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SATURDAY, JULY 5, 2008 (6:54 AM)

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On The Brink Of It All Going Down The Sink

As I was contemplating the eventual strike Israel will inevitably have to launch against Iran, I recalled the following entry from my blog almost two years ago. While Iran having nuclear weapons presents an untenable situation, it will not be without dramatically high economic costs to the world. Given recent predictions for the price of gasoline for the next year peaking to $7.00 per gallon, imagine if supplies are disrupted from the Persian Gulf from war, and the truly cataclysmic consequences for the world as a whole. We may thank our Presidents Carter, Reagon, Bush I, Clinton, Bush II for complete and utter abysmal failure at recognizing the geo-political consequences for Carbon based fuel reliances...and the potential for calamity for life as we've come to know it with NO practical universal alternatives for the forseeable future. Whilst thanking, remember to thank the three "dessert religions" for centuries upon centuries of needless, senseless unending war, all in the name of "their" God, who hasn't gone the way of the worship for the Sun, Moon, and Greek/Roman Gods soon enough.

Aug 5 2006, 12:42 PM
On The Brink Of It All Going Down The Sink

One word, one concept, one life blood for modern civilization: Oil. Without it, nations court certain calamity and slide closer to barbaric savage prehistoric times-the spawning origins and era of this “Black Gold” (“Texas Tea”-sorr
y, couldn’t resist). Our entire way of life is predicated upon the simple notion, without energy a society is without life-certainly as we’ve come to know it.

So let’s review: Has anything lately been occurring, say overseas, maybe in the Middle East that might impact upon both the price and availability of petroleum crude oil? Why yes, and perhaps the most recent flair up between Muslin Extremist Fascists and the nation of Israel might be a good place to consider. At war’s outbreak, the price of a barrel of crude hovering near 80 buckaroos a barrel, sending the stock markets into wild flurries of fluctuation and disquietude. While any reasonable thinking person-rooted in reality, might easily pull for the decimation and complete abject destruction of the Iranian-Syrian sponsored terrorists, Hezbollah, there may very well be a heavy priced to be paid for the necessary elimination of the savage vermin.

Anyone living in the Seventies, remembers the “stagflation” coupled with eventual catastrophically exorbitant high interest rates and the effect they had on the quality of life during most of said era. While numerous causes accounted for this, the catalyst most responsible was both oil crisis/embargos occurring respectively in 1974 and 1979. Prices shot through the roof (several), long gas lines, but the greatest damage was the escalating, spiraling inflation! This rampant and aberrant “inflation” belied the normally accepted economic rules known at the time (Inflation would offset unemployment-unemployment offsets inflation), and as prices rose, goods and services applicable demand fell, while unemployment rose as well. Consider the following table:

Year Inflation Unemployment

1974 11.0 5.6 < First oil crisis
1975 9.1 8.5
1976 5.8 7.7
1977 6.5 7.1
1978 7.6 6.1
1979 11.3 5.9 < Second oil crisis
1980 13.5 7.2
1981 10.3 7.6
1982 6.2 9.7
1983 3.2 9.6
1984 4.3 7.5

The devastating effects from just this one commodity’s diminished supply, clearly demonstrates how addictive and reliant we’ve, as a nation have become. The economic zeitgeist, of the day, viewed oil as an elastic demand item. As prices rose, demand would fall as the populace would seek out other alternatives. Yeah right! Oil is in fact, INELASTIC and our fervor as a nation to acquire it suggests one simple tourniquet, a dark dirty room, and a syringe heading for a mainline. Yet things are much more unstable and are much more volatile in today’s world. The adage: “everything affects everything” reigns as the supreme truth when discussing oil. While the future remains as yet unknown for the current Middle East’s malaise, and it would take literally volumes to provide a fair and reasonable understanding for the dynamics involved, suffice it to say, if this war escalates as it might very well do, “Katy bar the door”, Oil Industry experts have proposed the price for a barrel of oil might very well double,…..might triple or more, as supplies become increasingly limited. Juxtapose this, to the record settings for increased demand (see-China and India), and the prescription is born unto calamity.

Three dollars a gallon translates into a “pain in the ass”. Five or six dollars (maybe less) a gallon “kicks our ass” and into certain recession. Eight or nine dollars a gallon, brings back a circa 1930s depression, and a horrible story to lay witness to for your grandchildren (maybe even great-grandchildren). Well you might say, Europe has had to endure price levels of 5 or so U.S. dollars a gallon for a time, as it is. I say, and despite other factors of overly obtrusive government regulation, artificially high minimum wage levels, and ridiculously higher taxation, France, Germany, and Italy have double digit unemployment levels in national economies (for years) that remain stagnant (no growth!). The U.S. economic downturn would spell even greater disaster for the entire continent of Europe, as it would for the world as a whole.

So one might ask, sure, but how likely is all of this? Wars/conflicts have broken out before, and most certainly in the Middle East, yet largely we in the U.S. remained unaffected. What has changed is the stakes. Islamic Fascist Extremism has influenced to greater severity and degree, higher levels of Middle Eastern governments. It’s no longer just a case of a particular Islamic country’s “self-interest”, but concerns for following to a greater magnitude, the prescribed articles of the Muslim faith. One of the greatest mistruths about Islamic Extremists” is that they are crazy. The “extremists” in actuality, are the better practicing “good Muslims” who are more closely aligned, more insistent on following the fundamental dogmas that mark their faith. When they crash planes into buildings, have their children and women strap bombs to themselves and blow up crowded marketplaces, chop off heads, there is always appropriate text cited in the Koran for dealing with the infidels….death!! The radicalized Muslim common man (growing in greater numbers daily) affects his government-threats of unrest and expulsion, while the government stokes and conjures the fires of hatred with education indoctrination schemes of its very youth, while marginalizing/subverting/exaggerating “Western Truth” to the adult population in the state influenced/sponsored media. The vicious circle knows no end. All the Middle Eastern citizenry cares to know is that Israel must be destroyed, and it is the “Great Satan”, the United States who bears responsibility. This Islamic “hatred” possesses resolute resolve, and places prudent, responsible self-interest, to an ancillary concern. Oil commerce and trading may not happen, or be able to happen for long periods at a time, if things become too untethered or cataclysmic. It only takes a few, well organized, steadfastly determined “tempests” in the Middle East, to upset what once went for rationality and propriety self interest.

Does all this eventually play out? In degrees? I don’t think so (hope?), but at the same time I caution, we are much closer than is realized, to a dramatically altered way of life with egregious unsettling consequences that reach over to us all, from “Mohammad’s” long extending tentacles.

Category: News and Politics

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