What’s Really Up With This Business in Libya?

It seems like the world has turned upside down since the beginning of the year. I’m trying to make sense of it all, so I plan to spend a bit of time over the next few weeks discussing the big events; what may have led to them and what might be the outcome. First up….let’s talk about Libya.

When the West decided to intervene in Libya my first thought was, “Of course…Libya has oil”. After all, plenty of humanitarian crises are occurring in other parts of the world and yet they are left alone to sort their own problems out. Oil makes Libya a special case.

However, from politicians and talking heads on TV I was hearing that this was not about oil, because Libya only has about two per cent of the world’s oil production. They claim that they were going into Libya because they had learned their lesson in the 90’s and didn’t want another Kosovo on their hands. Two percent is supposedly nothing in the global oil supply….a mere blip, which the global economy could care less about.

And yet, Libya is a big deal. Why is it that a potential loss of only two per cent of the world’s oil production is cause for expending huge amounts of money launching air strikes against Col Gaddafi’s regime? (With warheads containing depleted uranium no less…. but that’s a whole other story)

When we look at the percentage of European oil imports that come from Libya, the story becomes a lot clearer. More than half a dozen European nations rely on Libyan oil for more than 10 per cent of their oil imports. This then is one obvious reason for the West’s intervention in Libya. Industrialised economies cannot afford to lose access to 10-23 per cent of their oil imports.

Source

But given the relatively small quantity of oil passing from Libya to North America, why is the US so heavily involved? Is it just a matter of the US helping out its NATO allies or is there more to this than meets the eye?

Dr. Paul Craig Roberts, former assistant secretary of US Treasury provides some insight on the revolution in Libya in a recent interview. He states:

In my opinion, what this is about is to eliminate China from the Mediterranean.  China has extensive energy investments and construction investments in Libya.  They are looking to Africa as a future energy source.

The US is countering this by organizing the United States African Command (USAC), which Qaddafi refused to join.

[…]

In my opinion, what is going on is comparable to what the US and Britain did to Japan in the 1930s. When they cut Japan off from oil, from rubber, from minerals like ore; that was the origin of World War II in the pacific. And now the Americans and the British are doing the same thing to China.

The geopolitics of oil is a very interesting subject and occurs very much outside of the spotlight of the mainstream media. It is my opinion that the great world powers are fully aware of the oil shortages upon our doorstep and are manoeuvering to control access to the remaining deposits of conventional oil. What concerns me is how this might play out. What we are now seeing in Libya could be the beginnings of the 21st century’s first great war.

The other interesting story surrounding Libyan oil is that Saudi Arabia pledged to raise production to offset the decline from Libya, and yet Saudi Arabian production remains flat. Could this be an indication that the kingdom actually no longer has the spare capacity to meet the global demand for oil? From the Daily Reckoning:

For better or worse, most of the “spare capacity” burden falls on Saudi Arabia. Saudi princes claim to be able to goose production from 9 million barrels a day to 12 at the drop of a hat.

Never mind that they’ve never done anything like that before, even when oil ran up from $25 to $147 a barrel between 2003-08. The official line – and, therefore, the oil market – still believes it’s true.

Bottom line: “Saudi Arabia can’t make the shortfall from Libyan supplies,” says commodities investing legend and Vancouver veteran Jim Rogers. “They’ve said in the past that they can increase production, but they can’t.”

To me, this is just one more indication that we are very close to, or past the peak in global oil production. If a loss of two per cent of the world’s oil supply cannot be made up by OPEC’s ‘swing producer’, and is cause for military posturing, then surely we are in a desperate place indeed.

What we hear from the media is that this latest run up in prices at the fuel pump is simply a result of speculators and freaked out investors, coupled with typical Easter long weekend price hikes. What they are missing is that the end of cheap oil is here. We have now entered a world of highly volatile liquid fuel prices, and just about anything could happen. Oil production can no longer keep pace with demand and desperate times call for desperate measures. Hold onto your hats, we could be in for a wild ride.

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2 comments

  1. Hi Mia,

    Great post and very well investigated. I kinda knew what was up with Libya especially the China connection. We are on the cusp of some big shenanigans by world players who like oil and have the military clout to attempt to take it by force.

    Gav x

    P.s. welcome back to OZ.

  2. THOUGHTS AND REFLECTIONS ON THE USE OF MILITARY POWER BY THE UNITED STATES OF AMERICA

    What is evident to me is that the politics of the world increasingly has to be viewed in terms of the raw use of military power. The US, at this juncture of human history, is the nation state with the greatest amount of military power in the world and there is serious cause for concern about how that power is used and projected into the world.
    I will explain what I mean.
    When the Wall Street mafia raped private funds and brought the world to global economic crisis, the response by Bush was to inject trillions back to the same gangsters, thieves and “banksters” who caused the crisis. Then, when Obama was elected, he did not reverse the process but continued and gave many trillions more back to the same “banksters”. At the same time for decades before, the United States defence budget has increased constantly year after year. At a time when clearly, many citizens of the US are in need in the midst of a serious economic slump, when there is no ‘cold war’ and the wars in which the US are engaged are not in the least wars of defence in response to any nation having attacked the US, it stretches the bounds of credulity to justify the on-going wars and bombardments of other weaker nations by US military forces and attacks by their troops supported by the NATO nations. In this sense, the traditional political ideas of divisions between Democrat and Republican, right and left, become meaningless.
    Again, post 9/11, the Bush administration used this event as the casus belli for bombing an already impoverished and war destroyed nation ( i.e. post the Soviet invasion and defeat). How does one catch Bin Laden by bombing carpet bombing Afghanistan is a logical question to ask. How does one target combatants who are not uniformed and do not comprise a standing army in their own country is the next question. How does one legitimize having trained the Taliban, Bin Laden and armed the Muslim combatants at a time when the US/CIA ( read: “Charlie Wilson’s war”) wanted to defeat the Soviets, then post war speak of trying to defeat the so-called Al-Qaeda fighters ( i.e. the very ones who had been trained by the CIA and the US is sacrificing young service persons lives for ) – and so justify this foreign incursion with an iota of credibility? How can it be justified to sacrifice young American lives to run an oil pipeline across Afghanistan and shed US blood on foreign soil in a war that supports a man whose brother along with the CIA has seen heroin production reach its zenith simultaneously while American troops have occupied Afghanistan? How can one legitimately speak of “freedom” when since 2003 the US government knowingly lied to the American people and the world about WMDs and clearly is faced with an unyielding resistance( because the Iraqis do not want illegal US occupation) and continue to sacrifice to a number of one million dead Iraqis and over 4,700 American lives ( officially acknowledged by the US) in a depleted uranium infested nation, due to this unyielding American aggression? How can there be any conceivable decency of US foreign policy when for eight years the US supported in turn Iraq under Saddam and Iran in a war that cost significant numbers of human life, during the longest conventional war of the twentieth century?:-

    (http://www.iranchamber.com/history/articles/arming_iraq.php)

    Today the illegality persists with the irony of the first US President of direct African descent setting out along with his European/NATO partners to destroy Libya, Africa’s most prosperous country measured on social indicies and the per capita income yardstick? This last question is supported, strange as it may seem, from the figures and information available on the CIA factbook ( assuming that post bombing the CIA has not deleted or altered the facts that were posted prior to the NATO bombardment).

    It is these kinds of questions that I find troubling, for that the answers that are to be given take any sentient, perceptive, decent and honest human being to a point of some doubt about why America is projecting its power into the world not so much as the “land of the free and the home of the brave”, but as the “land of thieves and home of slaves”. Pardon my apparent rudeness in so observing, but personally I yet have respect for the document termed the American Constitution for reasons of its innovative construct and genuine attempts to balance the forces and use of power within the nation. For peace-loving American individuals I bear no ill will. Unfortunately, the American government has diverged significantly from the founding fathers nobly expressed aspirations. Sadly, as Eisenhower warned of:-
    “the military industrial complex”
    http://www.rumormillnews.com/cgi-bin/forum.cgi?read=206082
    17th January, 1961
    his concerns have proven overwhelmingly justified.
    Conclusion
    I end on that note, because if it were merely me who alerted world denizens to beware of the use of the words “security” , “liberty” and “freedom” in the abstract, when justification is sought for US foreign policy, then no one would give any serious thought to merely my observations as made above about US/NATO hegemonic conduct. In actuality, it was a prescient Republican president who made the observations that increasingly in our world today are proving him brutally, bloodily and frighteningly – correct in his expressed insightful concerns.
    You may not be in agreement with me – but do share these thoughts with your friends, for that we have the power of the internet, our own minds, our basic concepts of human decency, justice and fairness to question these wars and to resist in whatever ways we can the advancing extended militarism of our times.
    Interestingly, George Kennan, the US architect of the cold war made these four observations:-
    “World communism is like [a] malignant parasite which feeds on diseased tissue” (1946).
    And
    “It may be true, and I suspect it is, that the mass of people everywhere are normally peace-loving and would accept many restraints and sacrifices in preference to the monstrous calamities of war.”

    (N.B.The humane ones amongst us ought not to embrace bellicosity as if it were the normal and natural state of conduct in human affairs. There is indeed a pathology of power, and it is manifest around us.)
    And
    “We should cease to talk about vague and unreal objectives such as human rights, the raising of the living standards, and democratization. The day is not far off when we are going to have to deal in straight power concepts. The less we are then hampered by idealistic slogans, the better.”
    And
    “Were the Soviet Union to sink tomorrow under the waters of the ocean, the American military establishment would have to go on, substantially unchanged, until some other adversary could be invented. Anything else would be an unacceptable shock to the American economy.”

    What was deemed to be potentially an unacceptable shock to the American economy, in this post Soviet collapse world of ours, viewing the various manifestations of American military power here and now, is an actual shock of horrendous proportions for the non-European and non-American peoples of the world ( some half million Asian lives and about 60,000 dead US service persons from the Vietnam war, to a million dead in the Iraq war and counting upwards). And if we, the people, are not hampered in our thoughts by the belief that the US and NATO really are projecting democratization, human rights and the quest for rising living standards into the world by way of its/their increasing militarism and aggression, the better we are able to appreciate what Kennan had in mind when he wrote the words quoted above. If communism is/was as Kennan stated, and his was an option of capitalism, which now has unchallenged dominance in the world, what must we, the many humans inhabiting our world, make of the conduct of the unbridled option which remains as it gains expression through the projection of military force into the world?

    Think again – peace!
    Courtenay Barnett – 4th June, 2011 ( http://www.globaljusticeonline)

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