel on the New York Mercantile Exchange.
But along with the rising prices and an increase in production has come a dramatic increase in the number of insurgents. According to the New York Times, the number of insurgents in Iraq has grown from 2,500 in April 2003 to some 20,000 today. And those men understand that America's Achilles' heel in Iraq is oil.
"Whoever controls Iraqi oil controls Iraq's destiny," says A.F. Alhajji, an oil industry analyst at Ohio Northern University who closely follows the Persian Gulf. And now, says Alhajji, the insurgents are ensuring that Iraq's destiny is to continue in chaos. By strangling the country's oil exports, they are cutting off the lifeblood of Iraq's new government. Without reliable flows of cash from its oil industry, Iraq will not be able to rebuild. And the U.S. Congress is unlikely to fund the Iraqi rebuilding effort unless it shows some results quickly.
Since last June, insurgents have attacked various parts of Iraq's oil infrastructure at least 90 times. That figure is probably a fraction of the real number. Gal Luft, executive director of the Institute for the Analysis of Global Security, a Washington think tank that tracks energy issues, says the real figure may be twice as high. But the Pentagon is reluctant to talk about the attacks on oil targets. "Nobody really wants to provide information because it's a political hot potato," says Luft. According to IAGS's pipeline watch Web site, there were 90 attacks on oil targets between June 2003 and early August of this year. On Aug. 5 alone, there were three attacks, including an additional bombing of the Kirkuk-to-Ceyhan line. That same day, a bomb hit a gas pipeline that feeds an electricity plant in Bayji, north of Tikrit.
---- snip ----
Complete article can be found at:
http://www.salon.com/opinion/feature/2004/08/16/iraq_oil/index_np.html
It is worth reading, IMO and has lots more details in the rest of the article........
Why didn't someone tell me earlier that you had a nice clean forum over here?????? I been a member here for a looong time
Kitco
Still looking for Tantalum mines?
I found these notes I kept from some research I did a few months ago and thought you tantalum bugs might be interested.... ( Don't know if the URLs are still good....
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Avalon is exploring two targets in Ontario and one on the border in Manitoba. It has a deal with a private company in the tantalum industry giving that firm the right to earn a 50-per-cent interest in any of Avalon's tantalum targets by spending $5-million ( Canadian ) on exploration.Tantalum Mining has a joint venture with Gossan Resources Ltd. of Winnipeg to explore a property near Kenora.Other Canadian juniors looking for tantalum in Ontario include Houston Lake Mining Inc. of Val Caron, Ont., and Champion Bear Resources Ltd. of Calgary.One of the largest U.S. producers of tantalum capacitors, Kemet Corp. of South Carolina, has reached a deal to help an Australian company develop tantalum properties in that country.Mine expansions and some exploration success could result in tantalum prices falling dramatically as they did in 1979-80 when another supply squeeze came to an end.
http://www.globeandmail.ca/gam/ROB/20010105/RTANT.html
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Leader Acquires Second Tantalum Project
CALGARY, Alberta-- ( BUSINESS WIRE ) --March 20, 2001--Leader Mining International Inc. ( OTCBB: LDRMF - news; CDNX: LMN. - news ) is pleased to announce that it has entered into an option agreement with Champlain Resources ( a private company ) to acquire up to 70% working interest in the New Ross Tantalum Project; which consists of approximately 21,000 acres of mineral claims within a historic tin-tungsten mineral district.
The properties are located approximately 70 km west of Halifax, Nova Scotia and possess excellent infrastructure with paved roads and power supply to provide for year round exploration and easy development.
Grab samples, by Champlain Resources, yielded Ta2O5 values up to 390ppm, 395ppm, and 972ppm Ta2O5 from a flat lying pegmatite outcrop and boulders over a strike length of 2,000 feet. In 1970, the Nova Scotia Department of Mines drilled 600 feet northwest of the primary pegmatite, and intersected another 2 foot wide pegmatite zone which produced a Ta2O5 value of 265ppm. For comparison, 25% of the world tantalum production comes from two Australian mines which grade 230ppm and 414ppm Ta2O5.
In addition to the tantalum bearing pegmatites, the underlying granites also show enrichment in tantalum. These highly fractionated, topaz bearing leucogranites could host large scale porphyry-type tantalum deposits, amenable to large-scale, low-cost open pit mining. Ta2O5 values of up to 50ppm have been obtained from these granites.
Leader is expecting to start detailed geological mapping and geochemical sampling in May. Diamond drilling program will follow. Leader has budgeted $150,000 for this initial work program, and a total expenditure of $600,000 is anticipated over the next 18 months.
This more advanced tantalum project compliments Leader's early-stage Bright Lake Tantalum Project and represents Leader's belief in the short-term, as well as the long-term, strength of the price and demand for tantalum; Leader's guiding philosophy is to capitalize on strategic opportunities in geologically under-explored terrains among politically stable jurisdictions.
Financing: Leader Mining has signed a letter of intent with Mr. Ernst Baer of Weinfelden, Switzerland to arrange a private placement in the amount of $500,000 @ $0.50/share with a half a share purchase warrant attached at $0.75 over 12 months. A 10% finders fee is payable on this transaction. The funds will be used for the tantalum projects and for general working capital.
http://biz.yahoo.com/bw/010320/0815.html
Have fun......
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