Written by Jack Martins Friday, 18 March 2011 00:00
The riveting video of the natural catastrophe in Japan captured attention while a simultaneous human-made catastrophe with grave implications for this island played out on the other side of Asia. In Qatif, on the eastern coast of Saudi Arabia, security forces opened fire to disperse protesters. Many of the protesters are part of a repressed Shiite minority, who also live over much of Saudi Arabia’s remaining petroleum reserves.
Long Island’s future is bundled together with the events in the Middle East. Most Americans lean naturally toward goodwill and fair play, but the policies of our national government have put us in a precarious position. “The United States considers Qaddafi rehabilitated since the days when President Reagan called him the ‘mad dog of the Middle East,’” said a 2008 Fox News story about Secretary of State’s visit to Libya. Qaddafi, who appears to be regaining control at this time, has attempted to win favor with rebels by blaming the United States for his country’s troubles. So has our close ally Ali Abdullah, the embattled President of Yemen, where American military and intelligence personnel have planned and participated in air strikes on suspected terrorist positions. A short drive from Qatif, security forces of the Kingdom of Bahrain, where the U.S. Fifth Fleet is now based, beat back protesters with tear gas and swords. Secretary of Defense Gates flew in to assure King Hamad bin Isa al-Khalifa that the U.S. was totally committed to our partnership. That’s just some of the news from a 24-hour period last week.
The big news here isn’t that the U.S. government does business with nasty people, for a variety of reasons that sometimes work at cross purposes. No kidding. The real story is that the unrest is exposing, once and for all, that OPEC nations, particularly Saudi Arabia, don’t have the excess production capacity or the deep reserves they’ve claimed. Sooner or later, somehow, for some period of time, the petroleum trade routes are going to be disrupted.
Last week, a record number of petroleum options traders (speculators) were betting that the price of crude would almost double and reach $200 a barrel by May 17. Maybe it will, maybe it won’t. The price of petroleum will likely swing up and down. We may be in a horrible race between $200 per barrel oil and an economic slowdown that causes demand to drop and brings prices tumbling down. Pick your poison.
The smart money is talking, and our leadership and our daily media are making believe they don’t hear.
Last week, a report produced by Morgan Stanley said that spare capacity in the oil markets is going to run out by the end of 2013. By the way, back in February, some of the infamous WikiLeaks documents included diplomatic cables stating that the Saudis have been exaggerating their recoverable oil reserves by at least 40 percent. Widely unreported in America, where we are instructed that WikiLeaks is a terrorist organization.
It took eight years for Iraq’s oil output to finally reach pre-invasion levels, and that took widespread hydrofracking and other extreme measures to draw out the oil. Output at Cantarell, Mexico’s super giant oil field, has collapsed to a fifth of its 2003 levels. Just a taste.
The world is not running out of oil, but much of the remaining oil is so far down, buried or dispersed that its recovery isn’t feasible. Worldwide oil production hit about 82 million barrels per day in 2005 and has hung there.
In Great Britain, the government warns that gasoline prices may soon hit the equivalent of $9.60 a gallon, and is publicly discussing the possibility of rationing. In the U.S., our leaders urge us to go back to sleep. Recently, Federal Reserve Chairman Ben Bernacke told a Congressional Committee that high oil prices are not inflationary, and that “Inflation has declined, on balance, since the onset of the financial crisis.” Dreamland.
An energy crisis will definitely cause disruption, but Long Island can survive. We will adjust to some new way of running this island. The more we can plan and prepare, the less chaotic that transition will be. Or will we just wing it?