Saturday, April 5, 2008

Riding on the Backs of Americans

There's an interesting article that appeared by Dr. Rachel Ehrenfeld and Alyssa A. Lappen in The Washington Times in March. It is entitled Burning the candle at both ends, and can also be found at Dr. Ehrenfeld's website (which I encourage you to visit). I review it here in its entirety with some comments interspersed.

With the U.S. economy "obviously going through a tough time," America should welcome capital investments even from foreign sovereign wealth funds, President George W. Bush asserted on March 14, 2008 at New York's Economic Club.

"It's our money to begin with," he added, referring to roughly $95 trillion in OPEC holdings of U.S. dollars and investments accumulated largely through oil sales. Contending that we can "protect our people against investments that jeopardize our national security," Mr. Bush added, "Seems like we ought to let it come back." But President Bush is ignoring some basic principles of U.S. capitalism and democracy: personal and corporate ownership rights are nearly sacrosanct.

President Bush has a well-established habit of ignoring whatever truths are inconvenient for him.

$95 trillion in OPEC holdings of U.S. dollars and investments -- wow!

Dollars may be "coming back," but they do so with strings attached, giving foreigners huge leverage and control over the U.S. currency and economy. Of the world's 86 million barrels in daily crude oil output, the Middle East produces only 25.6 percent. With escalating prices, crude oil now runs $111 per barrel, putting $2.4 billion daily in Middle East pockets.

Before you continue reading this article, I would like you to consider a quote from another, different article, on a different -- but related? -- topic:

Former FBI Translator Sibel Edmonds Calls Current 9/11 Investigation Inadequate by Jim Hogue, May 07, 2004

JH: Can you explain more about what money you are talking about?

SE: The most significant information that we were receiving did not come from counter-terrorism investigations, and I want to emphasize this. It came from counter-intelligence, and certain criminal investigations, and issues that have to do with money laundering operations.

You get to a point where it gets very complex, where you have money laundering activities, drug related activities, and terrorist support activities converging at certain points and becoming one. In certain points - and they [the intelligence community] are separating those portions from just the terrorist activities. And, as I said, they are citing "foreign relations" which is not the case, because we are not talking about only governmental levels. And I keep underlining semi-legit organizations and following the money. When you do that the picture gets grim. It gets really ugly.

Back to Ehrenfeld and Lappen:

Unlike President Bush, market observers don't think we can burn the candle at both ends. Legendary investor and Vanguard Group founder John Bogle blasted the "orgy of speculation" that granted foreign investors excessive influence over the U.S. economy. "We should have never let ourselves get into this position where so many dollars are ... held by foreign countries and bought by foreign countries that are enemies," he stated also on March 14. "Friend or enemy, they have a lot of control over what happens here," he said.

Money buys influence -- money buys control.

Who owns the place where you work? Who owns the place where you live?

Even if you own your own home and your own business -- are you paying back loans that you used to buy them? Who are the investors in the bank where you got those loans?

Who are the investors in the financial institutions that have issued your credit cards?

The US government is roughly $9,000,000,000,000 in debt.

Who owns this money?

Some of it is owned by middle America -- people who have invested in pension and retirement funds... but, who are middle America's partners?

Indeed, major Middle East oil producers have a different understanding than Americans of economics and ownership. The October 2006 Organization of the Islamic Conference (OIC) "Mecca Declaration" is but one, albeit pointed example of this fundamental difference. Islam views all property owned by Muslims as held "in trust for Allah." The Qur'an decrees, "The land belongs to Allah, He gives it as a heritage to those of His devotees whom He pleases" (15:128). Therefore, Muslim property "shall be subject to the terms and conditions established by their owners." While OPEC and the Saudis blame the Bush administration for high oil prices, by "mismanaging" the U.S. economy, in fact OPEC policies cause the escalation.

In the case of your credit card debt, the terms and conditions basically read that the bank can change its terms and conditions whenever and however it wants to.

Or, do you have a different take on the fine print?

In a significant indication of brazen Saudi determination to undermine the U.S. and Western economies with petrodollars, King Abdullah rebuffed President Bush's recent appeal to boost production and lower prices.

"I would hope, as OPEC considers different production levels, that they understand that if... one of their biggest consumers' economy suffers, it will mean less purchases, less gas and oil sold," the President pleaded. Without hesitating, however, Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi responded, "We will raise production when the market justifies it." Considering the effects on U.S. markets, the Saudi strategy should be recognized as economic warfare.

Saudi Arabia is unable to significantly raise production of oil.

Oil production in the Kingdom comes mainly from fields that have been in service for decades. To maintain current production, they are having to pump water down on the peripheries of the oil fields in order to maintain pressure in the center. Not only are the Saudis unable to significantly increase production, but there is a question as to how long they can maintain production at current levels.

A comment left on a thread entitled Bringing the OPEC production numbers per well up to date gives us an insight:

There seems to be another factor that is almost impossible to read from the outside: Water.
First, is the amount of oil per well before or after Gas Oil Seperation Plant (GOSP), that is, discounting the water and associated gas that passes through the well head but then has to seperated by GOSP?

Secondly, water injected. If there has been any educational benefit to us all, (even those who do not accpet the overall premise) of Matthew Simmons' book, "Twilight In The Desert, The Coming Saudi Oil Shock And The World Economy", it is to point up just how wide a band production of an oil field can be manipulated by varying the amount of the water injected.

Allow me to quote a fascinating excerpt from the book itself, these remarks regarding the "Berri" oil field, one of the "royal four" super giant fields in all of Saudi Arabia,

"Following production startup, the high initial reservoir pressure went into rapid decline, falling from almost 4,000 psi in 1970 to 2,600 psi in 1973. At this rate of descent, the reservior would have reached bubble point pressure within two years. To prevent this, a peripheral water-injection program was began in 1975.
The water-injection program enabled a significant increase in production at Berri:
*Prior to water injection,Berri produced 155,000 barrels a day in 1973 and 300,000 in 1972.
*After water injection began, production rose to 800,000 barrels a day, in 1976." (Simmons)

Note the spread: 300,000 to 800,000 barrels a day!
With water injection, the pressure was driven back up, so the need for extra wells was reduced greatly. Each well could still produce at full output on the retention of very high reservior pressure. A "well count" would have been completely useless in explaining the status and the health of the Berri field.

To demonstrate this, and to sound the sad warning, let us just go ahead and finish the paragraph from which the above quotes and numbers were cited:

"In 1977, less than two years after the start of the injection program, water began to break through in the first row of producing wells nearest the flood front. Initially, the completions in the wet zone were plugged off, and the wells were recompleted in drier zones higher up the wellbore. A moderate amount of water production could be tolerated in each well once wet crude handling facilities were installed at the Berri Gas & Oil Seperating Plant (GOSP) For some time therafter, the typical water cuts stayed around 20 percent, although the flood front was advancing rapidly to the crestal area."(Simmons)

Now you see why I stressed the "before or after "GOSP" issue. This is not some minimal thing, of only a few percent. Notice that in this case A FULL FIFTH of the oil passing through the wellhead would have been water, and had to be shaved off in the GOSP (!!) Some say the water cut in many mature Saudi fields may be as high as one third now, or 33%.

Let us close with the obituary for a peaked and declining field: "The available record of Berri's production history contains the following benchmarks:
*In 1976, Berri's output peaked at 800,000 barrels per day and then began to decline rapidly.
*By 1981, when Saudi Arabia's overall oil output peaked, Berri's production had already fallen by 30 percent.
By 1990, 25 percent of Berri's producing wells had totally watered out, choking off the oil flow and forcing Saudi Aramco to shut in the wells." (Simmons)

That folks is what "peak" and "oil depletion" really look like out at ground level, in the oil fields. The above is certainly being played out all over the middle east and the world at this moment. Witness, the recent adjusting of water injection and drilling volume of the "Burgen" field in Kuwait, in which in a matter of months, the output was "adjusted" by first, 5%, then 10%, the 20%, before Kuwait Oil Company announced that Bergen was peaked, and would never again deliver more than 80% of it's former top production, and all indications is the production will continue to drop, and if known history of peaked fields holds true, the decline will accelerate quickly. Now recall, this is the second largest field in the world, behind only Ghawar in Saudi Arabia.
Water injection boosts reservior pressure and greatly boosts production from a given set of wells. It also reduces the warning time to nearly none, as peak nears.

Some say that the issue of oil depletion in general, and Matthew Simmons book in particular are too complicated and hard to understand.
Sadly, it is all too easy to understand.

Continuing with Ehrenfeld and Lappen:

Despite protracted violence against the United States, West and Israel since 1979, only the September 11 attacks forced America to recognize the Islamic holy war (jihad) waged by al Qaeda, Hamas, Islamic Jihad and Hezbollah.

What will it take for the United States to recognize the far more dangerous and important part of that jihadeconomic warfare (financial jihad, or al-jihad bi-al-mal) -- which the Saudis and Gulf States now aggressively also pursue? Shari'a mandates that Muslims fund jihad: Qur'an 61:10-11, "strive for the cause of Allah with your wealth and your lives...." And Qur'an 49:15, "(true) believers are only those who...strive with their wealth and their lives for the cause of Allah." "Financial Jihad [is] … more important ... than self-sacrificing," says Saudi Islamic cleric and Muslim Brother Hamud bin Uqla al-Shuaibi.

This open economic warfare, however, has effected U.S. economic or foreign policies, much less media coverage or presidential election campaigns or debates.

While the U.S. currency weakens and Saudi and Gulf interests continue their binge buying of strategic U.S. assets and financial institutions, their petrodollars lure more and more ignorant, and even desperate American bankers and investors into the purported glimmer of shari'a banking -- a gold-plated Islamic money pit.

The president and his economic advisors should heed Jack Bogle. Without emergency measures to redirect U.S. economic policy and market regulations, the petrodollar- and shari'a-driven takeover of America will indeed endanger national and global security.

To put this into perspective, let me reproduce the following from a little box in the corner of Bringing the OPEC production numbers per well up to date:

"My father rode a camel.
I drive a car.
My son flies a jet-plane.
His son will ride a camel."

—Saudi saying

"His son will ride a camel." Perhaps not.

If the Saudis play their cards right, by the time their oil runs out (which could be any day now!) their sons -- together with the sons of their friends in high places here in the US -- might find themselves riding on the backs of Americans via our debt-based economy.

I leave you now with another quote from that other different article, on that different (but related?) topic, a quote which puts into perspective why President Bush is so eager for investment of Saudi petrodollars in the American economy:

Former FBI Translator Sibel Edmonds Calls Current 9/11 Investigation Inadequate by Jim Hogue, May 07, 2004

JH: Here's a question that you might be able to answer: What is al-Qaeda?

SE: This is a very interesting and complex question. When you think of al-Qaeda, you are not thinking of al-Qaeda in terms of one particular country, or one particular organization. You are looking at this massive movement that stretches to tens and tens of countries. And it involves a lot of sub-organizations and sub-sub-organizations and branches and it's extremely complicated. So to just narrow it down and say al-Qaeda and the Saudis, or to say it's what they had at the camp in Afghanistan, is extremely misleading. And we don't hear the extent of the penetration that this organization and the sub-organizations have throughout the world, throughout their networks and throughout their various activities. It's extremely sophisticated. And then you involve a significant amount of money into this equation. Then things start getting a lot of overlap -- money laundering, and drugs and terrorist activities and their support networks converging in several points. That's what I'm trying to convey without being too specific. And this money travels. And you start trying to go to the root of it and it's getting into somebody's political campaign, and somebody's lobbying. And people don't want to be traced back to this money.

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