The Energy Reality We Face  

Dilip Hiro has an article at TomDispatch on The Current Oil Shock, noting there is "no end in sight". he doesn't really grapple with peak oil, simply referring to "static supply" and doesn't seem to have any idea about clean energy at all, instead looking at limitations of coal and nuclear for nations looking to increase energy supply.

When will it end, this crushing rise in the price of gasoline, now averaging $4.10 a gallon at the pump? The question is uppermost in the minds of American motorists as they plan vacations or simply review their daily journeys. The short answer is simple as well: "Not soon."

As yet there is no sign of a reversal in oil's upward price thrust, which has more than doubled in a year, cresting recently above $146 a barrel. The current oil shock, the fourth of its kind in the past three-and-a-half decades, and the deadliest so far, shows every sign of continuing for a long, long stretch.

The previous oil shocks -- in 1973-74, 1980, and 1990-91 -- stemmed from specific interruptions of energy supplies from the Middle East due, respectively, to an Arab-Israeli war, the Iranian revolution, and Iraq's invasion of Kuwait. Once peace was restored, a post-revolutionary order established, or the invader expelled, vital Middle Eastern energy supplies returned to normal. The fourth oil shock, however, belongs in a different category altogether.

Nick Turse also has a post up at TomDispatch on Iraq and "The Oil Deal Nobody Wants to Talk About", looking at the close links between Hunt Oil and the Bush Administration.

For years, "oil" and "Iraq" couldn't make it into the same sentence in mainstream coverage of the invasion and occupation of that country. Recently, that's begun to change, but "oil" and "the Pentagon" still seldom make the news together.

Last year, for instance, according to Department of Defense (DoD) documents, the Pentagon paid more than $70 million to Hunt Refining, an oil company whose corporate affiliate, Hunt Oil, undermined U.S. policy in Iraq. Not that anyone would know it. While the hunt for oil in Iraq is now being increasingly well covered in the mainstream, the Pentagon's hunt for oil remains a subject missing in action. Despite the staggering levels at which the Pentagon guzzles fuel, it's a chronic blind spot in media energy coverage.

Let's consider the Hunt Oil story in a little more detail, since it offers a striking example of the larger problem. On July 3, 2008, according to the New York Times, the House Committee on Oversight and Government Reform found that Hunt Oil had pursued "an oil deal with the regional Kurdistan government that ran counter to American policy and undercut Iraq's central government." Despite its officially stated policy of warning companies like Hunt Oil "that they incur risks in signing contracts until Iraq passes an oil law," the State Department in some cases actually encouraged a deal between the "Texas oil company with close ties to President Bush" and Kurdistan that "undercut" Prime Minister Nouri al-Maliki's government in Baghdad.

Asked if the White House was aware of Hunt Oil's negotiations with Kurdistan's largely autonomous regional government, President Bush's press secretary Dana Perino replied, "I don't know of anybody who was aware of it."

It turns out that wasn't exactly the truth of the matter. The Times noted that the company's chief executive, "Ray L. Hunt, a close political ally of President Bush, briefed [the President's Foreign Intelligence Advisory Board, of which he was a member] on his contacts with Kurdish officials before the deal was signed." In fact, in a July 2nd letter, Committee Chairman Henry A. Waxman told Secretary of State Condoleezza Rice: "Documents obtained by the Committee indicate that contrary to the denials of Administration officials, advisors to the President and officials in the State and Commerce Departments knew about Hunt Oil's interest in the Kurdish region months before the contract was executed."

For the Times, however, the hunt for the story ended with Hunt Oil. No attention was paid to its corporate twin, Hunt Refining, with its own major financial ties to the Pentagon, the President, and the U.S. occupation forces in Iraq. This despite the fact that the company proudly promotes itself as "a significant supplier of jet fuel to the U.S. Department of Defense" in the Southeastern United States.

And why not be proud? Ever since the President's Global War on Terror revved up and Iraq was invaded, Hunt Refining has quietly reaped major rewards. While the company was a defense contractor back in the 1990s, according to DoD documents, Hunt did not receive any funds from the Pentagon in 2000 or 2001. From 2002-2004, however, the company began garnering contracts and collected an average of just over $15.5 million a year. And only then did the good times begin to roll. In the last three years, records show that Hunt has taken in increasingly larger sums of taxpayer dollars from the Pentagon -- $39.6 million in 2005, $52.2 million in 2006, and, in 2007, a whopping $70 million. (Hunt Refining did not return telephone or email messages seeking comment for this article.)

Hunt's largest 2007 Pentagon contract was for the delivery of both aviation turbine fuel and JP-8 jet fuel -- the latter a product used by the Army and Air Force that is very similar to commercial jet fuel. That deal was awarded just months before Hunt Refining and its affiliate Hunt Southland Refining agreed, according to Department of Justice documents, "to pay a $400,000 civil penalty and spend more than $48.5 million for new and upgraded pollution controls at three refineries" as part of a settlement to resolve "alleged violations of the Clean Air Act."

In addition to its Pentagon connections, Hunt Refining, too, has tight ties to President Bush. Ray Hunt's son Hunter Hunt, the senior vice president of Hunt Oil Company, is, according to his corporate biography, "also involved in special projects that occur at Hunt Refining Company." The younger Hunt, however, took a leave of absence from the family businesses, from 1999-2001, to work for the Bush presidential campaign "as the primary Policy Advisor responsible for energy issues" and chief architect of Bush's national energy policy.

While Hunt Oil is finally making headlines and garnering press attention for its Bush administration connections and dealings in occupied Iraq, just as it should, Hunt Refining's complex ties to the force in charge of occupying that country aren't considered news at all. Despite the obvious financial relationship and network of curious ties that extend from the White House and the Pentagon to Texas, Alabama, and Iraq, this part of the story is just considered business as usual.

Iraq is also the topic of this June article from Naomi Klein - Disaster Capitalism: State of Extortion.

It's been ten months since the publication of my book The Shock Doctrine: The Rise of Disaster Capitalism, in which I argue that today's preferred method of reshaping the world in the interest of multinational corporations is to systematically exploit the state of fear and disorientation that accompanies moments of great shock and crisis. With the globe being rocked by multiple shocks, this seems like a good time to see how and where the strategy is being applied.

And the disaster capitalists have been busy--from private firefighters already on the scene in Northern California's wildfires, to land grabs in cyclone-hit Burma, to the housing bill making its way through Congress. The bill contains little in the way of affordable housing, shifts the burden of mortgage default to taxpayers and makes sure that the banks that made bad loans get some payouts. No wonder it is known in the hallways of Congress as "The Credit Suisse Plan," after one of the banks that generously proposed it.

But these cases of disaster capitalism are amateurish compared with what is unfolding at Iraq's oil ministry. It started with no-bid service contracts announced for ExxonMobil, Chevron, Shell, BP and Total (they have yet to be signed but are still on course). Paying multinationals for their technical expertise is not unusual. What is odd is that such contracts almost invariably go to oil service companies--not to the oil majors, whose work is exploring, producing and owning carbon wealth. As London-based oil expert Greg Muttitt points out, the contracts make sense only in the context of reports that the oil majors have insisted on the right of first refusal on subsequent contracts handed out to manage and produce Iraq's oil fields. In other words, other companies will be free to bid on those future contracts, but these companies will win.

One week after the no-bid service deals were announced, the world caught its first glimpse of the real prize. After years of back-room arm-twisting, Iraq is officially flinging open six of its major oil fields, accounting for around half of its known reserves, to foreign investors. According to Iraq's oil minister, the long-term contracts will be signed within a year. While ostensibly under control of the Iraq National Oil Company, foreign firms will keep 75 percent of the value of the contracts, leaving just 25 percent for their Iraqi partners.

That kind of ratio is unheard of in oil-rich Arab and Persian states, where achieving majority national control over oil was the defining victory of anticolonial struggles. According to Muttitt, the assumption until now was that foreign multinationals would be brought in to develop brand-new fields in Iraq--not to take over ones that are already in production and therefore require minimal technical support. "The policy was always to allocate these fields to the Iraq National Oil Company," he told me. This is a total reversal of that policy, giving INOC a mere 25 percent instead of the planned 100 percent.

So what makes such lousy deals possible in Iraq, which has already suffered so much? Ironically, it is Iraq's suffering--its never-ending crisis--that is the rationale for an arrangement that threatens to drain its treasury of its main source of revenue. The logic goes like this: Iraq's oil industry needs foreign expertise because years of punishing sanctions starved it of new technology and the invasion and continuing violence degraded it further. And Iraq urgently needs to start producing more oil. Why? Again because of the war. The country is shattered, and the billions handed out in no-bid contracts to Western firms have failed to rebuild the country. And that's where the new no-bid contracts come in: they will raise more money, but Iraq has become such a treacherous place that the oil majors must be induced to take the risk of investing. Thus the invasion of Iraq neatly creates the argument for its subsequent pillage.

Several of the architects of the Iraq War no longer even bother to deny that oil was a major motivator. On National Public Radio's To the Point, Fadhil Chalabi, one of the primary Iraqi advisers to the Bush Administration in the lead-up to the invasion, recently described the war as "a strategic move on the part of the United States of America and the UK to have a military presence in the Gulf in order to secure [oil] supplies in the future." Chalabi, who served as Iraq's oil under secretary and met with the oil majors before the invasion, described this as "a primary objective."

Invading countries to seize their natural resources is illegal under the Geneva Conventions. That means that the huge task of rebuilding Iraq's infrastructure--including its oil infrastructure--is the financial responsibility of Iraq's invaders. They should be forced to pay reparations. (Recall that Saddam Hussein's regime paid $9 billion to Kuwait in reparations for its 1990 invasion.) Instead, Iraq is being forced to sell 75 percent of its national patrimony to pay the bills for its own illegal invasion and occupation. ...

Intimately connected to the price of oil is the global food crisis. Not only do high gas prices drive up food costs but the boom in agrofuels has blurred the line between food and fuel, pushing food growers off their land and encouraging rampant speculation. Several Latin American countries have been pushing to re-examine the push for agrofuels and to have food recognized as a human right, not a mere commodity. United States Deputy Secretary of State John Negroponte has other ideas. In the same speech touting the US commitment to emergency food aid, he called on countries to lower their "export restrictions and high tariffs" and eliminate "barriers to use of innovative plant and animal production technologies, including biotechnology." This was an admittedly more subtle stickup, but the message was clear: impoverished countries had better crack open their agricultural markets to American products and genetically modified seeds, or they could risk having their aid cut off.

Genetically modified crops have emerged as the cureall for the food crisis, at least according to the World Bank, the European Commission president (time to "bite the bullet") and Prime Minister of Britain Gordon Brown. And, of course, the agribusiness companies. "You cannot today feed the world without genetically modified organisms," Peter Brabeck, chairman of Nestlé, told the Financial Times recently. The problem with this argument, at least for now, is that there is no evidence that GMOs increase crop yields, and they often decrease them.

But even if there was a simple key to solving the global food crisis, would we really want it in the hands of the Nestlés and Monsantos? What would it cost us to use it? In recent months Monsanto, Syngenta and BASF have been frenetically buying up patents on so-called "climate ready" seeds--plants that can grow in earth parched from drought and salinated from flooding.

In other words, plants built to survive a future of climate chaos. We already know the lengths Monsanto will go to protect its intellectual property, spying on and suing farmers who dare to save their seeds from one year to the next. We have seen patented AIDS medications fail to treat millions in sub-Saharan Africa. Why would patented "climate ready" crops be any different?

Meanwhile, amid all the talk of exciting new genetic and drilling technologies, the Bush Administration announced a moratorium of up to two years on new solar energy projects on federal lands--due, apparently, to environmental concerns. This is the final frontier for disaster capitalism. Our leaders are failing to invest in technology that will actually prevent a future of climate chaos, choosing instead to work hand in hand with those plotting innovative schemes to profit from the mayhem.

Privatizing Iraq's oil, ensuring global dominance for genetically modified crops, lowering the last of the trade barriers and opening the last of the wildlife refuges... Not so long ago, those goals were pursued through polite trade agreements, under the benign pseudonym "globalization." Now this discredited agenda is forced to ride on the backs of serial crises, selling itself as lifesaving medicine for a world in pain.

Moving on, it seems the Iranian partnership with Gazprom may have been the straw that breaks the camel's back with the US reported to be planning to reestablish diplomatic ties - After 30 years, US to send diplomats to Iran. Of course, this could just be a cynical Republican maneouver to try to reduce oil prices in the run-up to the election.

The US is planning to establish a diplomatic presence in Tehran for the first time in 30 years, a remarkable turnaround in policy by president George Bush who has pursued a hawkish approach to Iran throughout his time in office.

The Guardian has learned that an announcement will be made in the next month to establish a US interests section in Tehran, a halfway house to setting up a full embassy. The move will see US diplomats stationed in the country.

The news comes at a critical time in US-Iranian relations. After weeks that have seen tensions rise with Israel conducting war games aimed at Iran and Tehran carrying out long-range missile tests, a thaw appears to be under way.

The White House announced today that William Burns, a senior state department official, is to be sent to Switzerland on Saturday to hear Tehran's response to a European offer aimed at resolving the nuclear standoff.