GWB knows it too.
Cutting off the nose to spite the face. If they want to classify the aforementioned banks as speculators, they’d better be prepared to give them the additional classification of “bankrupt”, since energy hedges are about the only things keeping the lights on at these institutions.
Startling stupidity on the part of the government... ONCE AGAIN.
Saudi Arabia has us by the cajones, plain and simple. If OPEC member nations sign on to the oil-in-the-ground-as-insurance-for-the-future philosophy, oil will continue to go up and up and up. If Saudi Arabia enacts this kind of policy, the pressure will be enormous from the constituents of other OPEC nations (i.e., their citizens) to follow suit. A policy of aggressively conserving production would almost guarantee military conflagration.
I’ve said this time and again for the last two years: the Middle East doesn’t need a nuclear weapon when it can simply strangle the oil market by leaving it in the ground. As light bulbs continue to go on in places like Saudi Arabia, you’re going to see a level of consternation that WILL push us to the brink of an all out World War for oil.
Ironically, this is all dovetailing with Iran’s interest in preventing it’s own economic demise, as it moves rapidly toward becoming a net IMPORTER of oil. If we push past the bluster and saber-rattling and look at the unfolding scenario with a cold eye, it becomes very obvious what Iran’s goals are:
Iran wants actual WMD so it can take possession of economic WMD (Saudi oil reserves) and call the shots with a nuclear gun at the head of Europe/Israel/Asia...They’re not interested in destroying Israel, per se. They’re interested in controlling Saudi Arabia by means of coercion or all-out conquest. Israel’s just the feint. Once Iran gets control of those fields, the rest of the world will have to either come to them hat-in-hand, or start a nuclear war.
But I digress.
The oil producers have discovered that they can essentially name the price for the oil they sell as Mexico and the North Sea interests very publicly broadcast the declining status of their fields. The world economy is on the brink and there are no alternatives on the horizon for manufacturing, transportation, etc. - all of which will shrivel and die without oil, and take their respective economies (and governments) with them. The only way it backfires is if a worldwide depression literally devolves us back into an agrarian society. Anything short of that, and oil is still indispensable and more precious than ever.
Thus, if oil is going to be the weapon of choice, the only discernible outcome would be an Oil War for control of Saudi Arabia. If Iran gets there before us, our standard of living is going to decrease quickly. If we get there before Iran, we could push China into a grab for the south Asian shipping lanes, not unlike Japan pre-WWII, as a hedge against the U.S. having complete hegemony with oil, and maybe even make a play for India. It’s just ugly.
Any way we cut it, we have to get the Saudis to abandon the notion that they are better off using reduced production as a hedge for their own future. At the same time we have to stop the Iranians from building nuclear weapons. And then we have to pray that Peak Oil is a sham. If it’s not, none of this matters. The price of oil will only go up until we find an alternative.
And now you know why we can’t leave Iraq.
GWB knows it too.