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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: sunshadow who wrote (33613)	9/26/2000 4:47:05 AM
From: IQBAL LATIF	Respond to of 50167

<<OPEC Secretary-General Rilwanu Lukman cautioned industrialized nations on Sunday against following the U.S. lead in releasing strategic oil reserves to counter high prices.>> In my opinion OPEC is seriously divided on this issue, the camp led by Venezuelans and Iraqis have quite a different agendas from the swing producer Saudi. This is a statement that I will take with a pinch of salt. High prices will hurt the Arab 'OPEC' constituents far more than anyone else. With single entity dependent these countries are worried about the spectacle created in Europe by shortages. Crown Price Abdullah yesterday in a news item published here in a daily Kuwaiti newspaper calls for saner heads to coolly think the real threat of alternate energy sources. These can lead within 10-15 years for 26% of the global Saudi reserves of 260 billion barrel of oil to be permanently forced to sell at far lower prices if present oil prices are kept above 30$’s. I think that Arabs would lose the advantage of time if alternate energy resources take hold. For single entity dependent economy it is important that they should try to extend this 'era of affluence' by selling this oil as much as possible at best possible time over extended period of 25 to 50 years until their economies are multiple industry and commodity dependent. OPEC Secretary General statement can be dismissed as belligerent hyperbole and I think that is more representative of OPEC President Ali Rodriguez and his Socialist master Chavez outlook, Caracas head of state meeting in my opinion would not leave this opinion to survive. fwiw <<``Those who hold reserves should be careful when they use them so they can be there for real emergencies,'' >> US economy cannot be left hostage to agenda of Iraq and Venezuela. In my opinion the timing of Clinton release are perfect, a country who has a impeccable record of economic development could not have timed its release of reserves better. Real emergencies like war and closure of strait of Hormuz or a coup in Saudis where a belligerent anti- west government takes over are cases of national emergencies where until situation is resolved even rationing can be carried out. The reserves were created post 1973 amidst cold war with real threat from USSR to close the strait of Hormuz through Balauchistan by reaching the warm waters of Gulf the dream of Peter the Great. These threats today are all but eliminated, in 1973 Us had no advance contingent in Gulf the nearest base was in Indian Ocean Diego Garcia today 5000 soldiers sit in Kuwait and another 5000 in Saudi paid by the Gulf governments. If the threat subsides so should be the reason of reserves and the possibility when to use them. In 1973 I would not have written the same thing so vehemently. Strategic implications have changed altogether, we don't have a USSR threatening the narrow strait of Hormuz. We don't have an extremist Iran the revolution of Iran has buckled to the need to $'s for their own survival, the Azadi Chowk in Teheran and in front of Iran Central Bank $ is sold on top of voices to the highest bidder. The great satan's ' In God we trust' green back has far more attraction to the bearded mulla than the ritual Friday sermon where God is praised at the top the voices. Even Googoosh is now singing in LA, these are the change realities from 1973, hence in these changes circumstances US reserves of 560 million should be used as a carrot and a stick in face of rising oil prices. Like Hong Kong monetary authorities intervention in Hong Kong stock market that broke the back of the speculators sometime a dose a nation will does put these speculators in place. In those days WSJ and all the conservative press was against this idea of intervention by Tsong, this small little thread supported it and from that day onward once huge positions nearly 30000 contract expired worthless George Sorros or Julian Roberts never talked with the same arrogance. Every strategic action or reserve has a ultimate time frame in my opinion this release served its purpose and it should be continuously done until the speculators get the message. The refining short fall is a problem but the releases from the reserves will help understand the markets that US cannot remain a silent bystander when its national economic security interests are threatened by few speculators. For me in peacetime the soft landing of the US national economy from its super charged red hot stage is the real issue. The affluence of the US populace and global economic development has a lot of interest in non-inflationary US growth, this 'oil' wayward prices threatens the very core of this transition based on higher productivity and lesser dependence on commodities. Reserve supplies which were heavily boasted at 12-14$ from 423 million to 560 millions, should be sold, if as individuals can take our profits from our fattened stocks I don't see why Uncle Sam under new strategic and global environment cannot book some profits. Why should profits be bad or anemic for US and what kind of emergencies these guys want when these releases have to made? Yesterday a senior Kuwait expert told me Iqbal at 30$’s Khazakh oil is profitable we will make every effort for the central Asian oil to be out of the markets. That alone has a potential of a new Saudi supply hitting the market, these guys wanted business. They know that fusion, gas-based reserves and technologies, solar power, and Cambridge research on oil is just a matter of time. I think with the advancement in mhz and processing we are seeing exponential growth in global research parameters. Oil rich Kuwait and Saudi time frame is not as short as traders on the commodity exchanges. Nations are facing a threat of all this oil remaining inside the ground if prices rise too much. They can short term be rich but in long term these economies want a sustained income source and for them the important thing is not to kill the golden goose that lays a golden egg. The oil prices will have to settle between 20-25$ and that is the only way that Arab part of OPEC can extend the era of affluence to next 25 years if everything else goes well. Venezuelans and Iraqi political objectives and agendas are different, for the former it is quick wealth leading to development of other sectors of economy for the later being a spoiler will help him escape sanctions. Iraq knows it well that if Oil hits 40 plus, Europe will break rank with the US for sanctions and free Iraq from the follies of Saddam. So here also the Kuwaitis and Saudis know the game perfectly well, the game is big, the picks are rich and we are not letting it off our radar’s on this thread. No where else you will find this explained like the way I have done it above. It is a combination of hard politics, changed security environment. Most important nations who survive in this age does not adhere to the same mantra they need to keep changing, as a strategist my job here to bring you a picture of sanity and clarity from purely an objective perspective. Of course we have been wrong and shall be wrong as we are guardians of truth but our analysis brings a breath of fresh air to what has become a very boring subject. I have just tackled the first two sentences of his statement and if I continue that would take me another thousand of words however the fact remains I am for the release of the reserves and hopefully also call upon the OPEC to release enough oil so as to balance the price around 25$. One last word the fact remains that US needs to reduce its usage of energy with the 5% of global population and 40% of the energy usage, US has to think of equity in terms of emissions. If global populations are suffering from green house effect and if it is true that we are seeing a pattern of weather changes, we might need to compromise on the luxury of 5 cars each family and gas guzzlers. This is as a separate issue but conservation of energy would be in long term benefit for US populace and they should do it for the sake of equity. Next time you sit in your car try to save a liter by driving at 65kph.