New Oil Cold War
By Christian DeHaemer
The African proxy fight is on… It will shift the winners from the losers and make vast fortunes for a select few.
Gas is up
Here’s a shocker. The price of gas goes up in the summer! I know you can’t believe it. But it’s true. Every spring the U.S. refineries slow down production due to annual maintenance. This year they’ve hit more problems than normal. Consequently, inventories of US gasoline had fallen for three months up until last week.
The average national price is now at $3.073 – that’s above the $3.057 post Katrina highs.
But because nothing is simple in the markets, gasoline futures for June delivery fell 5.09 cents to settle at $2.3012 on the New York Mercantile Exchange. The price just got ahead of itself a bit.
The price of oil has also been heading higher…
Brent Sea Crude hit $US67 a barrel in London, due to tight supplies. In New York light sweet crude hit $US62.53 a barrel.
This upward momentum is due to a warning from International Energy Agency over tight supplies. This isn’t an all time high but it’s trending that way.
Don’t look for substitutes
Alternative energy is a false god. It is not the answer. Corn or ethanol requires more BTUs to produce than it makes. Wind farms take up a massive amount of space, create environmental concerns, and produce little energy. And even hybrid cars have a legacy of environmental damage due to their batteries.
And given that hybrid cars cost $1500 to $4500 more than non-hybrid cars, it would take years to make them pay for themselves. According to Edmunds, it would take nearly 10 years to recoup the extra costs after buying a 2007 Mercury Mariner Hybrid. For the 2007 Honda Accord and Honda Civic hybrids it takes 14.5 and 6.5 years, respectively.
The 2007 Toyota Prius remains a good bargain when compared to a similarly equipped 2007 Toyota Camry -- it takes just 1.2 years to break even.
But none of these alternative energy systems would be worth anything if it weren’t for massive government subsidies. And in the case of Toyota, severe discounting…
Don’t look for Nukes either…
An increase in nuclear power energy remains five to ten years off – and in the end is local. Though I’m working on putting a reactor in my Hummer. I’ve already lined the trunk with two feet of lead…
Don’t get me wrong, the demand for Uranium is there, but in many ways it is a speculative bubble created by future demand and the desires of certain rogue funds – in the long run the nuclear build out is going to happen.
In the meantime, the only practical answer remains hydrocarbons in general and oil in particular.
Africa has oil
There are few places of undiscovered oil left on earth. One of which is the war-torn environs in the horn of Africa.
In fact the northern region of Somalia or Puntland contains the same geography as Yemen and Saudi Arabia. There are billions of barrels of oil under the sand.
It’s true that we just got reports of the worst fighting in Mogadishu since the U.S. Marines left more than a decade ago. The war rages on. The CIA has backed the Ethiopian government, which has recently invaded Mogadishu in order to force out the hard core Islamo-fascists that control that part of the world. This effort has been partially successful to date.
But, that really doesn’t matter because there is no fighting in Puntland. There is a huge difference between Puntland and Mogadishu. Puntland acts as an independent state with laws, human rights, the ability to sign treaties, etc.
At any rate, war or no war, there is a desire by the global forces to reap the natural resources of Africa. So after two decades of relatively little outside interference, Africa is in play once more.
The CIA is there. The Army just reconstructed its command structure creating an Africa Command and has 1,700 American troops in Djibouti – just west of Puntland, though it’s not getting much play in the media. In fact most people have never heard of the African Command. But it’s there.
On the other side, you have Chinese President Hu Jintao, who has visited Africa twice in the past year. China is investing billions of dollars in eight African countries in a bid to secure resources from oil to gold.
This is not surprising since Africa supplied between 25 percent and 28 percent of China's oil imports in 2006.
There will be a new cold war for natural resources in Africa - a proxy fight to secure the worlds last untapped pool of black gold.
The upshot is that gasoline is heading toward $4 – who knows if it will get there. It’s likely. Oil is heading toward record highs. China has been growing at 10% a year for since 1978. The U.S. continues to increase demand. Alternative energy isn’t cost effective – at least not yet.
There is money to be made in Africa, in oil, and that’s where I’d advise you to look.
Sincerely,
Christian DeHaemer, American Capitalist
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