Archive for the ‘Energy’ Category

A non-amendments post:

With everyone calling this a youth revolution, I took some time to look up and make an image of Egypt’s demographic info. I used info from CAPMAS for 2008 (which must be estimates since there wasnt a census that year).

The image makes the youth pyramid clear. Some stats: 38% are aged 15-35 and 32% are less than 15. What is interesting, I think, is that if you take out the 0-15, then 15-35 are 55% of the adult population (assuming 15 is adult, even though by international law it is 18).

Any random sample would be a majority youth. So even before you factor in other things such as youth energy and angst, higher unemployment, greater connectivity through ICT, etc that predispose youth more than older people to hit the streets, by definition, it would have to be called a youth uprising because youth would statistically be the majority.

I feel like this is stating the obvious, but I havent seen it stated thus anywhere else.

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This is really too good for me to pick excerpts out of. It really expresses so much of what I believe is wrong with the world and to cut it up would diminish it. While focusing mainly on India, Arundhati Roy, author of the God of Small Things (a book I think is overrated since I disapprove of the petered-out ending), and other books manages to strike the heart of the system: that the word democracy has been usurped to mean something entirely different than it should/did. Read it yourselves:

While we’re still arguing about whether there’s life after death, can we add another question to the cart? Is there life after democracy? What sort of life will it be? By “democracy” I don’t mean democracy as an ideal or an aspiration. I mean the working model: Western liberal democracy, and its variants, such as they are.

So, is there life after democracy?Attempts to answer this question often turn into a comparison of different systems of governance, and end with a somewhat prickly, combative defense of democracy. It’s flawed, we say. It isn’t perfect, but it’s better than everything else that’s on offer. Inevitably, someone in the room will say: “Afghanistan, Pakistan, Saudi Arabia, Somalia… is that what you would prefer?”

Whether democracy should be the utopia that all “developing” societies aspire to is a separate question altogether. (I think it should. The early, idealistic phase can be quite heady.) The question about life after democracy is addressed to those of us who already live in democracies, or in countries that pretend to be democracies. It isn’t meant to suggest that we lapse into older, discredited models of totalitarian or authoritarian governance. It’s meant to suggest that the system of representative democracy–too much representation, too little democracy–needs some structural adjustment.

The question here, really, is what have we done to democracy? What have we turned it into? What happens once democracy has been used up? When it has been hollowed out and emptied of meaning? What happens when each of its institutions has metastasized into something dangerous? What happens now that democracy and the free market have fused into a single predatory organism with a thin, constricted imagination that revolves almost entirely around the idea of maximizing profit?

Is it possible to reverse this process? Can something that has mutated go back to being what it used to be? What we need today, for the sake of the survival of this planet, is long-term vision. Can governments whose very survival depends on immediate, extractive, short-term gain provide this? Could it be that democracy, the sacred answer to our short-term hopes and prayers, the protector of our individual freedoms and nurturer of our avaricious dreams, will turn out to be the endgame for the human race? Could it be that democracy is such a hit with modern humans precisely because it mirrors our greatest folly–our nearsightedness?

Our inability to live entirely in the present (like most animals do), combined with our inability to see very far into the future, makes us strange in-between creatures, neither beast nor prophet. Our amazing intelligence seems to have outstripped our instinct for survival. We plunder the earth hoping that accumulating material surplus will make up for the profound, unfathomable thing that we have lost. It would be conceit to pretend I have the answers to any of these questions. But it does look as if the beacon could be failing and democracy can perhaps no longer be relied upon to deliver the justice and stability we once dreamed it would.

A Clerk of Resistance

As a writer, a fiction writer, I have often wondered whether the attempt to always be precise, to try and get it all factually right somehow reduces the epic scale of what is really going on. Does it eventually mask a larger truth? I worry that I am allowing myself to be railroaded into offering prosaic, factual precision when maybe what we need is a feral howl, or the transformative power and real precision of poetry.

Something about the cunning, Brahmanical, intricate, bureaucratic, file-bound, “apply-through-proper-channels” nature of governance and subjugation in India seems to have made a clerk out of me. My only excuse is to say that it takes odd tools to uncover the maze of subterfuge and hypocrisy that cloaks the callousness and the cold, calculated violence of the world’s favorite new superpower. Repression “through proper channels” sometimes engenders resistance “through proper channels.” As resistance goes, this isn’t enough, I know. But for now, it’s all I have. Perhaps someday it will become the underpinning for poetry and for the feral howl.

Today, words like “progress” and “development” have become interchangeable with economic “reforms,” “deregulation” and “privatization.” “Freedom” has come to mean “choice.” It has less to do with the human spirit than with different brands of deodorant. “Market” no longer means a place where you buy provisions. The market is a deterritorialized space where faceless corporations do business, including buying and selling “futures.” “Justice” has come to mean “human rights” (and of those, as they say, “a few will do”).

This theft of language, this technique of usurping words and deploying them like weapons, of using them to mask intent and to mean exactly the opposite of what they have traditionally meant, has been one of the most brilliant strategic victories of the tsars of the new dispensation. It has allowed them to marginalize their detractors, deprive them of a language to voice their critique and dismiss them as being “anti-progress,” “anti-development,” “anti-reform” and of course “anti-national”–negativists of the worst sort.

Talk about saving a river or protecting a forest and they say, “Don’t you believe in progress?” To people whose land is being submerged by dam reservoirs, and whose homes are being bulldozed, they say, “Do you have an alternative development model?” To those who believe that a government is duty bound to provide people with basic education, healthcare and social security, they say, “You’re against the market.” And who except a cretin could be against markets?

To reclaim these stolen words requires explanations that are too tedious for a world with a short attention span, and too expensive in an era when “free speech” has become unaffordable for the poor. This language heist may prove to be the keystone of our undoing.

Two decades of “progress” in India has created a vast middle class punch-drunk on sudden wealth and the sudden respect that comes with it–and a much, much vaster, desperate underclass. Tens of millions of people have been dispossessed and displaced from their land by floods, droughts and desertification caused by indiscriminate environmental engineering and massive infrastructural projects, dams, mines and Special Economic Zones. All developed in the name of the poor, but really meant to service the rising demands of the new aristocracy.

The hoary institutions of Indian democracy–the judiciary, the police, the “free” press and, of course, elections–far from working as a system of checks and balances, quite often do the opposite. They provide each other cover to promote the larger interests of Union and Progress. In the process, they generate such confusion, such a cacophony, that voices raised in warning just become part of the noise. And that only helps to enhance the image of the tolerant, lumbering, colorful, somewhat chaotic democracy. The chaos is real. But so is the consensus.

A New Cold War in Kashmir

Speaking of consensus, there’s the small and ever-present matter of Kashmir. When it comes to Kashmir, the consensus in India is hard core. It cuts across every section of the establishment–including the media, the bureaucracy, the intelligentsia and even Bollywood.

The war in the Kashmir valley is almost twenty years old now, and has claimed about 70,000 lives. Tens of thousands have been tortured, several thousand have “disappeared,” women have been raped, tens of thousands widowed. Half a million Indian troops patrol the Kashmir valley, making it the most militarized zone in the world. (The United States had about 165,000 active-duty troops in Iraq at the height of its occupation.) The Indian Army now claims that it has, for the most part, crushed militancy in Kashmir. Perhaps that’s true. But does military domination mean victory?

How does a government that claims to be a democracy justify a military occupation? By holding regular elections, of course. Elections in Kashmir have had a long and fascinating past. The blatantly rigged state election of 1987 was the immediate provocation for the armed uprising that began in 1990. Since then elections have become a finely honed instrument of the military occupation, a sinister playground for India’s deep state. Intelligence agencies have created political parties and decoy politicians; they have constructed and destroyed political careers at will. It is they more than anyone else who decide what the outcome of each election will be. After every election, the Indian establishment declares that India has won a popular mandate from the people of Kashmir.

In the summer of 2008, a dispute over land being allotted to the Amarnath Shrine Board coalesced into a massive, nonviolent uprising. Day after day, hundreds of thousands of people defied soldiers and policemen–who fired straight into the crowds, killing scores of people–and thronged the streets. From early morning to late in the night, the city reverberated to chants of “Azadi! Azadi!” (Freedom! Freedom!). Fruit sellers weighed fruit chanting “Azadi! Azadi!” Shopkeepers, doctors, houseboat owners, guides, weavers, carpet-sellers–everybody was out with placards, everybody shouted “Azadi! Azadi!” The protests went on for several days.

The protests were massive. They were democratic, and they were nonviolent. For the first time in decades, fissures appeared in mainstream public opinion in India. The Indian state panicked. Unsure of how to deal with this mass civil disobedience, it ordered a crackdown. It enforced the harshest curfew in recent memory, with shoot-on-sight orders. In effect, for days on end, it virtually caged millions of people. The major pro-freedom leaders were placed under house arrest, several others were jailed. House-to-house searches culminated in the arrests of hundreds of people.

Once the rebellion was brought under control, the government did something extraordinary–it announced elections in the state. Pro-independence leaders called for a boycott. They were rearrested. Almost everybody believed the elections would become a huge embarrassment for the Indian government. The security establishment was convulsed with paranoia. Its elaborate network of spies, renegades and embedded journalists began to buzz with renewed energy. No chances were taken. (Even I, who had nothing to do with any of what was going on, was put under house arrest in Srinagar for two days.)

Calling for elections was a huge risk. But the gamble paid off. People turned out to vote in droves. It was the biggest voter turnout since the armed struggle began. It helped that the polls were scheduled so that the first districts to vote were the most militarized districts even within the Kashmir valley.

None of India’s analysts, journalists and psephologists cared to ask why people who had only weeks ago risked everything, including bullets and shoot-on-sight orders, should have suddenly changed their minds. None of the high-profile scholars of the great festival of democracy–who practically live in TV studios when there are elections in mainland India, picking apart every forecast and exit poll and every minor percentile swing in the vote count–talked about what elections mean in the presence of such a massive, year-round troop deployment (an armed soldier for every twenty civilians).

No one speculated about the mystery of hundreds of unknown candidates who materialized out of nowhere to represent political parties that had no previous presence in the Kashmir valley. Where had they come from? Who was financing them? No one was curious. No one spoke about the curfew, the mass arrests, the lockdown of constituencies that were going to the polls.

Not many talked about the fact that campaigning politicians went out of their way to de-link Azadi and the Kashmir dispute from elections, which they insisted were only about municipal issues–roads, water, electricity. No one talked about why people who have lived under a military occupation for decades–where soldiers could barge into homes and whisk away people at any time of the day or night–might need someone to listen to them, to take up their cases, to represent them.

The minute elections were over, the establishment and the mainstream press declared victory (for India) once again. The most worrying fallout was that in Kashmir, people began to parrot their colonizers’ view of themselves as a somewhat pathetic people who deserved what they got. “Never trust a Kashmiri,” several Kashmiris said to me. “We’re fickle and unreliable.” Psychological warfare, technically known as psy-ops, has been an instrument of official policy in Kashmir. Its depredations over decades–its attempt to destroy people’s self-esteem–are arguably the worst aspect of the occupation. It’s enough to make you wonder whether there is any connection at all between elections and democracy.

The trouble is that Kashmir sits on the fault lines of a region that is awash in weapons and sliding into chaos. The Kashmiri freedom struggle, with its crystal-clear sentiment but fuzzy outlines, is caught in the vortex of several dangerous and conflicting ideologies–Indian nationalism (corporate as well as “Hindu,” shading into imperialism), Pakistani nationalism (breaking down under the burden of its own contradictions), US imperialism (made impatient by a tanking economy) and a resurgent medieval-Islamist Taliban (fast gaining legitimacy, despite its insane brutality, because it is seen to be resisting an occupation). Each of these ideologies is capable of a ruthlessness that can range from genocide to nuclear war. Add Chinese imperial ambitions, an aggressive, reincarnated Russia, and the huge reserves of natural gas in the Caspian region and persistent whispers about natural gas, oil and uranium reserves in Kashmir and Ladakh, and you have the recipe for a new cold war (which, like the last one, is cold for some and hot for others).

In the midst of all this, Kashmir is set to become the conduit through which the mayhem unfolding in Afghanistan and Pakistan spills into India, where it will find purchase in the anger of the young among India’s 150 million Muslims who have been brutalized, humiliated and marginalized. Notice has been given by the series of terrorist strikes that culminated in the Mumbai attacks of 2008.

There is no doubt that the Kashmir dispute ranks right up there, along with Palestine, as one of the oldest, most intractable disputes in the world. That does not mean that it cannot be resolved. Only that the solution will not be completely to the satisfaction of any one party, one country, or one ideology. Negotiators will have to be prepared to deviate from the “party line.”

Of course, we haven’t yet reached the stage where the government of India is even prepared to admit that there’s a problem, let alone negotiate a solution. Right now it has no reason to. Internationally, its stocks are soaring. And while its neighbors deal with bloodshed, civil war, concentration camps, refugees and army mutinies, India has just concluded a beautiful election. However, “demon-crazy” can’t fool all the people all the time. India’s temporary, shotgun solutions to the unrest in Kashmir (pardon the pun), have magnified the problem and driven it deep into a place where it is poisoning the aquifers.

Is Democracy Melting?

Perhaps the story of the Siachen Glacier, the highest battlefield in the world, is the most appropriate metaphor for the insanity of our times. Thousands of Indian and Pakistani soldiers have been deployed there, enduring chill winds and temperatures that dip to minus 40 degrees Celsius. Of the hundreds who have died there, many have died just from the elements.

The glacier has become a garbage dump now, littered with the detritus of war–thousands of empty artillery shells, empty fuel drums, ice axes, old boots, tents and every other kind of waste that thousands of warring human beings generate. The garbage remains intact, perfectly preserved at those icy temperatures, a pristine monument to human folly.

While the Indian and Pakistani governments spend billions of dollars on weapons and the logistics of high-altitude warfare, the battlefield has begun to melt. Right now, it has shrunk to about half its size. The melting has less to do with the military standoff than with people far away, on the other side of the world, living the good life. They’re good people who believe in peace, free speech and human rights. They live in thriving democracies whose governments sit on the UN Security Council and whose economies depend heavily on the export of war and the sale of weapons to countries like India and Pakistan. (And Rwanda, Sudan, Somalia, the Republic of Congo, Iraq, Afghanistan… it’s a long list.)

The glacial melt will cause severe floods on the subcontinent, and eventually severe drought that will affect the lives of millions of people. That will give us even more reasons to fight. We’ll need more weapons. Who knows? That sort of consumer confidence may be just what the world needs to get over the current recession. Then everyone in the thriving democracies will have an even better life–and the glaciers will melt even faster.

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I stumbled upon this post by Mo-ha-med and discovered a pretty good blog. I am reproducing the post in full. It’s about time someone put this much investigation into such a politically and economically critical yet entirely opaque issue. Don’t neglect to check out the first post (referenced in the first line) and the comments on it for some more valuable info.

Anyway, hats off to Mo-ha-med and without further ado:

(Three Quick notes:
– Part One of this article presented a background to the Egypt-Israel gas export deal and what was ‘renegotiated’ last week, and can be found here.

– The research here was all made from public sources. Some sources required a sign-up for a trial version. References from newspapers, business reviews and databases, and industry analysis consultancies are mentioned as often as humanly possible. Information from unreliable online sources, or quoting an inaccessible print source was discarded.

– That article took me quite some time to write. So If you liked the article – or, hell, if you didn’t – make my day and leave a comment!)


EMG signed the gas export deal on the Egyptian side. But what hides behind this acronym? And why are they mandated with selling the country’s natural resources?

EMG is short for ‘East Mediterranean Gas’ – an Egyptian-Israeli consortium. Which, despite managing multi-billion dollars projects, has no online presence or website.

We do know however that it was originally a joint venture between the Egyptian Gas Petroleum Consortium (EGPC), a government joint venture operating under the ministry of Petroleum, and Israeli corporation Merhav, after a deal between Minister of Petroleum Sameh Fahmy and then minister of infrastructure Binyamin Ben Eliezer in 2005.

The company has been quite keen on keeping a low profile – hell, I can understand them – but it has gone a bit too far: it is actually spreading false information about itself!

But take a look at this page: this is a typical company-generated public profile – the only one I could find on the internet.

It is so full of misinformation I am still laughing. For instance:

– The website address is fictitious. That’s right: there is no www.emg.com. As a matter of fact, the domain name is registered for an education company in New Jersey.

– Check out the listed shareholders (graph):

Right. Only there is no “MIDGAS” that I can find, there is no Fordas Pernamanian, there is no Middle East Pipeline NV in the Netherlands, and there is no Coltex in Britain. There’s a Coltex in Austin, Texas, which generates annual sales of $170,000 so I’ll make the assumption that they’re not shareholders in a transnational pipeline.

The profile makes no mention of business with Israel anywhere. It just says (hihihihihi) “… to Turkey, to other countries situated along the Eastern Coast of the Mediterranean”.

Now to some more reliable information on the company.

Currently, the owners of EMG appear to be as follows:

28% for HKS, the main Egyptian partner. They seemingly started off with 53% – a controlling share -but sold a 25% stake to PTT – before gas even started pumping.

25% for Thailand’s Public company PTT (see page 3 of this document)

20% for Yosef Maiman, through Ampal-American Israel Corporation which he chairs, and Merhav MNF Ltd., which he owns

10% for the Egyptian government, via the Egyptian Natural Gas holding Company (EGAS)

4.4% for Israeli institutional investors. (Source)

The main remark to make here is that — the Egyptian shareholders in the company that signed on behalf of the Egyptian partner own, that is commonly referred to as “Egypt’s EMG” hmmmm, a mere 38% of the capital.

Let’s be very clear here: the Egyptian signatory to the deal is, ehhhh, not Egyptian. Beautiful, right?

A little digging into the main partners in this venture is in order, surely.

1. EGAS:

The State, of course. The Egyptian Natural Gas Holding company (EGAS) was established in August 2001 by Minister of Petroleum Sameh Fahmy (whose name pops up time and again in the EMG story). It supervises the natural gas industry in Egypt, manages the foreign investments in exploration, production, and the usage of Liquefied Natural Gas tankers”.

In 2000, the Egyptian government decided to allocate one third of the then proven reserves for domestic market requirements for 25 years, the second third for strategic purposes, and the remaining third, plus most gas discoveries from 2001 onward, for export.” Seems that EMG got some of those concessions..

Notice that when we read (like here or there) that “EMG reached an agreement with the Egyptian Government” – EGAS is the mandated government counterpart here.

So EGAS reaches an agreement with a company it is itself a shareholder of. Does that sound like a conflict of interest to you?

I guess we shouldn’t be surprised but can’t help to be a little bit – the 10 % share in EMG appears nowhere on the list of EGAS affiliate companies.

The Egyptian government is a silent partner. Hilarious. Though not unforeseen, given the expected unpopularity of the deal.


The HKS-Group is named after the initials of its founder’s, Hussein Kamal-el-Din Salem (usually just referred to Hussein Salem).

A real-estate development company, it owns a number of hotels, most notably the Jolie Ville hotels franchise it took over in 1997.

HKS defines itself as a “a Private Sector Egyptian investment Group whom (sic) has been active during the last Twenty-Five years in international business linking Egypt to the rest of the world in addition to managing a strong investment portfolio abroad.”

Hotels aside, HKS is no stranger to energy mega-projects.

In 1993, it established the ‘Middle East Oil refinery’ (MIDOR – Remember that name!) but declared it pulled out of project (apparently in 1999?) to, I quote, “concentrate in (sic) other new ventures and projects… on the core business of Hospitality and tourism”.

Yet it still owns the Midor Electricity Company (MIDELEC), which provides electricity to 3 oil refineries in the Alexandria region, chiefly to… MIDOR.
(Which HKS says it pulled out from).

Interestingly enough, MIDELEC is no longer mentioned on the company’s main website – but it seems they may forgotten to remove it from the company profile page on the Jolie Ville website.

This said, MIDELEC has its offices (as does EMG) within the HKS building in Cairo – at 26 Roshdy Street, Cairo. So much for distancing oneself…

MIDOR itself is a fascinating story. And it was most probably the meeting point for many partners of the EMG adventure.

For instance, guess who was made CEO and Vice-chairman of MIDOR in 1997? Sameh Fahmy, who 2 years later became minister of Petroleum, apparently supported by a recommendation of Mr. Hussein Salem to the President.

Briefly thereafter, a spinoff of HKS’ MIDOR was established in 2000, Al-Sharq Gas Co., selling gas to Jordan and Syria via the ‘Arab Gas Pipeline’. Al-Sharq, along with a handful others JVs, was granted particular advantages, namely “the same incentives and profit splits as foreign firms”.
Nice, eh?

And guess what Israeli company was part of the MIDOR joint venture? Merhav. They eventually withdrew – APS Review suggested that Gulf countries wouldn’t supply the refinery, forcing it to buy on the spot market; the Ahram Weekly put forth similar justifications at the time. Other explanations include the more general deteriorating Egypt-Israeli relations with Likud’s accession to power in 2001 – but I’m not too inclined to buy this justification.

Today, MIDOR makes a point of mentioning that 100% of its capital is Egyptian. Not Isra… shhhh!! :)
Its Chairman and CEO is a gentleman named Medhat Youssef Mahmoud; until 2006 though it was still reported that Hussein Salem, who held on to 2% of the shares, held the post.

HKS seems to have botched attempts to distance itself from the MIDOR sour memory, and to pass EMG for something it is not. At some level, their behaviour seems so nonchalant I wonder if they really meant to try to put this distance.

3. And the main Israeli partner, Yosef (Joseph / Josef / Yossi) Maiman?

He’s not this the guy on classmates.com :).
German-born, Peru-raised Maiman is a wealthy and influential Israeli businessman who owns Merhav (since 1972), is President and CEO of business conglomerate Ampal, and is on the board of Israel’s Channel 10. (see here, or here if you like US Government archive documents!). and, random fact of the day, his 2007 compensation was $2,154,563. Not bad!

With business interests around the globe, including several very large energy projects in the Middle East and Central Asia – with so much political influence there it reportedly worries Iran. He was also involved in a messy gas concession debacle off the Gaza coast with British Gas and the Quartet Representative a couple of years ago.

He’s a former intelligence officer (yes, former Mossad, but don’t freak out :), hence the close relationship with Shabtai Shavit, whom he recruited to head EMG’s Israel office.

(Yes. The Israel office of “Egypt’s” EMG is headed by the former Director of the Mossad. Tadaaa!).

Oh, and apparently Maiman is such good buddies with President Shimon Peres, he reportedly hosted his 80th birthday party in uber-posh neighbourhood Herzliya Pituah. Selfless friendship, clearly.

His Egypt connections go via HKS (MIDOR, of course) but also apparently via a longer chain of Maiman –>Shavit –> Omar Suleiman –> Every Egyptian Government big head. This relationship, Haaretz suggests, helped him get the EMG deal.

So there you have it.

The Egypt-Israel gas deal, it turns out, is a barely concealed cesspool of clientelism, personal relationships and private interests, breaches of government procedure, of transparency rules, and of corporate governance.

And we’re wondering why the deal was originally underpriced? I’m surprised we knew anything about it in the first place.

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This is pretty much what i was implying earlier.

With the attention of a great power like the United States, and a regional power like Venezuela, Brazil finds itself in a position of power that gives it several opportunities. Whether or not the Brazilian government headed by President Lula Ignacio da Silva will choose a path of unilateral action and stay completely unaffected by the two interceding powers or cooperate with the two powers vying for its attention is yet to be seen, but it is critical to recognize that Brazil will determine its own actions and that it is a strong enough power to hold all the cards in the current situation.

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Google Tackles Energy

I suppose if anyone’s gonna solve the energy problem, google will.  Power to the problem solver geeks!

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I realize i’ve been posting disproportionately frequently on oil and energy. I would post more on Egypt and the region but my time is quite limited these days.  I feel there’s no point in just posting links without commentary when someone else (the Arabist) already does it far more efficiently and including most of what i would post anyway.

Here‘s someone that claims oil prices are being distorted by fear and financial people speculating.

FP: So what about derivatives trading—

FG: That’s exactly what I’m focusing on. I truly believe that major investment banks and a large number of very high-risk-taking financial players have seized control of the oil markets, especially in the last six months. During that time, oil prices moved in one direction and market fundamentals really moved sideways or even lowered. Demand has slowed down significantly. We have seen all kinds of indications that we are reaching a breaking point here. We’ve seen what happened to gasoline margins on the West Coast; they’ve dropped to an almost 18-year low. All this is an indication that something is wrong with the system, that supply and demand fundamentals do not justify the current price. But if the current price is based on speculation, there is no limit to how high oil prices can go. Basically, as long as there is somebody willing to bid higher, the price of the commodity will move higher. FP: How much of the price of oil right now is really a “risk premium” associated with political turmoil in places like the Middle East, Venezuela, and Nigeria?

FG: Well, it’s very difficult to really quantify it. I wish there were a scale or a yardstick that one can use to do that, but one can deconstruct the $97 oil price and compare it to the $67 oil price only three months ago and see what happened in the world to push oil prices by $30 over a very short period of time. And basically, I can cite a few: The sharp drop in the U.S. dollar because of the Federal Reserve cutting interest rates; increased tension in the Middle East with tough talk by the administration against the Iranians; also, the dispute between the Kurdish rebels and Turkey—all of these things basically gave the financial players additional ammunition, if you will, to push the fear factor to a higher level. I do believe that oil prices are inflated, and significantly. If I were to quantify how much, I would say at least $40.

This is the first time i’ve seen someone claim that demand for oil is decreasing.

To my knowledge, there is no oil shortage. Any willing buyers will not have a problem finding oil. Global inventories are over 4 billion barrels. In simple math, that is the equivalent of all the oil produced in the Middle East for six months.

I always wonder when people will realize when it is and isnt suitable to use absolute or relative values. Saying there is 6 months of ME oil in reserves is meaningless and distorts facts. Stockpiles are actually quite low across the board. I’m believe i’ve previously noted articles that mention how stockpiles have continued to decrease (or, at best, stagnate) over the fall period when they historically increase after the summer peak and before the winter peak demand.

Second, the ME region has recently been topped by Africa as the largest provider of oil to the US. Yes; the ME is a (the?) critical region for oil production (and, I suppose, pricing) in the world. But OPEC as a whole (ie including non-ME producers like Venezuela and Nigeria) produces less than half of the world’s crude. SO, in his simple math logic, the 4 billion barrels are equivalent to, at best, 40% of oil production in the world over 6 months. Or, to calculate differently, 72 days of world production. Doesnt sound so benign.

Anyway, thought i’d document opposing opinion.

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OPEC Summit aside

Apparently an oil company consortium led by Brasilian company Petrobras has announced the conclusion of well tests that indicate the deep water Tupi field to be enormous. When the field comes online (it will require the cutting edge of oil drilling technology), it could place Brazil in league with the other major new world fuel producers (like Venezuela, Canada and the States) and potentially the world. In fact it stands to more than double Brasil’s proven reserves ranking it above Norway.

I’m not the expert but, in addition to the effects on world energy markets, i assume that this would likely result in power realignments in Latin America. This: new oil discoveries (and the technology to access them) is the only thing other than major conservation efforts (or a recession) that can seriously, albeit temporarily, hold down oil prices.

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