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Energy makes the world go 'round

Looking at the world of energy and hydrocarbon fuel supplies, we see a couple of interesting news items out today.

Bloomberg jumps into the ongoing critique of Putin's Russia and Chavez's "21st century socialism" in, "Chavez, Putin Use Power Gained From Open Markets to Close Them".

The article argues that revenues brought about by high resource prices will not be sufficient to drive the Venezuelan and Russian economies forward, as actions against foreign companies have driven away much needed investment and foreign expertise. An excerpt:

State takeovers have made foreign companies reluctant to increase spending or production, Aslund says. ``Russia doesn't need foreign direct investment for the sake of the money,'' he says. ``They need it for the technology, for the management it brings.''

A continued plunge in oil prices, which reached a 19-month low of about $52 a barrel last week, would rob governments of revenue as production stagnates. Chavez ``will be in bad shape, he'll be squeezed,'' O'Neil says.

Even gains from a rebound in prices would be short-lived as political leaders scare off investment, says Kenneth Rogoff, a former chief economist at the International Monetary Fund.

``Commodity-rich countries are living off the success of market oriented-economies,'' says Rogoff, now a professor at Harvard University. ``Twenty-first century socialism will do no better than 20th century socialism did.''

These points are well taken, but notice that noone is saying that the measures taken by these countries in favor of nationalization are, on their face, wrong. I guess they wanted to avoid an ideological slant in favor of a pragmatic sort of argument. So the focus of this particular piece is the shortsightedness of these resource-rich nations, rather than their blatant disregard for contracts, etc.

Now, speaking along the lines of energy scarcity, The Oil Drum has posted a couple of interesting articles in their latest edition of Drumbeat. These are the ones I thought I'd share with you.

In, "Deluded", Kurt Cobb wonders if America and its politicians are being led astray by their belief that remaining oil and gas resources are plentiful and waiting to be exploited.

Even after the Iraq civil war ends--and it will end someday though that day is probably many years away--the government which controls Iraq may not be the one now in charge or may, in fact, turn out to be three governments controlling a partitioned Iraq. Even if a unified Iraq survives, what would prevent it from changing the laws governing oil production, revoking existing contracts or simply renationalizing the oil industry?

An Iraq at peace may find itself capable of doing any of these with the broad support of its people. Certainly, some will say that a continued U. S. military presence in Iraq would cow the country into honoring any agreements made under the law. But who now believes, given emerging political and ongoing fiscal realities in the United States, that the U. S. military will remain in Iraq to the conclusion of the civil war and for many years after that?

Read this piece for an insight into why the country's thinking over Iraq and its potential oil supplies is largely "delusional".

Michael Klare gets a bit darker as he asks, "Is Energo-fascism in your future?".

Klare sees the beginnings of an emergent global energy race, wherein the powerful nations scramble to lock down all "strategic" energy supplies and the U.S. military is transformed into a "global oil protection service".

This emerging reality will set the foundation for a kind of global fascism, as state intrusions into public and private life are increased (as an increased reliance on nuclear energy leads to surveillance against sabotage threats and illicit proliferation). According to Klare:

Together, these and related phenomena constitute the basic characteristics of an emerging global Energo-fascism. Disparate as they may seem, they all share a common feature: increasing state involvement in the procurement, transportation, and allocation of energy supplies, accompanied by a greater inclination to employ force against those who resist the state's priorities in these areas.

As in classical twentieth century fascism, the state will assume ever greater control over all aspects of public and private life in pursuit of what is said to be an essential national interest: the acquisition of sufficient energy to keep the economy functioning and public services (including the military) running.

Is this dark view a real glimpse into the future or just "doom and gloom" paranoia?

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