Tick Tick Tick  

For some end of the week fear mongering, I wonder, is an attack on Iran likely ? A major disruption to oil supply from the gulf at this point would provide a shock that the world economy would not take well, so some observers consider it pretty unlikely and all the sabre rattling to simply be a way of keeping pressure on the Iranian leadership rather than a genuine push to commence military operations. Of course, you never know with the neocons - the idea that the rest of the world (particularly the Chinese) would not be willing to stand for an invasion of Iran could be their idea of a challenge rather than something to be concerned about.

The Wayne Madsen Report (August 10) is claiming that the planning for the invasion is underway, and that only the southern corner containing the main oil fields will be occupied (I've got no idea how reliable this guy has been in the past, but his theories seem generally in line with what Seymour Hersh and Scott Ritter were saying earlier in the year).

U.S. prepared to grab Iran's southwestern majority Arab and oil-rich province after saturation bombing of Iranian nuclear, chemical, and command, control, communications & intelligence (C3I) targets. According to sources within the German Federal Intelligence Service (Bundesnachrichtendienst - BND), the Bush administration has drawn up plans to hit Iran's nuclear, other WMD, and military sites with heavy saturation bombing using bunker buster bombs and tactical nuclear weapons. The attack will be coordinated with urban and rural critical infrastructure sabotage carried out by elements of the People's Mujaheddin (MEK), Pentagon Special Operations units, and other Iranian dissident groups.

The German intelligence comes from classified briefings provided by elements within the CIA that are concerned the neocons in the Bush administration will, in attacking Iran, set off a chain of events that will lead to world war. Intelligence on U.S. plans to attack Iran has also been passed by CIA agents to counterparts in France, Britain, Canada, and Australia. The Bush war plans for Iran also entail quickly seizing Iran's southwestern Khuzestan Province, where most of Iran's oil reserves and refineries are located. Khuzestan has a majority Shia Arab population that has close links with their ethnic and religious brethren in Iraq. The Bush plans call for a U.S. military strike across the Iraqi border and from naval forces in the Persian Gulf in answer to an appeal for assistance from the Al Ahwaz Popular Democratic Front and Liberation Organization rebel forces in Khuzestan, which will declare an independent Arab state of the Democratic Republic of Ahwaz and receive diplomatic recognition from the United States and a few close U.S. allies.

I've never heard of the Ahwazi, but it seems that the UN is complaining about discrimination against them, which may result in that rarest of alignments - the UN and John Bolton agreeing on something.

UN steps up Criticism of Minority Discrimination in Iran

The United Nation's Special Rapporteur for Adequate Housing has resumed his attack on discrimination against Ahwazi Arabs and other minorities by the Iranian government.

In an interview with the Reuters news agency, Miloon Kothari spoke of his impressions following his visit to Iran, including the Ahwazi homeland in the province of Khuzestan.

Back in the US, the Washington Post reports that war plans have been drafted to counter terror attacks within the US, with Northcom planning the deployment of soldiers in various situations inside the country (which apparently may not entirely be consistent with various laws, but what do they matter in these days of Empire anyway).

The parahistory world (doesn't that sounder cooler than "conspiracy theorists") is getting increasingly flustered about a lot of this stuff, with RI pondering the demise of the career of General Burns and the prospect of martial law throughout the US. Steve at Deconsumption (who seems increasingly influenced by RI) also has a number of interesting and thoroughly out there links in his latest post. One quoted section that I found quite alarming (putting the rumours of coups to one side), but all-to-believable, is this tolling bell for the remnants of the mainstream media and the consensus reality it used to provide.

"As a matter of fact, many mainstream news publications have been caught misstating the size of their daily readership, as with the recent cases involving the Dallas Morning News and Newsday newspapers. This has an effect on everything from what these papers charge for advertising, to the general reputation and veracity of the publication in its’ local community. The so-called alternative news websites of Jeff Rense, Alex Jones, World Net Daily, and NewsMax.com have now become the de facto mainstream press, with MILLIONS of people visiting these sites on a monthly basis."

The question is, what is scarier - a population that believes everything it reads on WorldNutDaily or one that believes everything it reads on Alex Jones' sites ? Or worst of all, a population split evenly between the two.

Heading south, PeakOil.com has a link to a a piece from Bloomberg about the erosion of fungibility in the oil markets, with Venezuela now doing a deal with Argentina to provide them with oil

Venezuela will buy two oil tankers from Argentina and swap as much as $200 million in diesel fuel for farm and industrial goods, as Venezuelan President Hugo Chavez seeks to expand his country's influence in Latin America.

The tankers, with a capacity of 300,000 barrels, will cost $112 million, the Argentine government said in a statement distributed by the presidential palace. Argentina needs the diesel to run electricity generators amid a shortage of natural gas.

In summary - things seem to be speeding up lately - the markets are running every day, there is more peak oil related news than I have time to read and think about (Energy Bulletin must be posting 10 times as much stuff as it was at the beginning of the year) and the political side of things looks increasingly ominous.

Jeff Vail seems to think so too, recommending that its time to buy your island, if you have the means. Doh - I knew I shouldn't have spent all that money on beer !

In other news, as I write this Light Sweet Crude is trading at $65.50 a barrel. I recently (finally) put my money where my mouth is on this one with one CLZ07 call option, at a strike price of $80/barrel. I don’t honestly know if the dramatic disparity between increasing and inelastic demand and level or decreasing supply will precipitate a crisis this Fall, or when exactly, but I have no doubt that it will happen, and soon. Right now, however, this disparity, coinciding with Greenspan feeling secure enough in the US economy to embark upon a long-term program of interest rate hikes suggests to me that price has a long, long ways to go up before it destroys sufficient demand to return to a lower equilibrium. The bottom line is that oil is still quite cheap to produce—but we are more and more fixed on exactly how much we can produce. The whole issue will “tip” when people finally realize that this is not a temporary problem created by refinery capacity, or temporary supply shortage until new projects come on line. When that realization tips, prices will spike. The next realization—that a general peak in energy coupled with our lack of foresight will lead reversing our general expectation of economic growth to a new general expectation of economic contraction—will lag behind a few months, allowing for profit taking.

“Islands” are expensive, whether real or conceptual. And they will only go up in price. Buy now :)

On a related note, LOBG asked a good question a little while ago - "Are you long oil ?". Almost everyone is "short" oil as their lifestyle, to a greater or lesser extent, depends on oil for its upkeep, yet they don't own any of this oil that they need. Looked at over an entire lifetime, this can be quite a large exposure to rising oil prices - so if possible, its wise to hedge against this. Making your lifestyle as independent of oil availability as possible is the best strategy, but the appropriate financial instruments, for a period, will also help cushion some of the shock (in fact, most people who are long shares in energy companies or oil related derivatives are probably feeling quite pleased with themselves at the moment).

I've got a bunch of other posts almost done but sleep seems more appealing at this point (must be the effect of the cricket I'm watching at the moment) - so I'll get back onto more peak oil and renewable energy related stuff tomorrow...