mike watkins dot ca : August 2005 Archives

August 2005 Archives

8 entries filed this month:

August 26 2005

Softwood, not soft-skinned

Taking a detour from holidays, noted recent Wilkins comments on softwood:

[US Ambassador] Wilkins called on Canada to resume negotiations rather than trade litigation to settle the softwood dispute, which has escalated following Washington’s announcement that it would ignore a NAFTA ruling in Canada’s favour.

“Emotional press conferences are not going to settle the issue,” Wilkins told the Citizen editors. “Canada needs to come back to the table. We need to close the door, roll up our sleeves and negotiate as need be, with good faith, and bring finality to it.” (Canadian Press)

As a Conservative I shouldn’t be praising Industry Minister David Emerson (Vancouver-Kingsway, my riding) but I will – he’s absolutely spot on:

Industry Minister David Emerson said David Wilkins’ comments, are hypocritical because they suggest Canada hasn’t been serious about negotiating. The minister said Canadians may need to start gearing up for a trade war with the United States.

“Candidly, Canadians have to decide as a small trading economy, are we going to stand together?” Emerson said at the start of a federal cabinet meeting in Winnipeg.

“Are we going to be stronger than the sum of our parts or are we going to be endlessly bickering amongst ourselves and allowing the bully to basically mop the floor with us?”

I’m pleased Emerson was elected over our candidate, a comment I say with no disrespect but the industry can use someone like Emerson – a former lumberman himself – at this time, and in my view politics is about serving the needs of the country, not about kowtowing to partisan expectations.

(and truth be told, Emerson was the best candidate of the slate, and the only one to answer a question I posed to an all candidates meeting, about the illegal drug problems in the riding, to my satisfaction)

August 24 2005

Pat Loves All Men... not.

Watch yer back, Hugo Chavez:

He has destroyed the Venezuelan economy, and he’s going to make that a launching pad for communist infiltration and Muslim extremism all over the continent. I don’t know about this doctrine of assassination, but if he thinks we’re trying to assassinate him, I think we really ought to go ahead and do it. It’s a whole lot cheaper than starting a war, and I don’t think any oil shipments will stop. But this man is a terrific danger, and this is in our sphere of influence, so we can’t let this happen.—Pat Robertson on his 700 Club television show, Monday August 22

Meanwhile, Venezuela presses forward with its Petrocaribe plan, and signs up Jamaica with a preferentially priced oil supply deal. That’s 22,000 bbl/day which won’t be available in the future to the US, and while its not much out of the 3.1 M bbl/day output of the country, expect the rhetoric to increase as more deals are done.

August 09 2005

Simmons Interview

Author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, Matthew Simons, is featured in this one-hour interview (mp3 format). For Real Player, Windows Media and other formats visit Financial Sense Online.

August 07 2005

Irony

I came across a story in Canada's National Post entitled Suicide bomber detonates empty fuel tanker near police station in Tikrit, and there located just under an accompanying photo of a man mourning a family member killed in the attack, was an advert for the civilian Hummer, which I consider a rolling billboard of our excesses and dependence on oil.

Neither the Post nor advertisers using Akamai's network likely intended the display of the story and these two images side by side, but I thought it made for unintended, if sad, irony.

It is difficult to see any near term hope for positive change. The US Energy Bill, recently passed, completely misses the mark. The one area where the US could easily and quickly make a difference in the international energy scene is to focus on reducing demand. Since 60% of all US imported oil goes to transportation, taking steps in this area would have a positive long-term impact.

Unfortunately the energy bill tackles no tough problems, panders to agricultural lobbies and calls on no one to make sacrifices.

Venezuela - Next Conflict Area?

Is Venezuelan leader Hugo Chavez the next target for an oil hungry US administration?

U.S. Official Says Venezuela Destabilizing Neighbors “The administration has found mounting evidence that Venezuela is actively using its oil wealth to destabilize its democratic neighbors in the Americas by funding anti-democratic groups in Bolivia, Ecuador and elsewhere,’’ Matthew Reynolds, the State Department’s acting assistant secretary for legislative affairs, stated in a letter to a congresswoman.

Reynolds’s comments were in a letter July 27 to Representative Ileana Ros-Lehtinen, a Florida Republican on the House International Relations Committee. Reynolds was responding to a letter Ros-Lehtinen sent to President George W. Bush asking him to pay attention to “the troubling axis’’ between Chavez and Cuba’s Fidel Castro, Chavez’s support “for Colombian terrorist organizations,’’ and Venezuelan arms’ purchases.

These comments from US lawmakers and bureaucrats have a deja vu ring to them. Will we be looking at Contra II in Venezuela in years to come? Iraq II?

Its certainly true that Chavez is trying to use his country’s resource wealth to gain influence in the region. Currently Venezuela is a major exporter of oil to the US; but the US doesn’t like Venezuela’s president much. That Chavez is shopping around for other customers for a product which the entire world wants should not surprise us at all.

In fact in a globalized-world where the free-market reigns, we should expect Chavez to seek diversification.

Yet in the light of a world potentially facing “peak oil”, this picture takes on a different hue. There are many net-importers of oil in the region Venezeula is geographically near. A number of these nations are already suffering due to the lack of less-expensive energy, so just imagine how much influence a major producer like Venezuela could have on the region when peak oil becomes an apparent reality…

An agreement between Venezuela and Caribbean countries, dubbed Petrocaribe, has been in the works for over a year and was ratified this past July.

Even among countries that did not sign on, such Trinidad and Tobago, there are voices within who are supportive of the development:

It is not simply about Venezuela increasing its influence in the region. As far as I am concerned the region could do with a bit more of Chavez-type thinking as an influence. It is a matter of whether increased Venezuelan influence can benefit us as a whole region. (Trinidad and Tobago News)

That nation’s prime minister, Patrick Manning, is not supportive of the Petrocaribe agreement. Energy politics may be playing a reverse role here – Trinidad and Tobago are the largest exporters of Liquified Natural Gas to the US bar none. With Natural Gas use in the US expected to far outstrip domestic production, LNG imports figure prominently in the US energy future.

In a world now dealing with a tight energy supply-demand balance, one that is will as a matter of course get tigher still provided world economic growth continues to head higher, it seems inevitable that the next world-shaking conflict will flare up over oil supplies.

Its a chicken and egg problem of global proportions – staving off the peak requires investment world wide; yet political instability is not condusive to the massive multi-year / multi-decade investments required to bring on major new fields or even bring significant upgrades to existing fields and production facilities.

Oil Habits Die Hard

Juan Cole over at Informed Comment takes on the Iraq is all about oil theme from a different perspective and hits the nail on the head – bad policy, an illegal war, and a complete clusterf??k since the war begain, have contributed to increasing the US – and the world’s – dependence on Saudi Arabian oil.

Aside from oil shut in due to political instability in regions such as Iraq, Saudi Arabia remains the sole swing producer that can quickly open the taps.

Unfortunately for oil product consumers everywhere, the incremental oil available is not the light sweet crude that most refiners want to see, so even more barrels per day is not a guarantee of lower or even stable prices.

Also the overall mix of of OPEC originated oil is getting heavier and more sour:

June 15: At present the API gravity for the new Basket is heavier, at 32.7º compared to 34.6 º for the previous basket of seven crudes. In addition, the sulphur content of the new Reference Basket is more sour at 1.77%, compared to the previous basket of 1.44%. (OPEC)

Iraq has significant oil reserves and could be a swing producer at least in the short term, if only it were stable. The sad reality is this: if Saddam Hussein were still there, world oil prices would be lower today, perhaps by as much as 30 – 50% lower. Why? Supply and demand count for more than any implied terror premium that may exist.

Pre-war, Iraq – even under UN sanctions – was exporting more oil on a more reliable basis and was increasing production steadily after 1996 to a high near 2.6M bbl/d, the highest level since Gulf War I when Hussein attacked Kuwait.

Now, Iraq now imports gasoline thanks to the war on terrah, where before it was self sufficient. Iraq exports less oil now than it did before sanctions, down to approximately 1.6M bbl/d at present. Its a volatile situation with attacks on oil pipelines and facilities being routine there.

To put this in context, for a world which is already running on the knife edge of supply and demand, taking more than 1 percent of world production off-line indefinitely is why we have $60+ oil today.

Today the Bush administration can’t even be certain that its investment in Iraq, likely to topple over 1 trillion dollars by the end of the decade, will ever be recouped. Some Iraqi oil fields apparantly were managed very badly, perhaps permanently damaging their long-term viability. Iraq may not be able to ever regain its peak oil production of 3M bbl/day.

Its easy to make a case for increased reliance on Saudi oil, when the protagonists tell you its true. Today, noted an article in the NY Times via the International Herald Tribune:

Thaw reflects reality: U.S. relies on Saudi oil August 6 2005: “There has been a realization in Washington that we need the Saudis,” said Jean-François Seznec, a professor at Columbia University’s Middle East Institute.

“The tone has improved tremendously,” he said. “We cannot be enemies with everybody. We need their oil desperately.”

“The Saudis are in a great position today,” he added. “They can play the United States against other buyers, like China. And why wouldn’t they?”

Indeed.

August 06 2005

Python Unicode HOWTO

AMK has put out a first draft of a Unicode HOWTO and is looking for comments.

Other Unicode Resources

Unicode Discussions of Late

August 04 2005

Matthew Simons Takes Questions

Saudi Oil and the World Economy

Matthew Simmons, author of “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,” participated today in an on-line discussion hosted by the Washington Post. Its worthwhile spending the time reading the questions and comments.