Thursday, January 21, 2010

The American Crisis Deepens

The Supreme Court decision that essentially gives corporations unlimited power through campaign spending is a danger to American democracy and a danger to every citizen. It is no joke.

I was tempted to title this post: The GOP Sells the United States to the Chinese Communist Party. The consequences of unlimited campaign spending by corporations means the person with the most money wins. Since anyone outside the United States can invest in our corporations, it will now be legal for the Chinese, Saudis and Russians to influence American elections. Even Osama bin Laden, if he uses enough corporate shells, can now influence American politics directly.

George W. Bush appointed two corporatist judges to the Supreme Court. If we're not careful, the legacy of the worst president in our nation's history will now be intact.

I expect many posts around the country to focus on today's judicial fiasco. Here's a post from Firedoglake:
If you had any doubt about the corruption that has infected the very bloodstream of American politics, look at today’s ruling from the U.S. Supreme Court. The Court said corporations can spend unlimited amounts to influence the outcome of elections.


Teabaggers, do you get it now? You are outraged by your powerlessness. Can you now see the real source of that powerlessness? It is not government. Government has been turned into the handmaiden of the corporate oligarchs.

I’m compelled to repeat something else: I’m a fan of entrepreneurship and responsible capitalism. But it’s not the so-called heavy hand of government that is the enemy. It’s the corporate monopolists.

Here's a post from Kevin Drum who almost always has some of the most thoughtful posts:
I confess that I've become more sensitive to First Amendment concerns about the McCain-Feingold campaign finance law over the years. But treating corporations as mere "associations of citizens"? Color me skeptical. That's just not what they are, and this is a decision that we're probably going to live to regret. After all, it's not as if lack of ability for corporations to influence the political process has historically been a major problem in the United States.

I've been saying it for some time now and I'll say it again: something has to change.

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Tuesday, January 12, 2010

How Much Oil Will Iraq Produce?

If the purpose of invading Iraq was about oil, the results have been disappointing. Although Iraq has had a few good quarters in the last two or three years, they have not been able to put together a year of production equal to pre-invasion levels. And it's been three decades since Iraq reached it maximum output. Wars, corruption and incompetence share blame for Iraq's poor performance.

Of course the oil is still sitting in the ground. Everyone agrees there is still a sizable reserve. Here's the latest concerning Iraqi oil:
Head of Iraq's State Oil Marketing Organization, Falah Alamri, said that the country plans to start crude oil shipping operations in March and prepares to export larger volumes of crude in the future, Reuter reported.

Another site carries the same Reuters story. They have a picture that may or not be contemporary and yet it seems to fit what I know of Iraq's petroleum industry for the last thirty years.

It's hard not to be skeptical. Stuart Staniford has a post in The Oil Drum that's also skeptical but he explores the possibility of Iraqi oil production rising from a little more than 2 million barrels/day in 2009 to 12 million barrels/day by 2017. Here's an excerpt from Staniford's post:
At this stage, it seems too soon to say the Iraqis definitely will succeed. But the scenario that they might seems worth serious consideration.


There doesn't seem to be too much dispute that Iraq has enough reserves to support far higher production than has actually occurred in the past.


Iraq held two rounds of auctions for oilfield management contracts in 2009 that the large international oil companies have responded to. The first round, in June, were for fields that were already in production and set up contracts in which companies get paid a fee per barrel for all production over the existing level. The second round, last month, were for fields not yet on stream. The Iraqis seem to have driven hard bargains - the oil companies are being paid a flat fee per barrel that is generally under $2/barrel in the safer parts of the country, and thus will not benefit from high oil prices - all price risk/reward remains with the Iraqis. Nonetheless they were able to attract some bids from large competent oil companies with a track record - the likes of Shell, Exxon, Statoil, and Lukoil, and have been signing preliminary contracts with them. According to the oil ministry, the total contracts awarded amount to 12mbd of production, and this could be achieved within six years.

Staniford always has good graphs. Below is just one of the them:

It's simply not possible these days to post such a story without checking to see if the Chinese are paying attention. They are:
Iraq's oil exports amounted to 1.97 million barrels a day in December 2009, an increase of 950,000 barrels over November, the preceding month, according to latest statistics from the Iraqi Ministry of Oil. And a significant change in the volume of exports fully reflects the rapidly-rising momentum from an aspect of current oil production in the country.

In line with requirements for its government to sign a contract with foreign energy firms, Iraq would increase its crude oil to 12 million barrels a day from the current 2.5 million barrels in the next six years; at the same time, its gas production would increase to 144 million cubic meters from the present 48 million cubic meters. Representatives of some OPEC member nations, however, regard that Iraq’s practice for a large-scale increase of oil production is inconsistent with the OPEC’s current strategy for "limited production and oil price protection", and this could cause volatility on the future global oil market.

Admittedly, the article doesn't say all that much, but it's in the opinion section of the People' Daily Online. That means it's news China wants to be noticed. Despite the optimism of Iraq's oil sector, China and Stuart Staniford agree: there may be increased production from Iraq but we're also likely to see increased volatility in the world's oil markets.

In the long run, a plug-in or hybrid car not only sounds like a bargain but may also offer peace of mind.

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Monday, January 04, 2010

The Growing Complexity of Dealing with China

Fifty years ago the United States would send government officials or business executives to small third world countries with a checkbook. Whenever such a checkbook was opened, such countries listened. At least for a while.

Now it's China that seems more active about using a checkbook to build relationships. In Africa, the Chinese have been buying up resources; one might argue that this is a new kind of imperialism, 21st Century style. Actually, other arguments can be made but the real point here is that the world is growing more complex and China is now very much part of that complexity.

China is often criticized for its human rights record—and rightfully so—but things are no longer as black as white as they were even fifteen years ago. I've been writing about China lately because a number of key issues cannot be dealt with unless China is part of the picture. Dealing with problems like global warming, fossil fuel depletion, the environment, the economy and American job losses are not going to happen without cooperation with China. Of course American companies who have their products made in China are also part of the picture. As an example, Reuters reports that GM saw its sales improve last year:
GM sold a record 1.83 million autos in China last year, the company said in a statement Monday. The auto maker expects to top that this year, though it sees slowing growth. Kevin Wale, president and managing director of GM China Group, "The industry outlook is strong and we expect more growth, albeit on a somewhat slower pace."

Whether Americans like it or not, we are tied to the economic performance of China. If that sounds vaguely familiar, it's because we're also economically tied to the performance of oil producers in the Middle East. With apologies to Laurel & Hardy, "It's a nice pickle we've gotten ourselves in."

Free trade is great if you're on the receiving end of profits but it's not so great if it means losing middle class jobs to cheap labor. Right now, China and the U.S. are increasingly two-tiered societies with a small wealthy class on one side and everybody else on the other. The wealthy of the current generation are too often not interested in the consequences of their behavior . When mostly Republican commentators in The Wall Street Journal praise the Chinese, they're not praising Chinese workers, they're praising Chinese business owners who share their own values.

Like the U.S., however, the Chinese have different factions with different ideas about the future. Obviously an authoritarian Chinese government has low tolerance for different views. But in spite of recent prison sentences, Chinese wanting democratic reform will continue to find ways to make their views known.

Keeping in mind that the Chinese can sometimes change direction on a massive scale—Deng's pro-capitalism moves is one example—the Chinese are slowly moving in fits and starts towards a more open form of journalism. There are certainly steps backward but we're getting news out of China that was unthinkable twenty years ago. We're hearing about coal mine disasters, earthquakes and protests and we're also hearing about Chinese foreign policy moves, new business ventures and sometimes detailed government policies.

Americans themselves need to be more nuanced when they read or comment about news from China. One of today's stories out of China is about a diesel spill; here's the story from a Chinese news site:
A diesel spill from a ruptured pipeline in northwestern China has seriously contaminated two rivers that finally flow into the Yellow River, the country's second longest waterway, a local official said Monday.

The Chishui and Weihe rivers were seriously contaminated after some 150 cubic meters of diesel leaked early Wednesday from a ruptured pipeline belonging to the China National Petroleum Corporation (CNPC), the country's top oil producer, Li Xiaolian, vice director with the Shaanxi Provincial Environment Protection Administration, said at a press conference.

However, contamination to the Yellow River remained under control and its water quality was still within the state standard, he said.

By the time the reader goes to the link, there may be updates but the point here is that earlier in the day the news, accurate or not, is that the spill had not reached the Yellow River. Later in the day, a website called Clean Skies was quick to note an emergency water decree downriver:
The warning contradicts earlier reports from the pipeline's owner, China National Petroleum Corp., that the contaminated water was contained after workers dug diversion channels and used floating dams and solidifying agents to stop the spill.

It's not a bad article though I wish they had given their sources. It gives the impression that China National Petroleum Corp. was trying to minimize the consequences of the spill. It may very well be the case. I note that the spill occurred on Wednesday and it's now five days later. What was that delay about?

But the Chinese in general were not hiding the story. The story can now be found in various places and the details suggests either Chinese government officials or government officials are talking to the media. Here's a BBC story with more details:
Pollution from a broken oil pipeline in northern China has now reached one of the country's major water sources - the Yellow River, state media say.


The official Xinhua news agency said: "At present, cities along the river in Henan province have sufficient water resources."

About 150,000 litres of diesel poured into the Wei river in Shaanxi province after a construction accident on Wednesday, state media reported.

It's possible company officials and local officials initially attempted to downplay what happened. I've talked earlier about corruption being a collusion between company officials and local government officials. On the other hand, there was an attempt to control the problem with floating dams, etc. What might then have happened is that the national government became aware of what was happening and the story hit the news agencies.

But the diesel spill is actually only a small part of a much bigger story: the Yellow River has for years been an environmental disaster story of international proportions. It is heavily used and heavily polluted. For some months a year it does not even reach the sea. Wait. This is our story too. The Mississippi and the delta it pours into has become increasingly polluted. It is the story of the Rhine. It is the story of the Nile. It is the story of the Ganges.

It used to take weeks, months, even years to get news out of China. I suppose we can criticize it if it takes more than a few hours for a story to hit the internet. I have no doubt government officials hold off on some stories. I have no doubt it takes time to do an English translation. I have no doubt that those translations sometimes have to get official clearance. But news is coming out of China. And it's often our news, even if, in a country of 1.3 billion people, it's sometimes on a larger scale.

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