Tag Archives: gas

The Clash of the Titans—How Greece became the target of an epic energy struggle

By Haneul Na’avi

Greek-EU relations parallel the epic battle of Hesiod’s Theogony, in which Kronos (Saturn/ restriction) overthrows his father Uranus (innovation) to become ruler of the Cosmos, and then devours his five children save for Zeus (Jupiter/ expansion) to prevent their future uprising.

Similarly, the trade bloc has done the same by devouring Spain, Italy, Cyprus, Portugal, and Greece in order to cement dominion over Europe, using the global financial crisis as an impetus.

1. “[…] the son from his ambush stretched forth his left hand and […] swiftly lopped off his own father’s members…”

Greek Prime Minister Alexis Tsipras’ struggle with the bureaucratic Cerberus known as the European Troika—the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF)—failed after he betrayed former Finance Minister Yanis Varoufakis, who sought radical fiscal options to rescue Greece’s economy.

Tsipras later signed the 2015 Supplemental Memorandum of Understanding, which claimed to “tackle tax evasion, fraud and strategic defaulters”, but in reality, shackles the country to another immovable €85 billion bailout and imposes a neoliberal, graduated privatisation scheme.

Unsurprisingly, Goldman Sachs CEO Lloyd Blankfein was the architect of Greece’s calamity, where in 2001 he feloniously hid Greece’s debts using complex credit default swaps in order to meet Eurozone requirements set by the Maastricht Treaty, but the spell did not last long.

“After the 9/11 attacks, bond yields plunged, resulting in a big loss for Greece because of the formula Goldman had used to compute the country’s debt repayments under the swap. By 2005, Greece owed almost double what it had put into the deal, pushing its off-the-books debt from 2.8 billion euros to 5.1 billion,” Salon reports.

“[…] as interest rates plunged and the swaps turned out to cost far more, Goldman and the other banks refused to let the municipalities refinance without paying hefty fees to terminate the deals.”

Since then, Hellenic ministers have desperately sought options to revitalise its economy whilst battling austerity, but even rational measures to save it have come under fire from Brussels.

In 2008, Greek ministers tried to bail out its national industry Hellenic Shipyards before selling it to a German enterprise, which was later declared an “illegal move under Brussels law”.

EU technocrats imposed “a six million euro upfront penalty on Greece’s cash-strapped government, to be followed by a daily levy of 34,974 euros,” the Express highlighted.

“[…] Greece will be required to pay 34,974 euros to Brussels every day until it has recouped all of the 250 million euros it used to bail out Hellenic Shipyards”.

The country continues to battles a Hydra of problems, and despite slow gains, very few options remain within the EU framework. Fortunately, it is not alone and there is still hope. Continue reading The Clash of the Titans—How Greece became the target of an epic energy struggle

EPA Wood-Stove Proposal Prompts Rural Backlash

Sunday, 23 Feb 2014 03:49 PM

By Newsmax Wires

A federal proposal to clean up the smoke wafting from wood-burning stoves has sparked a backlash from some rural residents, lawmakers and manufacturers who fear it could close the damper on one of the oldest ways of warming homes on cold winter days.

Proposed regulations from the U.S. Environmental Protection Agency would significantly reduce the amount of particle pollution allowed from the smokestacks of new residential wood-powered heaters.

Wood-burning stoves are a staple in rural homes in many states, a cheap heating source for low-income residents and others wanting to lessen their reliance on gas or electric furnaces. Outdoor models often cost several thousand dollars, but indoor stoves can cost as little as a few hundred dollars and sometimes double as fashionable centerpieces in homes.

Some manufacturers contend the EPA’s proposed standards are so stringent that the higher production costs would either force them out of business or raise prices so high that many consumers could no longer afford their products.

“There’s not a stove in the United States that can pass the test right now — this is the death knoll of any wood burning,” Reg Kelly, the founder of Earth Outdoor Furnaces in Mountain Grove, told Missouri lawmakers during a recent hearing.

More than three dozen Missouri lawmakers have co-sponsored a bill that would symbolically fight back against the EPA by declaring that “All Missourians have a right to heat their homes and businesses using wood-burning furnaces, stoves, fireplaces and heaters.”

Read more here!

Saudi Arabia And China Team Up To Build A Gigantic New Oil Refinery – Is This The Beginning Of The End For The Petrodollar?

The largest oil exporter in the Middle East has teamed up with the second largest consumer of oil in the world (China) to build a gigantic new oil refinery and the mainstream media in the United States has barely even noticed it.  This mammoth new refinery is scheduled to be fully operational in the Red Sea port city of Yanbu by 2014.  Over the past several years, China has sought to aggressively expand trade with Saudi Arabia, and China now actually imports more oil from Saudi Arabia than the United States does.  In February, China imported 1.39 million barrels of oil per day from Saudi Arabia.  That was 39 percent higher than last February.  So why is this important?  Well, back in 1973 the United States and Saudi Arabia agreed that all oil sold by Saudi Arabia would be denominated in U.S. dollars.  This petrodollar system was adopted by almost the entire world and it has had great benefits for the U.S. economy.  But if China becomes Saudi Arabia’s most important trading partner, then why should Saudi Arabia continue to only sell oil in U.S. dollars?  And if the petrodollar system collapses, what is that going to mean for the U.S. economy?

Those are very important questions, and they will be addressed later on in this article.  First of all, let’s take a closer look at the agreement reached between Saudi Arabia and China recently.

The following is how the deal was described in a recent China Daily article….

In what Riyadh calls “the largest expansion by any oil company in the world”, Sinopec’s deal on Saturday with Saudi oil giant Aramco will allow a major oil refinery to become operational in the Red Sea port of Yanbu by 2014.

The $8.5 billion joint venture, which covers an area of about 5.2 million square meters, is already under construction. It will process 400,000 barrels of heavy crude oil per day. Aramco will hold a 62.5 percent stake in the plant while Sinopec will own the remaining 37.5 percent.

At a time when the U.S. is actually losing refining capacity, this is a stunning development.

Yet the U.S. press has been largely silent about this.

Very curious.

But China is not just doing deals with Saudi Arabia.  China has also been striking deals with several other important oil producing nations.  The following comes from a recent article by Gregg Laskoski….

China’s investment in oil infrastructure and refining capacity is unparalleled. And more importantly, it executes a consistent strategy of developing world-class refining facilities in partnership with OPEC suppliers. Such relationships mean economic leverage that could soon subordinate U.S. relations with the same countries.

Egypt is building its largest refinery ever with investment from China.

Shortly after the partnership with Egypt was announced, China signed a $23 billion agreement with Nigeria to construct three gasoline refineries and a fuel complex in Nigeria.

Essentially, China is running circles around the United States when it comes to locking up strategic oil supplies worldwide.

And all of these developments could have tremendous implications for the future of the petrodollar system.

If you are not familiar with the petrodollar system, it really is not that complicated.  Basically, almost all of the oil in the world is traded in U.S. dollars.  The origin of the petrodollar system was detailed in a recent article by Jerry Robinson….

In 1973, a deal was struck between Saudi Arabia and the United States in which every barrel of oil purchased from the Saudis would be denominated in U.S. dollars. Under this new arrangement, any country that sought to purchase oil from Saudi Arabia would be required to first exchange their own national currency for U.S. dollars. In exchange for Saudi Arabia’s willingness to denominate their oil sales exclusively in U.S. dollars, the United States offered weapons and protection of their oil fields from neighboring nations, including Israel.

By 1975, all of the OPEC nations had agreed to price their own oil supplies exclusively in U.S. dollars in exchange for weapons and military protection. 

This petrodollar system, or more simply known as an “oil for dollars” system, created an immediate artificial demand for U.S. dollars around the globe. And of course, as global oil demand increased, so did the demand for U.S. dollars.

Once you understand the petrodollar system, it becomes much easier to understand why our politicians treat Saudi leaders with kid gloves.  The U.S. government does not want to see anything happen that would jeopardize the status quo.

A recent article by Marin Katusa described some more of the benefits that the petrodollar system has had for the U.S. economy….

The “petrodollar” system was a brilliant political and economic move. It forced the world’s oil money to flow through the US Federal Reserve, creating ever-growing international demand for both US dollars and US debt, while essentially letting the US pretty much own the world’s oil for free, since oil’s value is denominated in a currency that America controls and prints. The petrodollar system spread beyond oil: the majority of international trade is done in US dollars. That means that from Russia to China, Brazil to South Korea, every country aims to maximize the US-dollar surplus garnered from its export trade to buy oil.

The US has reaped many rewards. As oil usage increased in the 1980s, demand for the US dollar rose with it, lifting the US economy to new heights. But even without economic success at home the US dollar would have soared, because the petrodollar system created consistent international demand for US dollars, which in turn gained in value. A strong US dollar allowed Americans to buy imported goods at a massive discount – the petrodollar system essentially creating a subsidy for US consumers at the expense of the rest of the world. Here, finally, the US hit on a downside: The availability of cheap imports hit the US manufacturing industry hard, and the disappearance of manufacturing jobs remains one of the biggest challenges in resurrecting the US economy today.

So what happens if the petrodollar system collapses?

Well, for one thing the value of the U.S. dollar would plummet big time.

U.S. consumers would suddenly find that all of those “cheap imported goods” would rise in price dramatically as would the price of gasoline.

If you think the price of gas is high now, you just wait until the petrodollar system collapses.

In addition, there would be much less of a demand for U.S. government debt since countries would not have so many excess U.S. dollars lying around.

So needless to say, the U.S. government really needs the petrodollar system to continue.

But in the end, it is Saudi Arabia that is holding the cards.

If Saudi Arabia chooses to sell oil in a currency other than the U.S. dollar, most of the rest of the oil producing countries in the Middle East would surely do the same rather quickly.

And we have already seen countries in other parts of the world start to move away from using the U.S. dollar in global trade.

For example, Russia and China have agreed to now use their own national currencies when trading with each otherrather than the U.S. dollar.

That got virtually no attention in the U.S. media, but it really was a big deal when it was announced.

A recent article by Graham Summers summarized some of the other moves away from the U.S. dollar in international trade that we have seen recently….

Indeed, officials from China, India, Brazil, Russia, and South Africa (the latest addition to the BRIC acronym, now to be called BRICS) recently met in southern China to discuss expanding the use of their own currencies in foreign trade (yet another move away from the US Dollar).

To recap:

  • China and Russia have removed the US Dollar from their trade
  • China is rushing its trade agreement with Brazil
  • China, Russia, Brazil, India, and now South Africa are moving to trade more in their own currencies (not the US Dollar)
  • Saudi Arabia is moving to formalize trade with China and Russia
  • Singapore is moving to trade yuan

The trend here is obvious. The US Dollar’s reign as the world’s reserve currency is ending. The process will take time to unfold. But the Dollar will be finished as reserve currency within the next five years.

Yes, the days of the U.S. dollar being the primary reserve currency of the world are definitely numbered.

It will not happen overnight, but as the U.S. economy continues to get weaker it is inevitable that the rest of the world will continue to question why the U.S. dollar should automatically have such a dominant position in international trade.

Over the next few years, keep a close eye on Saudi Arabia.

When Saudi Arabia announces a move away from the petrodollar system, that will be a major trigger event for the global financial system and it will be a really, really bad sign for the U.S. economy.

The level of prosperity that we are enjoying today would not be possible without the petrodollar system.  Once the petrodollar system collapses, a lot of our underlying economic vulnerabilities will be exposed and it will not be pretty.

Tough times are on the horizon.  It is imperative that we all get informed and that we all get prepared.