A real bolt from the blue, right?
Yesterday Iran’s top nuclear negotiator boldly declared that his country was “allergic to the suspension” of uranium enrichment.
Meanwhile President Mahmoud Ahmadinejad continues to insist that Iran was within its rights under the Nuclear Nonproliferation Treaty to enrich uranium to fuel reactors for civilian electricity generation.
Listen to me on this. Things are getting interesting. And the price of oil is unlikely to come down anytime soon.
Here are bullet points from a speech given by Michael C. Ruppert, titled THE PARADIGM IS THE ENEMY: The State of the Peak Oil Movement at the Cusp of Collapse:
- The US government is playing a bluff hand over an attack against Iran , which in spite of being both unlikely and risking a global nuclear holocaust, has resulted in massive increases in military spending all around the planet. A global arms race is now using up energy and commodities that should be used rebuilding railroads, enhancing mass transportation, and building renewable infrastructure to soften the coming blows.
- In the face of this, the entire world, and especially China , Russia , India , Germany and Japan are pouring hundreds of billions of dollars of investment into Iran . This is one of many sure signs that the American Empire’s weaknesses are becoming visible. There is blood in the water and blood in the water usually leads to a fight. The world, at least as far as its pocketbook is concerned, is betting on Iran .
- Russia is selling Iran lots of Tor M1 anti-aircraft missile systems and cruise missile and high-speed torpedo technologies. China also is flooding Iran with advanced military systems.
The US has stepped up deliveries of weapons systems and military advisors to oil-producing regions around the world. This has been matched by similar deliveries to the same regions by Russia , China , Pakistan , Saudi Arabia , Venezuela , France , Britain , India and many other countries. A best-selling novel in China , The Battle in Protecting Key Oil Routes, has the Chinese navy destroying a US carrier battle group. The popular book documents a bloody contest over control of the Straits of Malacca, that narrow channel through which most of China ‘s, Japan ‘s, and Korea ‘s energy passes.
China ‘s Hu Jintao, clearly one of the world’s only major leaders with both plans and choices, is making direct calls on Saudi Arabia and Nigeria as George W. Bush haplessly points to hydrogen fuel cell cars as a solution. Don’t worry about how many American people will buy into such Bush nonsense. Worry about how many world leaders are watching these same clips and asking, “Is that the best he can do? America is in deep shit.”
With this as the backdrop, crude prices reacted in Europe overnight increasing as much as 2% before opening at $71.75 this morning on the NYMEX.
Iran, OPEC’s second-largest oil producer, has said it does not intend to halt oil exports as a political tactic. However, many traders fear that it’s certainly a possibility if the dispute escalates further.
But it’s not just Iranian fears that are pushing today’s oil markets. Shrinking U.S. gasoline supplies, strong global demand, and supply disruptions by militant rebels in Nigeria have all added to the price fire.
On Saturday the Movement for the Emancipation of the Niger Delta detonated a car bomb that damaged a base for tankers lifting fuel from a refinery in the city of Warri, a southern oil port.
This isn’t the group’s first assault on the Nigerian oil infrastructure. The militants have carried out a series of attacks in the oil-rich Niger Delta region where most of Nigeria’s crude is pumped, resulting in a 20% cut in production.
The rebels want a bigger slice of oil revenue pie that is currently controlled by the government. But President Olusegun Obasanjo’s administration says the militants are little more than thieves, involved in lucrative black-market dealings in stolen oil.
Either way the loss of production has pushed oil prices ever higher.
But is there relief in anywhere sight? Well, not according to Energy Secretary Samuel Bodman.
Three More Years of High Gas Prices…Maybe More
Retail gas prices have increased $0.60 a gallon in just a few short weeks in part because suppliers have been unable to keep up with demand. And Samuel Bodman says that higher gas prices could keep up for another three years.
On Sunday Bodman told Meet the Press that “the suppliers have lost control of the market…Oil has gone up because the suppliers are unable to make the flows equal to the demand…Clearly, it’s going to be a number of years, maybe two to three years, before suppliers are going to be able to keep up with those demands.”
Today’s higher oil demand has come from all fronts. Booming economies in China and India, reduced refining capacity after last year’s hurricanes, and production loss due to militant attacks have all pushed demand.
In 2005 the world consumed an average of about 83.6 million barrels per day. That’s quite a lot of crude being burned. But it’s only going to increase from here on out.
In its Short Term Energy Outlook the Energy Information Administration says that oil demand will grow to 85.2 million barrels per day in 2006 and 87.0 million barrels per day in 2007.
After that…there’s really no telling how high demand can grow.
In the meantime, we’ll have to adjust ourselves to these prices. It seems as if the economy already has.
With oil at record highs, you’d expect worldwide markets to be suffering. But it’s the exact opposite.
Even in the face of $75 oil, the Dow Jones is closing in on its all-time high of 11,723, set at the beginning of 2000. Today the Dow broke the 11,400 mark reaching as high as 11,428 earlier this morning.
The Dow has regained more than 4,000 points that slipped away after the dotcom bust and the 2001 recession.
Behind the rebound is a solid economy, emphasized last Friday when the Commerce Department reported that the GDP grew at a 4.8%, the biggest growth in 2 and a half years.
On top of that, the unemployment rate in March dropped to 4.7%, matching a four-year low, and hourly wages were 3.4% higher than a year earlier.
If the country can keep this trend going, we could easily see the Dow break it all time record and hit the 12,000 mark by in the second or third quarter of this year.
I guess it’s true – markets climb a wall of worry.
Until next time,