The Energy Non Crisis

The Energy Non Crisis

Market Full Of Oil, Price Trend "Fake": Ahmadinejad

June 17, 2008

By REUTERS

ISFAHAN, Iran (Reuters) - The market is full of oil and the rising price trend is "fake and imposed," Iran's president said on Tuesday, partly blaming a weak U.S. dollar which he said was being pushed lower on purpose.

"At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed," President Mahmoud Ahmadinejad said in a televised speech.

"It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims," he said when opening a meeting of the OPEC Fund for International Development in the central Iranian city of Isfahan.

Iran, the world's fourth-largest oil exporter, has repeatedly said the market is well-supplied with crude and blames rising prices on speculation, a weak U.S. currency and geopolitical factors.

"As you know the decrease in the dollar's value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability," Ahmadinejad said.

Oil steadied on Tuesday after touching a record near $140 the previous day, with traders caught between a weaker dollar and expectations that top exporter Saudi Arabia will ramp up output to its highest rate in decades.

Iran has often said it sees no need for the Organization of the Petroleum Exporting Countries (OPEC) to boost output.

"EVER-INCREASING DECREASE"

Ahmadinejad reiterated his view that oil should be sold in a basket of currencies rather than U.S. dollars, an idea which has failed to win over other OPEC members, except Venezuela.

"The ever-increasing decrease in the dollar's value is one of the world's major problems," he said.

"A combination of the world's valid currencies should become a basis for oil transactions or (OPEC) member countries should determine a new currency for oil transactions," he said.

Iran, embroiled in a standoff with the West over its nuclear program, has for more than two years been increasing its sales of oil for currencies other than the dollar, saying the weak U.S. currency is eroding its purchasing power.

Ahmadinejad, who in the past has called the dollar a "worthless piece of paper," suggested "some big powers" were driving it lower on purpose:

"The planners for some big powers are acting to decrease the dollar's value," he said. "For years they imposed inflation and their own economic problems to other nations by injecting the dollar without any support to the global economy."

Foes since Iran's 1979 Islamic revolution, Tehran and Washington are also at odds over Tehran's disputed nuclear activities as well as over policy in Iraq. Iran says its atomic work is peaceful.

(Additional reporting by Zahra Hosseinian in Tehran; Writing by Fredrik Dahl; Editing by William Hardy)

The collapse of the United States is accelerating: Oil in Euros vs. US

In the last eight years implementing the plans for the Project for the New American Century (PNAC) designed "to promote American global leadership" has backfired.

To accomplish PNAC's goals, all threats needed to be eliminated. From the onset, the United Sates earmarked two countries as mortal enemies: Venezuela and Iran. With Venezuela, it is well documented that the CIA attempted to overthrow the democratically elected government of Chavez. And with Iran, the United States continues to use it as a scapegoat for its failures in Iraq. These cold war tactics however are proving to be US's undoing.

The United States is hemorrhaging from every orifice, and oil prices can be used to measure the rapidity of its demise.

In April 2006, Venezuelan president Hugo Chávez launched "a bid to transform the global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel." At the time, this proposed price was $15 a barrel below global market levels, and what must surely seems to be a steal at the current $118 a barrel.

How critical was the decision not to take Chavez's proposal seriously? Just two short years later, in April 2008, President Mahmoud Ahmadinejad of Iran is stating that oil at current levels is too cheap. That's calling a 136% increase in price not enough, and most analysis and the market seem to agree. So what has changed in that time? The perceived value of the US dollar of course.

In 1999 the euro was introduced as an accounting currency (travelers' checks, electronic transfers, banking, etc.) and then launched as physical coins and banknotes on 1 January 2002. The euro replaced the former European Currency Unit (ECU) at a ratio of 1:1. However its value quickly began to drop, reaching a low of 0.8252 relative to the US dollar on 26 October 2000. This proved to be a solid support level for the next two years, and in 2002 the euro began its appreciation reaching a high of 1.60 as of 23 April 2008.

Aside from consolidating power for the new European Union, the euro added liquidity and flexibility to the financial markets which in time has made the euro a very attractive and safe investment as a major global reserve currency.

As of the beginning of 2007, within five short years, euro notes in circulation have exceeded the value of circulating US dollar notes. Considering that the dollar has been devalued by approximately 50% since reaching its high relative to the euro in 2000 (the euro has gained approximately 100%), we can only assume that according to global markets, the US dollar is losing its perceived value.

Price of oil in US dollars and euros

Oil prices had a recent low point in January 1999 at $8 per barrel, after "increased oil production from Iraq coincided with the Asian financial crisis, which reduced demand. The prices then rapidly increased, more than tripling by September 2000 (35 dollars per barrel), then fell until the end of 2001 before steadily increasing."

1999 is the same year that the euro was introduced as an accounting currency. By the time that the euro was launched as physical coins and banknotes in January 2002, oil was trading at approximately $20 a barrel, and at present, on 23 April 2008, oil is trading at $118 a barrel.

Let's compare the rise in the price of oil relative to the two currencies.

If we take Autumn of 2000 as our base point when the euro was trading at its low of 0.8252 relative to the US dollar and oil was trading at $35 dollars per barrel, we get the following results: The increase in price of oil in euros has been 74% since 2000, while it has been a 237% increase in US dollars.

Now let's take a look at what the increase in price of oil in euros and US dollars has been since April 2006 when Hugo Chávez wanted to lock the price at $50 per barrel. (Note: in April 2006 the euro was trading at approximately 1.22 relative to the US dollar).

Taking into account that the euro had a dramatic increase in value from 2002 to 2005, and then began a retraction period through to 2006, the above numbers confirm what Ahmadinejad has been stating, that "the dollar is not money any longer but a handful of paper distributed in the world without commodity support," and that oil is undervalued at present levels when priced in US petrodollars.

Several Reasons Why it isn't about Oil

By Curt Maynard

The war in Iraq, and America’s so-called Imperialistic ventures in the Mid East have nothing to do with oil.

How do you know that you might be asking?

Without delving into some very credible “conspiracy theories,” which tend to cause the eyes of “enlightened” Americans to glaze over in their own unique self-righteous stupor, let me relate some facts below, that should, assuming the reader has the ability to think properly as my friend in Rome Alfio Faro, likes to say, convince even the skeptic that Bush’s recent forays into the Middle East have nothing to do with the monopolization of oil reserves. I won’t leave the reader hanging, after relating these facts I’ll spell out in one word exactly why Bush is occupying Iraq and Afghanistan and why he intends to attack Iran and Syria as well.[1]

The Third World nation of South Africa produces a barrel of oil from coal for under $35.00 a barrel.[2] The United States of America has some of the largest coal reserves in the world.[3] These coal reserves are of a far higher quality than that used by South Africa, the sulfur content is much less, and thus, American coal can be converted to oil cheaper than can South African coal.

You may have heard about Canada’s Oil Sands, but what you may not have heard is that within these sands Canada harbors nearly as much oil as Saudi Arabia.[4] Granted, it costs much more money to extract this oil from the sand than it does for Saudi Arabia to open its spigots, but at current oil prices, $76.00 a barrel, it is both feasible and profitable to begin mass production.[5]

What the reader, especially the American reader, is almost certainly unaware of is that the United States of America has even more oil than Saudi Arabia or Canada locked away in strata of shale under the Rocky Mountains.[6] Costs to extract this oil are considerably higher than extracting it from sand, but bear in mind, at current prices, it too can be extracted profitably with technology that already exists. Not to mention the fact that its extraction, assuming that illegal aliens aren’t invited en masse to fill openings, will create hundreds of thousands of jobs for Americans, not service related jobs, but real employment with real salaries and benefits.

Methane Hydrate – methane hydrate is essentially frozen methane gas. Methane gas burns cleaner than any other energy source known, if combustion is complete; there is no appreciable pollutant created from its use. In any case, methane hydrate exists in reserves so large that they dwarf all of the oil and coal reserves combined, the world over, from the dawn of time; it lies under the oceans and has already been extracted by the industrious Japanese. Its extraction at present is too costly to be profitable, but like anything else, costs decline over time and/or as the result of new technology.[7]

If the United States government were truly interested in marshaling oil sources around the world, would it not be doing everything within its power to mollify relations with the countries that possess the oil? Instead Bush is doing everything he can to alienate the populations of oil producing nations, and doesn’t seem to be in the least bit concerned about the consequences of such foreign policy folly.


Above I promised that after relating some facts I’d spell out in one word exactly why Bush is occupying Iraq and Afghanistan and why he intends to attack Iran and Syria as well. Dear reader, the reason in one word is “Israel.” Why Bush pursues his insane adventures in the Mid East for the Zionist state is not exactly known, some think he is a Christian fundamentalist, with a “dual covenant” eschatological outlook, this writer seriously doubts this premise, Bush’s words may exemplify Christian value and virtue, but his actual behavior demonstrably prove that his words are empty and are meant only to maintain a relatively powerful base, that of the Christian voting block.[8]

There are others that believe Bush may be compromised in some way and may be under the influence of those blackmailing him; those who would and could reveal to the world some dark secret hiding in the closet of the Commander and Chief. I suppose it’s possible, I personally don’t believe that former President Clinton just happened to meet up with a young Jewess named Monica Lewinsky, who just happened to save a sample of the President’s sperm discharged on her dress after administering fellatio. Call me a conspiracy theorist if you like, but I’ll bet it wasn’t a happy accident.