Tag: USD Petro-Dollar

Shale, Oil, Petro-Dollar and More – US Empire’s Strategic Future

In the grand scheme of things, and politicians and their masters, the elites, are always scheming, one has to wonder about the trajectory of the confederated united States of America (former British colonies in North America) –> United States of America (the republic) –> United States of America (the centralized federal government from Lincoln’s policies) –> the United States of America (democracy that embraced via 16th and 17th amendments to the US Constitution both federal income (direct) taxes on the people as well as popular election of senators vs. state appointed PLUS social security, the original welfare program and FDR’s decision to leave the gold standard) –> the US Empire that emerged post WWII that replaced the British Empire. Debts were still being paid by the nations that fought WWI and the Marshall Plan meant even more debt was to be incurred as a result of WWII for the US:

The UK/US effort with Middle East oil started in the late 1940s and early 1950s made it clear that the US imperialism was to be more covert and economic than the British effort. The CIA’s assassination of Iranian prime minister in 1953 signaled to the region that the US was dead serious about maintain control of oil production in the region to the US’s benefit.

By the 1970s, after the US totally severed all ties with the gold standard in 1971 under Nixon and his short-term efforts to deal with more war debt, this time from the Vietnam War, Henry Kissinger setup the petro-dollar system to enable the US to incur even more debt than ever before as an article from Southfront’s Dr. Leon Tressell points out:

The Petro-dollar system set up by Kissinger in the 1970s underpins the American control of the global trading system and allows it to maintain a massively over bloated military the scale of which the world has not seen since World War 2.

With this backdrop that articulates an empire’s trajectory, from federated sovereign states to a global superpower empire, one can only wonder how long the US can fake it until it makes it time and again before the petro-dollar magic wears off.

To help unpack what is really happening in the oil world, one has to understand the initial promises of shale, the technology that allowed both Obama and Trump to brag that the US is now a net exporter of oil production and to leverage this “bubble” (no pun intended) to strong arm other nations not on the US Empire’s dependents list.

President Trump’s abandonment of the Iran nuclear deal and reimposition of sanctions on Tehran was based on the premise that the drop in Iranian oil exports would be made up for by U.S. shale oil production. Thus keeping down any inflationary pressures on the global oil market.

While Iran is definitely in the empire’s crosshairs, so is Russia:

Trump has also used the stick to force Europe away from Russian gas supplies. Under the terms of the misnamed ‘Protecting Europe’s Energy Security Act of 2019, a sanctions law ironically written by oil and gas rich Texas Senator Ted Cruz,‘the U.S. has threatened EU countries with sanctions if they participate in helping with the construction of Russia’s Nord Stream 2 pipeline under the Baltic sea.

The world’s bully continues to play cards like it has a full house, but it may be bluffing:

The EIA 2020 forecast is for shale oil production to peak in 2022 at 14 million barrels per day and continue at that level until 2050. The vast majority of this oil production is expected to come from the shale oil pays in just 3 states: Texas, New Mexico and North Dakota. The bulk of this oil production is expected to come from the world’s largest oil field in the Permian basin that runs across Texas and New Mexico.

There is the bluff. The US is treating shale like oil, and they are not the same. In the first half of the 1900s, oil wells put in place in this time-frame STILL makeup 50% of the global oil market. Shale is proving to have a much different curve:

The problem oil companies face is that the decline rate of shale oil wells are frighteningly rapid at a rate of 70% in the first year and 30% in the second year of operation. This means they have to keep pumping and drilling new wells like mad to just to keep up production levels.

Sounds like the EIA forecast may have been some “fake news”. Not cool.

Of greater concern are the reports warning that the Permian basin, the jewel in the crown of America’s fracking industry, is approaching peak production.

In 2018 Paul Kibsgaard CEO of Schlumberger, one of the oil industry’s largest service provider, warned, “We are already starting to see a similar reduction in unit well productivity to that already seen in the Eagle Ford, suggesting that the Permian growth potential could be lower than earlier expected.”

A respected scientist took the EIA projects and offered his own report:

David Hughes, a scientist who worked for 32 years with the Canadian Geological Survey, has carried out an exhaustive analysis of the EIA claims for U.S. shale production up to 2050. His 177 page report SHALE REALITY CHECK 2019 Drilling into the U.S. Government’s Optimistic Forecasts for Shale Gas & Tight Oil Production Through 2050 concludes that EIA forecasts through 2050 are,’extremely optimistic for the most part, and are therefore highly unlikely to be realized.’

This is not good news. This is the type of news the media will bury and the US government will ignore.

Maybe this is the reason Trump refuses to leave Syria’s eastern oil fields, or Iraq. Maybe this is why Trumps economic sanctions target Iran and Venezuela?

Oil production from countries that Washington designates as enemies, such as Russia, Iran and Venezuela, will increase in importance on the global market as U.S. shale oil production starts to decline. This will give greater power and influence to OPEC and Russia when it comes to determining oil prices through production cuts/increases.

Maybe this is also why Trump has actually stepped up the Middle East warfare, buy dropping more bombs per day than O-bomb-a and taking the additional aggressive step of threatening assassination of Iraqi politicians that might strike new deals with China for Iraqi oil:

Nations from Iraq to Saudi Arabia are developing trade and infrastructure relations with China which the United States takes strong exception to. Take for example, the recent bombshell admission by Iraq’s caretaker Prime Minister that Trump threatened him with assassination if Iraq proceeds with an oil for infrastructure project with China. In the first phase of this deal Iraq will send 100,00 barrels of oil to China in return for a $10 billion credit. China would finish the building of the country’s electricity grid and other major infrastructure projects including its vital oil and gas sector.

A desperate empire/bully is no fun to be around, as someone is going to get hurt economically or with low yield nukes that are being placed on US Navy submarines.

Dr. Tressell wraps up by stating:

As U.S. shale oil production declines it will seek to maintain control over the regions oil production. China’s desire for growing amounts of Middle Eastern oil will intensify this clash for resources, influence and power in the region. Thus leading to greater geo-political and economic conflict.

So basically, for three decades, since the Cold War with the USSR ended, the USA has destabilized the Middle East, and now, blow-back will be a real thing and not just a CIA projection. The War of Terror costing $6T may have spawned a new season of global conflict.

So the US is in a “pre-War” period and we are already $23T(2020) in debt, usually all that debt piles up AFTER a war. This can’t end well especially if the petro-dollar status slips away.

So now what?

“… Jesus then left the Temple. As he walked away, his disciples pointed out how very impressive the Temple architecture was. Jesus said, “You’re not impressed by all this sheer size, are you? The truth of the matter is that there’s not a stone in that building that is not going to end up in a pile of rubble.” Later as he was sitting on Mount Olives, his disciples approached and asked him, “Tell us, when are these things going to happen? What will be the sign of your coming, that the time’s up?” Jesus said, “Watch out for doomsday deceivers. Many leaders are going to show up with forged identities, claiming, ‘I am Christ, the Messiah.’ They will deceive a lot of people. When reports come in of wars and rumored wars, keep your head and don’t panic. This is routine history; this is no sign of the end. Nation will fight nation and ruler fight ruler, over and over. Famines and earthquakes will occur in various places. This is nothing compared to what is coming…” – The Bible (The Message paraphrase) – Matthew 24:1-8

This might be another world war, or this might be a more final clash ..

“.. Staying with it—that’s what God requires. Stay with it to the end. You won’t be sorry, and you’ll be saved. All during this time, the good news—the Message of the kingdom—will be preached all over the world, a witness staked out in every country. And then the end will come…” The Bible (The Message paraphrase) – Matthew 24:13,14

One day at a time people .. stay the course!

-SF1

Iran STILL Upholds the Treaty it Signed with the US and Other Nations, But the US is UPSET?

* actual numbers may be dated, however, the true character of each nation should be obvious to the most casual observer!

Iran has yet to violate the JCPOA treaty that was signed by many countries almost four years ago. Have you read it?

There seems to be some angst in major media today, 01JUL2019, when they heard that Iran has announced that it has exceeded 300kg of enriched uranium hexafluoride (UF6). Really? Did they not read the treaty and know what “triggered” this action? Did they not hear Iran warn about this during late-May and earlier last month? This should have been no surprise.

I had shared my own concerns of the heightened tensions between the US Empire and Iran in a post about a week ago when I mentioned:

A nations character is determined by its actions over time. The US’s character in domestic and world affairs has been going downhill for decades, even over a century. This nation has long passed the time when the world might see us as a “shining city on a hill”.

It takes TWO in any relationship, and in this case, the US has been nothing but a bully in “victim-blaming” Iran .. from when the CIA assassinated their president in 1953 to this April when Trump said:

“floods once again show the level of Iranian regime mismanagement in urban planning and in emergency preparedness.”

.. WHILE whole swaths of the US Midwest were underwater. You can’t make this up. Every administration assumes that the stupid American people will just nod their head and agree with main-stream-media and their masters, the US government (deep state, politicians and thousands of bureaucrats that suck the life out of the American taxpayer).

Moon of Alabama cuts to the chase about what is really going on here:

Iran does that [exceed 300kg UF6] within the frame of the JCPOA. It is not breaching it. Article 26 of the joint plan states that the U.S. will refrain from reimposing sanctions and that Iran will react in case that happens:

The United States will make best efforts in good faith to sustain this JCPOA and to prevent interference with the realisation of the full benefit by Iran of the sanctions lifting specified in Annex II. The U.S. Administration, acting consistent with the respective roles of the President and the Congress, will refrain from re-introducing or re-imposing the sanctions specified in Annex II that it has ceased applying under this JCPOA, without prejudice to the dispute resolution process provided for under this JCPOA. The U.S. Administration, acting consistent with the respective roles of the President and the Congress, will refrain from imposing new nuclear-related sanctions. Iran has stated that it will treat such a re-introduction or re-imposition of the sanctions specified in Annex II, or such an imposition of new nuclear-related sanctions, as grounds to cease performing its commitments under this JCPOA in whole or in part.

For the record, on 08MAY2019, the US broke the JCPOA when it reimposed sanctions on Iran. Period. There should be ZERO crocodile tears from the US on this latest development.

In addition to this, Mood of Alabama points out that on 03MAY2019:

the State Department removed sanction waivers that allowed Iran to export low enriched uranium in exchange for natural uranium:

In addition, any involvement in transferring enriched uranium out of Iran in exchange for natural uranium will now be exposed to sanctions. The United States has been clear that Iran must stop all proliferation-sensitive activities, including uranium enrichment, and we will not accept actions that support the continuation of such enrichment.We will also no longer permit the storage for Iran of heavy water it has produced in excess of current limits; any such heavy water must not be made available to Iran in any fashion.

Linked to this is the US’s attempt to isolate Iran in all this by its threat to keep EU (European Union) partners (especially Germany, France and the U.K.) from trading with Iran.Do you see any similarities to how the US treated Japan in 1940 for force them to fire first? (from a 15JUN2019 post):

Especially damning was the economic manipulation FDR orchestrated against Japan the year before Pearl Harbor and the fact that his administration was well aware of the Japanese fleet’s route to Pearl but decided to keep the US Navy in Hawaii in the dark. So much for that “surprise”.

Deja vu, all over again. When will the masses learn? Oh yes, we are in the process of erasing our history, how convenient!

But there is some good news, according to Zero Hedge:

Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass American sanctions on Iran, is now operational.

The EU has *alls! This is great news and the price of oil reflected this event.

This also has some more unintended consequences for the US playing “hard-ball” with Iran (on behalf of Israel and Saudi Arabia you know, because what other reason would the US be upset with Iran about?). Zero Hedge again points out this aspect of the empire that has some more cracks in it:

Here is a simpler summary of what just happened: this was the first official shot across the bow of the USD status as a global reserve currency, and not by America’s adversaries but by its closest allies. And once those who benefit the most from the status quo openly revolt against it, the countdown to the end of the USD reserve status officially begins.

Yes. You may ask why would I be happy about the economic mayhem that is bound to occur when the effects of this ripple out through all the US economic “spinning-plates”? It is because the only way for the US Empire to quit thinking that “American Exceptionalism” gives it a license to operated above the law (natural law) in the whole world without penalty, the only way the US Empire finally understands that it can no longer be the world’s policeman, that the only way the US political class / elites and deep state finally come to terms with the immorality of its ways (not practicing the golden rule on the macro level) is for the financial rug be pulled out from under it so the “beast” (i.e. swamp) can finally be starved (i.e. drained).

I yearn for the day that the American people (together (doubtful) OR separately (ideally) in various federations of states and city-states) get back to that moment in time when the American Revolution concluded when life, liberty and the pursuit of happiness were the top three in the minds of those that finally threw off the British Empire’s micro-managing / taxing agenda.

For the current US government who never saw a treaty that it couldn’t eventually break, it is no wonder why the political elite never wanted this deal with Iran to work, as one can see in the intro to the 2015 treaty:

The E3/EU+3 (China, France, Germany, the Russian Federation, the United Kingdom and the United States, with the High Representative of the European Union for Foreign Affairs and Security Policy) and the Islamic Republic of Iran welcome this historic Joint Comprehensive Plan of Action (JCPOA), which will ensure that Iran’s nuclear programme will be exclusively peaceful ..

Yes, it is that word “peace”. The US Empire has not nor has never wanted peace. Free trade is the antidote to war, and the state knows this!

Know your history!

-SF1