February 25, Obama Administration’s Plan for Domestic Energy Production is Hazy at Best

President Obama says America can not “drill its way out of the problem” regarding the steep rise in the cost of gas at the pump.

However, allowing more drilling platforms to go on line and deliver production of oil would potentially offer Iranian trading partners a safer alternative to oil produced in Iran. More American domestic fuel production would change the opinions regarding oil prices among speculators. Thousands of Americans involved in the field of oil production could find new, profitable employment. The United States would be less beholden to oil producing nations that operate against American interests and have ties to global terrorism. If President Obama was to take a more aggressive course of action in favor of domestic production of oil and natural gas, he would easily win the support of the majority of Americans. The only people that would take offense would be the few thousand people Obama and his administration cater to, the Green movement.

Imagine how much more affordable the cost of living would be for the average American if gasoline was $2 per gallon again. Domestic fuel production and affordability of oil products is something that all of the Republican presidential candidates are rallying behind in one form or another. Maybe leaders in  Washington DC have lost touch with how the value of fuels affects business and the cost of living on a daily basis for the average American. When fuel prices increase, so does the cost of food, electricity, shipping, and personal transportation. Everyone pays more in one form or another.

President Obama should consider how much domestic production of oil and natural gas can help the American economy domestically and abroad.

Imagine how much more leverage the United States would have in terms of economic independence if it was to increase its domestic production and supply of oil and natural gas. The Obama administration, or any other candidate who wins in 2012 should consider the opportunities that can arise for America if trade tension still exists in the Straight of  Hormuz. Currently, countries who have major ports near the Straight of Hormuz are selling less of their petrol products as a result of rising military posturing. It was reported in the Wall Street Journal on Wednesday, February 22ndthat there was drastic decrease in the purchasing of petrol products from Dubai, while petrol being sold from Oman, a country with a southern port extending far from the Straight of Hormuz, and an amorphous border with Saudi Arabia, an American trading ally, experienced a large increase in petrol sales. With current American trade allies in good standing, and a greater domestic production of fuels, much of the void being created by a military tense Persian Gulf could be overridden.

Many would agree with President Obama that during an election year, both Democrat and Republican candidates will promise the world, and deliver nothing. Obama speaks of there being “no silver bullet” in terms of reducing the price of gasoline. However, unless one is a die-hard conservationist and an exclusive proponent of green energy, he or she must admit that during this year of record-high fuel prices, it is better to have an aggressive plan to produce more fuel domestically, and to lessen burdensome regulation on the oil and natural gas industry in the United States.

The Obama administration is starting to talk a good game regarding domestic fuel production. Recently, they have stated that they wish to have an “all of the above” approach to domestic energy including further technological development in the field of battery powered vehicles. The Obama administration declares proudly that the United States is producing more oil now than it has in eight years. This may be true, but almost all of the permitting for current drilling was started with the approval of George W. Bush. Furthermore, confidence in American manufacturing is not bolstered by decisions made by the Obama administration, voting against the Keystone Pipeline.

Fubruary 18, 2012- “Geo-Political Economic Chess Match Continued, China and the U.S”

What Fruit will come out of meetings with the Chinese heir apparent, Xi Jinping?

Like it or not, the 1.3 billion-strong corporate communist entity known as The People’s Republic of China is heavily connected to the American economy, as well as the Euro, and South America. Yes, the world has become a bunch of week-willed, “money-talks,” loan recipients. The good news is that the Chinese have a co-dependent relationship with the countries whose debts they back. After all, Apple needs to sell quite a few cell-phones to keep techno-savvy sweatshops like Foxconn in business. it’s a nice fantasy for one to imagine being President Obama himself, and getting down and dirty with the Chinese regarding artificial lowering of currency, total disrespect of trade quotas, disregard for human rights that could probably raise the eyebrows, and earn the respect of many tin-horn dictators. But the reality of a holding pattern with China is to be expected due to the dichotomy China establishes as an available debt-backer, and the lowest bidder for manufacturing of goods that people around the world seemingly can not live without.

In future engagements with Xi Jinping, a few major issues need to be put on the table. Fortunately or unfortunately, depending on how one looks at it, the United States has currently put forth Barack Obama to set the economic tone with China for potentially the next ten years. Hopefully, Obama will be practical, and put the most important issues first. If the meeting with Xi Jinping was set a couple of years ago, the future General Secretary might have been expecting red-carpet, special dinner treatment. The Chinese, however, affected by the dip in  the Euro, as well the economic pains that America is facing, have been humbled by some major economic setbacks of their own, most notably, a slashing of their GDP, down to approximately 4 percent for 2011. Chinese exports to Europe have declined drastically for the first time since 2009.

Is the U.S. in a similar place as it was when Roosevelt and Stalin allied in World War II?

One can witness the heated military posturing being waged in the Straight of Hormuz and figure out that in the short- term the  tactics which Iran is waging are affecting the world drastically in terms of  fuel and shipping. American voters can acknowledge that the price they had to pay at the pump during the election had a major effect on the results. Many conclude that Barack Obama was elected solely based on the rise in gasoline prices during the 2008 election. Can the U.S. find a way to put forth its greatest assets in food and fuel commodities in such a way that will convince the Chinese to join America in  the pursuit of de-clawing despotic, rogue regimes like Iran and North Korea? How hard should America push China regarding raising the value of the Yuan, and the equivalency of quotas between the two countries? Is the world willing to tolerate a significant rise in highly sought-after items manufactured in China as a result of fairer currency and quota standards?

In a world where global organizations like UNESCO and the U.N. give more consideration to nations like Iran, the most global brokers of terrorism, than they do to the United States, is now the right time to rock the boat with China when the Chinese could be America’s most valuable asset? Kirk Leeds, chief executive of the Iowa Soybean Association, does not think so at this moment. He believes that although a stronger Yuan would increase demand for American soybeans in China, making an issue out of currency at this time could put commodities like soybeans in dispute. When wooing the leaders of the most populous country in the world, the U.S. has to ponder the fact that the Chinese government needs to economically and politically take the reigns of 1.3 billion people.  America is at a crossroads with China. It must weigh the value of fairer trade and commodity arrangements versus placing its own fuel commodities front-and-center, and putting despotic regimes like Iran completely out of business. Can United States find a way to unite with China the way it did with the Soviets in World War II so that the threat of a nuclear Iran, and the influence it has on the global price of shipping and fuels can be eliminated? Time is running out.

Key Quotes:

The Wall Street Journal, Saturday, February 11th, Nathan Hodge, Laura Meckler, Sudeep Reddy “U.S. Gears Up to Reset Tone With Beijing”- “After 10 Hu Encounters, Obama to Take Xi‘s Measure in a Once-in-a-Decade Chance to Remold China Relationship”

“The Obama administration is gearing up for next week‘s visit by Chinese Vice President Xi Jinping, expected to become the country’s next leader, as a once-in-a-decade chance to set the tone in relations between Washington and Beijing.”

“…U.S. officials hope to get a read on how China’s heir apparent views everything from sanctions against Iran to currency and trade issues.”

“The Obama administration for the past three years has urged China to allow its currency to appreciate at a faster pace. A weak yuan boosts China‘s export sector, making U.S. products less competitive overseas. But the world‘s two largest economies have found little common ground on the issue.”

The Wall Street Journal, Saturday, February 11th, Tom Orlick “Fortuitous Trade Data Give China Ammunition on Yuan”

“The U.S., under Republican and Democratic administrations has pushed China to boost the value of its currency as a way to ease the trade imbalance. But there is some evidence that the Obama administration- and some businesses- would like to take some emphasis off the exchange rate.”

“ For some outside the Beltway, a shift in attention is welcome. Kirk Leeds, chief executive of the Iowa Soybean Association, hopes the yuan doesn‘t come up during Mr. Xi‘s trip to Iowa. Although a stronger yuan would bolster demand for Iowa‘s soybeans in China, he worries the currency fight sours relations over all. ‘We don’t want too much pressure on the exchange rate to turn soybeans into a pawn in a trade dispute,’ he said.”

Financial Times, Saturday, February 11th, Guy Chazen, Javier Blas- “Beijing halves Iranian oil imports in price dispute”

“Iranian officials have warned fellow members of Opec… not to fill any gap created by its loss of market share. But Saudi Aramco,… reduced official selling prices for Asian customers for a second successive time… which was a signal that the kingdom is ‘prepared to offer competitively priced alternatives to Iranian barrels.’ ”

“We think European refiners should be able to find alternatives to Iranian crude, thanks to existing Opec spare capacity, expected growth in capacity among major producers during 2012 and anticipated shrp rebound in 2012 among non-Opec supplies,” stated Maria van der Hoeven, the IEA’s executive director.

Financial Times, Saturday, February 11th, Shannon Bond- “Trade gap with china grows as deficit hits high”

“The US trade deficit increased more than expected in December on rising imports and higher oil prices, lifting the 2011 gap figure to the highest level since the financial crisis. Separately, consumer sentiment fell in early February as concerns over falling incomes outweighed optimism over jobs.”

“China reported that its exports declined for the first time since 2009 and that imports plunged 15.3 percent. Exports to the European Union rebounded 3.6 percent from November‘s decline.”

 

 

 

 

February 11th- Geo-Political Economic Chess Match, Asia

Key Countries:

China- In 2011, China invested roughly $5 billion on the European Financial Facility (among many other debt backing agreements). They have invested similarly in American debt. The Chinese also want to invest and design world-trade on their terms. But their 1.2 billion people depend on the livelihood of the European and American economies. As American and European economies suffer, so does China.

China, Japan, and South Korea- All three of these countries have to find ways to keep the cost of commodities, goods and services low so that they can have a large labor force, and stay lower in price than the competition. However, they have all been guilty of not having even trade quotas with America. What happens when prices rise due to a leveling of the playing field regarding quotas, and the price of commodities? Due to their necessity and drive to stay competitive, all three of these economies are among Iran’s largest trade partners.

The United States– The U.S. is concerned that allowing deregulation of trade will make Asian markets much more competitive, threatening American auto and manufacturing unions, and leading to further outsourcing. With outsourcing goes many of American middle-class jobs. However, much of the security of our dollar, and our ability to be rewarded credit depends on how reliable we are in paying back Chinese backed debt. In forming trade pacts like the Trans-Pacific Trade Initiative, the U.S. faces major logistical challenges that revolve around not alienating the larger East-Asian economies. Perhaps the U.S. can expand on the Trans-Pacific Trade Partnership, and design it as a vehicle for assuring the major Asian economies that when Iran is sanctioned out of the global market, they have a safe haven regarding fuels. 

India- India has extremely large sectors in service and telecommunications. However, relative to its population, India is not very resource rich. Because it is such a large, emerging market, India needs resources and commodities at low prices, and therefore, has to compromise in terms of who its main trading partners are, like Iran. Due to the speed of its emergence in the market, and its size in population, India is subjected to one of the hardest geo- political economic chess games of its own. Imagine having to be Iran’s second largest trading partner while dealing with constant terrorist threats and attacks from groups that the Iranian government backs.

Iran- The largest global backer of terrorism. Weapons- grade nuclear material in the hands of the Iranians makes the possibility of urban terrorism multiple many times deadlier than it is now. Imagine a September 11th style massacre executed with nuclear material. Potentially tens of thousands more people would die. The world can not afford to have a nuclear Iran. The problem is, countries that wish to stay competitive economically are willing to deal with Iran in exchange for low priced Iranian oil.

Saudi Arabia/ Oman- Saudi Arabia is the second largest producer of oil behind Russia. Many Islamic extremists come out of Saudi Arabia. However, the Saudis, with the help of Oman, have a great opportunity if they can help enable an embargo against Iranian oil. Oman is important because it is a relatively peaceful Islamic country that can serve as a vehicle for transporting Saudi oil at its southern port. Maybe Saudi Arabia, and Oman were considered as members of  the Trans-Pacific Trade Initiative, they would have greater incentive in filling the void of a market without Iranian oil. The Southern port of Oman overlooks open passage to the Indian Ocean, and is in relatively close proximity to the southern port of India.

Indonesia- One of the most successful emerging economies in South-East Asia is Indonesia, with a market of 240 million consumers. Indonesia’s location is key due to its proximity to India, Australia, and China as well as key players in the Trans-Pacific Trade Initiative. Its resource rich, and has a large labor force. If Indonesia was a hub in the Trans Pacific trade pact, they would benefit in the development in the production of oil products traded with Saudi Arabia.

Key Quotes:

Financial Times, Tuesday, February 7th, “The Lex Column”- “China and Europe”

“China’s position on bailing out the Euro zone is as ambivalent as, well, Germany’s.”

“Sure we are interested in helping out the Euro zone, but on our terms.”

“In 2011, Asia based investors bought roughly 20 percent of the 16 billion Euros of bonds issued by the European Financial Stability Facility.”

Financial Times, Tuesday, February 7th, Jagdish Bhagwati- “Shame on you, Mr. Obama, for pandering on trade”

“He compounded the folly by instead floating the Trans-Pacific Trade Initiative that is conceived in the spirit of confronting China rather than promoting trade.”

“…there is evidence that outsourcing is in parallel Indian information giants such as Wipro are increasingly outsourcing to the U.S.”

The Wall Street Journal, Tuesday, January 31st, Tom Barkley- “China Loses Trade Appeal Over Its Curbs On Exports”

“A World Trade Organization appeals panel ruled against China‘s efforts to limit the export of raw materials used in the steel and chemicals industries, a decision that could provide the U.S. and Europe with ammunition against similar limits on China’s rare-earth exports.”

“Chinese restrictions on the export of several raw materials… gave the Chinese companies an unfair advantage by keeping the price of domestic raw materials low compared with prices in other parts of the world.”

The Wall Street Journal, Tuesday, February 7th, Yuka Hayashi and Tom Barkley- “Japan’s Bid to Join Asian Trade Pact Faces a Leery U.S.”

“The pact known as the Trans-Pacific Partnership… is a key element of Barack Obama‘s effert to boost U.S. exports.”

“The U.S., Australia, Brunei, Chile, New Zealand, Peru, Singapore, and Vietnam- are hoping to complete talks before the end of this year.”

 

 

 

 

 

Saturday February 4- “Active Sanctioning” Is How America Needs To Confront Iran

Active Sanctions Against Iran- Can America Flex its Muscle Without A Military Strike?

Opinion editorial by Terence Rosenthal

One can argue that after sanctioning countries like China and Pakistan for their development of nuclear weapons, they managed to attain nukes, and people around the world are still alive to talk about it. However, the difference between Iran and countries like China and Pakistan is the magnitude in which Iran  funds and networks and plans attacks with a variety of anti-Western, and anti-Israeli terrorist groups around the world. Hamas, Hezbollah, and Al Quaida immediately come to mind. It is an undisputable fact that Iran distributes weapons around the world to these organizations. In fact, Hezbollah was planning a terrorist operation in Thailand just a couple of weeks ago. If Iran has nuclear weapons, they can network with any one of these terrorist agencies and incur mass casualties in urban centers with the use of dirty bombs containing nuclear material. Iran has voiced as well as demonstrated their contempt for the West more than any other country, including Pakistan. This is why nations that are part of the U.N. should not adopt the fatal attitude that a nuclear Iran is inevitable, and therefore should be accepted. Allowing Iran to attain nuclear weapons is essentially allowing the most rogue nation on earth to become a military super-power, which some conclude, already is.

Something needs to be done. It is not enough for leaders of the world to say that all possibilities are on the table regarding Iran. A vague threat like this carries little weight. The question is, what country has the most intelligence and bravery to be able to call Iran on its honest threats or colossal bluffs? Many in the world say Israel should strike, yet they are not willing to openly support or help them. The world needs to take notice that Iran has placed considerable attention on attaining a nuclear program, and is probably past the point of no return. Given their track record regarding sponsorship of the largest, most destructive terrorist organizations around the world, it is highly doubtful that Iran is developing nuclear technology for power plants, and medical technology. Maybe in the minds of the Iranian government, their nuclear program is a cancer fighting agent. After all, Khameini just called Israel a “Cancer,” and that it would support any regime in pursuit of destroying it. Should the world not take Iran at its word?

Tough talk is easy, however, taking action requires true knowledge, and a decisive plan of action. Nothing deters action like the cost one ends up paying at the pump when speculators see tension in pivotal regions like the Straight of Hormuz. And countries like China and India, who need to supply power to more than a billion people can not be cavalier about sanctioning their major fuel source. Consternation keeps nations that would normally be more supportive of heavy sanctions, and possibly even military strikes against Iran on the defensive. The fact is, however, a country can only maintain reactive strategies for so long.

Regarding Iran, enough attempts at driving up the price of oil will force many nations to give up taking true substantive action. People in the media are already taking the stance that Iran potentially has a fully developed nuclear program that is so covert, its military foes would not know where or how to dismantle it. On the other hand, there are military leaders like Moshe Ya’alon, former IDF Chief of Staff who say it is possible to destroy sites where Iran has developed nuclear capabilities. This is great news, the only problem is that people around the word, and especially Americans are very wary of getting into another full scale war. Unless covert military working in Iran knew how to expedite a strike on all Iranian nukes, a war against Iran could last for years, and cost thousands of soldiers’ lives, not to mention the cost.

Are there are ways in which the United States can address the Iranian Nuclear Program which have not been considered? Why does the United States not  deliberately release positive news regarding new oil and natural gas discoveries in the United States, and within American trade alliances which could affectively put Iran out of business. America, with the help of its own media, could strategically plan trade agreements, and speed up the permit process for drilling of new oil and natural gas sites to coincide with tightening world  sanctions against Iran. Currently American and European sanctions are already forcing Iran to buy time, and allow the I.A.E.A. to conduct investigations. This is a great first step. The Iranian government, however, are masters at lies and deceit.

If America, Western Europe, and any other country sanctioning Iran wants to achieve true success, they need a more active, hard-lined form of diplomacy. Three things must happen. First, the United States, and its trading partners must communicate to Ahmedinajad, and Khameini that it can and will replace Iranian oil commodities, and take away Iran’s trading partners. Second, The U.S. must let Iran know that the only way it can resume normal trade with other countries is if a joint security force containing U.N., U.S., and Israeli members were to be allowed into Iran. Third, Iran must allow this security force to peacefully dismantle, and destroy all of its nuclear capabilities. Why should Israel be allowed on this security force? The Israelis, out of necessity, know more about Iranian nukes than any other country in the world. Iran’s military leaders may talk tough, but do they really want their country to starve to death?