A-Infos (en) US, Minneapolis, DAYBREAK #6 - The Game by T. Hunnicutt

America, once the leading creditor nation in the world, is now the leading
debtor nation and the US continues to live beyond it means. Most Americans
cannot make a decent living and many are up to their eyeballs in debt. The
Bush administration continues to spend without taking any legitimate steps
to slow down the federal deficit. Other nations whose governments allow
their deficits to get out of control would swiftly be punished by the
market.  Investors would lose confidence, interest rates would have to be
raised to attract capital, financing the deficit would become more
expensive and a vicious spiral would be in place.

     The US gets away with its out of control spending because America can
borrow money, mainly from abroad, with impunity. The US economy is a
crucial market for the world’s producers so there is no lack of
credit. Since 1945, the US has been the sole engine powering the
world’s economy so there hasn’t been any choice other than to pump
money into America. Additionally, the US, the richest nation in the
world, has traditionally been viewed as being good for the money.

     However, the primary advantage the US has over other countries is
that the US owns the world’s reserve currency, which consists of the
notes and coins used for trade and investments over all other
currencies. This gives the dollar a huge advantage. The US doesn’t
have to balance its books because if the government runs out of money
and can’t find a lender to bail it out, the government can just print
more money inflating away the value of its debt and destroying the
value of assets held by its creditors.

     The reason the dollar is the world’s reserve currency is because the
dollar is the currency of the oil industry. Since most countries need
to

import oil, they have to maintain reserves in dollars to pay for it.
Two-thirds of the worlds currency reserves are kept in dollars. A switch

out of dollars would be a major assault on the dollar’s pre-eminence in
the world.

     In order to finance its current and future foreign wars, the US needs
to persuade investors, again mostly from overseas, to lend the US
government $4 billion every day to finance its soaring federal
deficit. Part of the Bush administration’s formula of foreign policy
expansionism in Afghanistan and Iraq is having foreign investors
finance the administration’s intrigues (while at the same time
providing huge tax cuts to America’s wealthiest citizens). Although
the US officially has a “strong dollar” policy, the Bush
administration is quietly letting the value of the dollar fall. The
last engineered fall in the value of the dollar took place in the
1970s during the Vietnam War. This had the effect of wiping out the
federal deficit over time but also crucified America’s trading
partners. The same thing is happening today.  Exporters to the US
such as China and Japan have no choice but to try and arrest this
decline by buying dollars which they invest in US Treasury Bonds,
thus financing the deficit, to protect their own trade. It doesn’t
matter what these countries think about America’s foreign policy
objectives; they are seemingly caught in a trap.

     Those unhappy with America’s quest of global manifest destiny
understand the game. Countries that see their part as pawns on the
grand chessboard are beginning to see that rejecting the dollar can
be a means of political

aggression. Saddam Hussein grasped this concept and saw the Euro as a
likely candidate to fill the role of the dollar (note 1).



The Euro

     The euro was created over the past five years and may have sparked a
hidden war over global hegemony as to the world’s reserve currency.
Prior to 1999, there was no potential challenger to the dollar in
world trade. The dollar has been at the center of world trade since
the US went off the gold standard in the early 1970s and oil took its
place. For US global ambitions, the dollar is as important
strategically, if not more so, than its military superiority.

     Until 2000, no OPEC country (Organization of Petroleum Exporting
Countries) dared to violate the dollar price rules laid down by the
US and so long as the dollar was the strongest currency there was
little reason to violate these rules. But, in November of that year,
Saddam Hussein decided to sell oil in euros rather than dollars --
“the enemy currency.” Iraq’s move to the euro in defiance of the US
and the dollar was in itself no big deal. However, if other countries
followed Iraq’s lead of switching to the euro it could create a panic
sell-off of dollars which would devastate the US economy. In the
months before the current Iraq war, hints along theselines were being
heard from Russia, Iran, Indonesia, and Venezuela. Many believe,
including a number of eminent Middle Eastern experts, that the Iraq
invasion was seized on as the easiest way to deliver a deadly
pre-emptive warning to OPEC and others not to flirt with abandoning
the “petro-dollar” system for one based on the euro. One thing is
sure, Iraq is about oil and preserving global domination (note 2).



Oil

     “... We as an industry have had to deal with the pesky problem that
once you find oil and pump it out of the ground you’ve got to turn
around and find more or go out of business...

    ... Every year you’ve got to find and develop reserves equal to your
output just to stand still, just to stay even. This is true for
companies as well as in the broader economic sense as it is for the
world. A new merged company like Exxon-Mobile will have to secure over
a billion and a half barrels of new oil equivalent reserves every year
just to replace existing production...

    ...For the world as a whole, oil companies are expected to keep
finding and developing enough oil to offset our 71 million-plus barrel
a day of oil depletion, but also to meet new demand. By some estimates
there will be an average of two percent average growth in global oil
demand over the ten years ahead along with conservatively a three
percent natural decline in production from existing reserves. That
means by 2010 we will need on the order of an additional 50 million
barrels a day...

    ...So where is the oil going to come from?

    ...For most companies, the majority of their profits come from core
areas, that is areas where they have significant investments,
economies of scale and large license areas locked up, but many of
these core areas are now mature, and it can be difficult to replace
the earnings from the high margin barrels there. Some of the oil being
developed in new areas is obviouslyvery high cost and low margin...

    ...Clearly the main driver behind the biggest mergers are the cost
savings that are anticipated as a result of economies of scale....

    ...Oil is unique in that it is so strategic in nature. We are not
talking about soapflakes or leisurewear here. Energy is truly
fundamental  to the world’s economy. The Gulf War was a reflection of
that reality. It is the basic, fundamental building block of the
world’s economy...

    ...Well, the end of the oil era is not here yet, but changes are
afoot, and the industry must be ready to adapt to the new century and
to the

transformations that lie ahead....”



--- Halliburton Chairman Dick Cheney in a speech given to the London
Institute of Petroleum, November, 1999



     “China and India are building superhighways and automobile factories.
Energy demand is expected to rise by about 50 percent over the next
20 years, with about 40 percent of that demand to be supplied by
petroleum...

    Oil supplies are finite and will soon be controlled by a handful of
nations; the invasion of Iraq and control of its supplies will do
little to

change that. One can only hope that an informed electorate and its
principled representatives will realize that the facts do matter, and that
nature -- not military might -- will soon dictate the ultimate
availability of petroleum.”



--- Alfred Cavallo, “Oil:The Illusion of Plenty,” Bulletin of the Atomic
Scientists, Jan-Feb 2004



“The 9/11 attacks gave the US an ideal pretext to use force to secure its
global domination...

     The plan “Rebuilding America’s Defenses: Project for a New American
Century - 2000” shows Bush’s cabinet intended to take military
control of the Gulf region whether or not Saddam Hussein was in
power...

    The overriding motivation for this political smokescreen is that the
US and the UK are beginning to run out of secure hydrocarbon energy
supplies... As demand is increasing, so supply is decreasing,
continually since the 1960s.”



--- Michael Meacher MP, UK Environmental Minister 1997-2003, “The War on
Terrorism is Bogus,” The Guardian, September 6, 2003



    In a few years the global production of conventional oil will fall,
while global demand continues to rise. The resulting shock of this
structural oil famine is inevitable. American geologist M. King
Hubbert predicted in 1956 the peak in US domestic oil production in
1970. He was amazingly accurate. Transposing Hubbert’s approach today
to other countries has given similar predictive results. Currently,
the production of every giant oil field -- and only the giant ones
matter -- is in decline except in the “black triangle” of Iraq, Iran,
and Saudi Arabia.

     The Hubbert’s Peak of Middle East oil production is expected to be
reached around 2010 depending on recovery of full Iraqi production
and the growth rate of demand from India, China and lesser
industrializing countries. The sectors most affected first by a
steady rise in the price of crude oil will be intensive agriculture
and aviation. The price of crude oil is directly linked to prices of
nitrogenous fertilizer, jet fuel and diesel fuel. Following these
will be ground transportation, the automotive industry, and any
industry using petrochemicals. These sectors would then begin to feel
the effects of a reduction in the quantity of oil (depletion). The
oil shock that will come before the end of the decade will not be
like its predecessors. Prior oil shocks were geopolitical in nature,
the upcoming oil shortage will be geological in nature. In 1973 and
1979, the shortages had a political origin in OPEC’s decisions;
supply was then restored. Today, the wells themselves are in decline
(note 3).

     Already the world is losing more than a million barrels of oil per
day due to depletion, twice the rate of two years ago according to an
analysis published in Petroleum Review (Aug. 2004) the oil and gas
magazine of the Energy Institute of London. This oil is consumed
primarily by the industrialized nations and cannot be replaced.

     The analysis dissected the out-put from 18 significant oil-producing
countries which account for 29 percent of total world production. The
report also found the annual rate of decline appears to be
accelerating, contrary to the view that depletion progresses slowly.
This analysis, based on data in the latest British Petroleum (BP)
Statistical Review of World Energy, reports production from this
group of 18 countries peaked in 1997 at 24.7 million barrels per day
(mb/d) and by 2003 it had fallen to 22.1 mb/d. In 1998, these 18
countries’ total production dropped by less than one percent, whereas
in 2003 it declined by nearly five.

     Declining oil production from entire countries, as opposed to
individual fields or regions, is a recent development. Until the
1990s, only two countries were in decline, including the US where
production peaked in 1971 and began continuously to decline in 1985.
By the late 1990s, the BP statistics showed at least ten significant
producers in decline. Two more were added each year from 1999 to 2001
(note 4).

     Oil, so rich in stored energy, so easy to use, store, transport, and
with so many uses -- domestic, industrial, fuel, raw material, etc.
-- has no equal or replacement. Once oil is gone the indu trial age,
as we know it, is gone as well.



Paths

     Permaculture, a design system for creating sustainable human
environments along with local currencies, is one viable option
(coupled with an adjustment of life-style). Many communities around
the country, such as Ithaca, N.Y., have already begun implementing
their own alternative currency systems, but the majority of Americans
are trapped in a system that will strip almost everyone of their
assets should it ever collapse, or sag significantly, which many
knowledgeable observers fear is imminent.

    Permaculture principles, to paraphrase the founder of permaculture,
designer Bill Mollison: “...focus on thoughtful designs for
small-scale intensive systems which are labor efficient and which use
biological resources instead of fossil fuels. Designs stress
ecological connections and closed energy and material loops. The core
of permaculture is design and the working relationships and
connections between all things. Each component in a system performs
multiple functions, and each function is supported by many elements.
Key to efficient design is observation and replication of natural
ecosystems, where designers maximize diversity with polycultures,
stress efficient energy planning for houses and settlement, using and
accelerating natural plant succession, and increasing the highly
productive "edge-zones" within the system.

     The central design of ecological landscapes is to produce food with
emphasis placed on multi-use plants and the integration of animals to
recycle nutrients and graze weeds. Gardening and recycling methods
common to permaculture include edible landscaping, keyhole gardening,
companion planting, trellising, sheet mulching, chicken tractors,
solar greenhouses, spiral herb gardens, swales, and vermicomposting.
However, waste water treatment, solar and wind power, composting
toilets, solar greenhouses, energy efficient housing, solar food
cooking and drying, recycling, and land stewardship in general are
other important components of permaculture. Water collection,
management, and re-use systems like Keyline, greywater, rain
catchment, constructed wetlands, aquaponics (the integration of
hydroponics with recirculating aquaculture), and solar aquatic ponds
(also known as Living Machines) play an important role in
permaculture designs. More recently, permaculture has expanded its
purview to include economic and social structures that support the
evolution and development of more permanent communities, such as
co-housing projects and eco-villages. As such, permaculture design
concepts are applicable to urban as well as rural settings, and are
appropriate for single households as well as whole farms and villages
(note 5). Permaculture also acknowlodges a basic life ethic, the
intrinsic worth of every living thing. The value of living entities
beyond commercial value and is something that is sorely lacking in
our current mass media driven consumer culture.



Note 1:  America’s Foes Prepare for Monetary Jihad, by Janet Bush, The New
Statesman, October 4, 2004

Note 2:  A New American Century? Iraq and the Hidden Euro-Dollar Wars, by
F. William Engdahl, Current Concerns, english edition of Zeit Fragen, No.
4, 2003

Note 3: Toward the Petro-Apocalypse, by Yves Cochet, Le Monde (Paris),
March 31, 2004, <http://www.lemonde.fr/web/article/0,1
0@2-3232,36359335,0.html>

Note 4: Over a Million Barrels of Oil a Day Lost to Depletion, From the
Wilderness, August 24, 2004 <http://www.fromthewilder ness.com/>. Also see
<http://www.peakoil.org/>

Note 5: ATTRA - National Sustainable Agriculture Information Service,
<http://attra. ncat.org/attra pub/perma.html#intro>
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