Wednesday, 24 September 2008

No war for who's Oil?

I should apologize to Professor Yahya Sadowski for the blog title, which originates from his article in Le Monde Diplomatic newspaper, entitled, "No War for Who's Oil?". I am in no way of the caliber of Prof. Yahya, but I think the title is just super cool and still captures the moment, even five years after he wrote it, and its something I think is worth a thought, a special with the oil prices falling and rising like a yo-yo. His article, is about the war on Iraq concludes, that the war on Iraq, was not about oil. At least not entirely. This is only reconfirmed today, because Iraq is yet to affect the oil prices.

Man, Eagle-Eye Cherry songs can capture so many situations. The dude seriously needs to write more songs. Anyway, the oil prices hitting 165$ a barrel, feels like "been here once before".

Here is a graph of the oil prices between 1970 and 2007.

If one notices that in 1981, the barrel peaked at 85$ a barrel. Add that to inflation and purchasing power of the dollar at the time, this could roughly equal the same value of a barrel of oil today. The only difference is, that now China is creeping up on the United States in terms of consumption, and probably will surrpass it in the coming years, and the price of oil is not stopping it. The argument that the West is trying to raise prices of oil to slow the growth of the Chinese dragon, is fundamentally flawed. The second argument, that the West are seeking to control Arab oil, again, is also fundamentally flawed. Thirdly, oil prices are usually an effect of global markets, rather than a cause.

Today, the barrel is at 82$. Now that sounds counter-intuitive doesn't it? It's less than what a barrel cost in 1981, and with Western economies in turmoil (should I mention the UK £500Bn bailout, the nationalization of RBS , the German EU480Bn, the US $700Bn and so on and so forth - they are all different bailout formats- but thats for a different post to discuss), the Chinese and the Indians, as well as the Brazilians and South Africans who have joined the bandwagon of already-emerged markets, are definitely enjoying all this chaos, if, for the sole reason that Oil, is dirt cheap! When Western Economies are slowing down, if oil was a catalyst, then the Eastern Economies are accelerating. Either way, I was in Saudi Arabia - and the yanks can have all the oil they need, the Saudis sure don't need that much, believe me. (Can you imagine that you can get a full tank for 10$?)

So, No War for Who's Oil? It ain't about oil lads, its about political goals. Lets drop the canned conspiracy theories.

So if it's not Oil they are after, what is then? I don't like to really, mix my blog with political strategies and tactics, because I am no expert, although political economics is a major discipline. But, now that oil is out of the equation , well, ask yourself this: Where is Iran on the map, and what are the two countries bordering it?

Now, let me worry about the Lebanese Hummus lawsuit.

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