|Saudi King Salman bin Abdulazi|
Black gold hemorrhage
From riches to rags
End of the road
BEHCHOKO, Northwest Territories, Canada, Oct 26 (Thomson Reuters Foundation) - Daniel T’seleie, an indigenous activist in Canada’s far north, is campaigning to help his people wean themselves from a worrying dependence on imported fuel and food, recover old traditions and win greater autonomy from the government.
In a region with nearly 24 hours of daylight in the summer, one way to help meet his goals seems obvious: more solar power.
“Right now a lot of communities in the Northwest Territories are dependent on diesel-generated electricity, along with store-bought food,” said T’seleie in an open air interview near Behchoko, a clutch of small wooden houses nestled along the shores of Great Slave Lake.
Standing beside spindly jack pine trees growing from thin soil on the hard granite rock that covers much of northern Canada, T’seleie sees renewable energy as the force which could respond to the region’s complex, intertwined challenges.
Canada’s north is particularly vulnerable to global warming, which is making it harder for indigenous people to continue their traditions of hunting and trapping on the land, as ice sheets melt and caribou herds collapse.
And although indigenous people want what they call a “nation to nation” relationship with the Canadian government, they largely depend on it for diesel fuel in order to keep warm.
By harnessing renewable energy, T’seleie believes indigenous communities could gain more freedom from the state and revive ancient cultural practices, while doing their part to combat climate change which is hitting them particularly hard.
“Any way that communities can produce energy at a local level produces independence,” said the 34-year-old, sporting a baseball cap and jeans, the informal dress common in Canada’s rugged north.
The Northwest Territories has seen a surge in the use of solar power over the last five years, after the regional government spent about $50 million to boost renewable energy production and improve efficiency, said Jim Sparling, the territory’s senior climate change manager.
“On a per capita basis, we are second only to Ontario (Canada’s most populous province) for installed solar capacity,” Sparling told the Thomson Reuters Foundation in the territorial capital Yellowknife.
The huge and sparsely populated northern territory has fewer than 50,000 residents, about half of whom are indigenous, many from the Dene Nation, a tribal people who traditionally hunt caribou.
Solar power still represents a fairly small part of its energy consumption, though the level is rising, said Sparling.
Private individuals and companies in the territory are also installing solar panels on their own to try and bring down their energy bills and cut dependence on imports, he said.
That combination of rising use of renewable and better energy efficiency has allowed the province to hold its climate-changing emissions stable at 2005 levels despite a rise in the population and a growing economy, Sparling said.
The territorial government plans to be part of a Canadian delegation going to Paris for a U.N. climate summit in December, aimed at reaching a new global agreement on climate change.
Average temperatures in parts of the northern territory have already risen more than 3 degrees from pre-industrial levels, Sparling said.
Scientists say average world temperatures should not rise more 2 degrees if the world is to avoid the worst disasters associated with global warming.
“We have to scale up the ambition,” Sparling said. “We are very vulnerable if this problem gets worse.”
North of the Arctic Circle, the village of Colville Lake, with fewer than 200 residents, is in the midst of a major switch from diesel power to solar.
Last year, the mostly indigenous community faced weekly power outages. But after a new solar power system was set-up, the area is now nearly self sufficient in electricity production during summer months when the sun shines almost round the clock.
It still needs to import fuel for the winter, but officials believe the new investments will lead to a 30 percent drop in diesel consumption, helping the environment and saving money.
Other small northern towns are looking to mimic the project to save cash and allow people to maintain traditional lifestyles by being less dependent on expensive imports.
“In the last 10 to 15 years there has been a huge push from (indigenous) communities to try and support themselves,” said Ashlee Cunsolo Willox, an indigenous studies professor at Cape Breton University and a researcher on climate change impacts.
As global warming leads to the thinning of Arctic sea ice and changes in the habits of northern animals, the region’s indigenous inhabitants are struggling to adapt their lifestyles while holding onto old traditions, she said.
The caribou population has collapsed in parts of the territory in a development experts link to climate change, and melting ice makes it harder for hunters to navigate the land in search of other animals to hunt.
“The north is the fastest changing geography in the world,” Cunsolo Willox said in a phone interview. “There is a lot of concern that traditional knowledge and skills will be lost with climate change.”
OLD TRADITIONS, NEW TECHNOLOGIES
Building greater self sufficiency - including by adapting cleaner, cheaper energy - may be a strategy for holding onto the old ways, activists say.
T’seleie, a law school graduate, said he previously tried to work through Canada’s court system and treaty negotiations to win greater autonomy for his people, after what he considers years of colonial abuses.
In the 1920s, Canadian colonial administrators declared the government’s aim was to “get rid of the Indian problem” by ending indigenous cultural practices, corralling the population into reserves and forcing aboriginal children into grim residential schools.
Canada’s government signed treaties with many indigenous groups, often in return for political support during periods of conflict, granting them access to parts of the land they once controlled and other benefits.
But many legal scholars and historians say the government did not honor those agreements in good faith.
After becoming disillusioned with the legal process, T’seleie decided working towards greater self-sufficiency in food and energy was the best way forward.
T’seleie is part of the first generation of indigenous people not forced to attend residential schools usually run by religious groups in other parts of Canada which took children from their parents, and forced them to speak English rather than native languages as a means of assimilation.
Sexual and physical abuse were rife at the institutions, the government now admits following years of litigation.
Health experts and indigenous leaders believe the legacy from these schools - including that many parents never learned how to raise children, as they were taken from their own parents - partially explain high rates of substance abuse, family violence and poverty in some indigenous communities.
Allowing people to stay on their ancestral land, continuing hunting and trapping practices, and learning stories and traditions from community elders are key to overcoming these problems, said Cunsolo Willox.
To support traditional practices and allow indigenous communities to live off the land as they have done for centuries, they need access to renewable energy, T’seleie said.
“A huge aspect of our lives, culture and language is lost when we can’t be on the land,” he said. “For me, that’s one of the biggest threats of climate change.” More
18 November 2015: The International Energy Agency (IEA) held its 2015 Ministerial meeting under the theme, ‘Innovation for a Clean, Secure Energy Future.’
According to the Summary of the Chair, Ernest Moniz, US Secretary of Energy, discussions focused on “the critical role that energy sector policies and energy innovation can play to successfully combat climate change.” Among the meeting outcomes was a statement calling for the successful outcome of the 21st session of the Conference of the Parties (COP 21) to the UNFCCC.
The IEA Ministerial Statement on Energy and Climate Change highlights five key opportunities for reducing emissions from the energy sector and advance the date that emissions peak. These opportunities are: increasing energy efficiency in the industry, buildings and transport sectors; phasing-out the use of the least-efficient coal-fired power plants; increasing investment in renewable energy technologies (including hydropower); gradual phasing out of inefficient fossil-fuel subsidies to end-users; and reducing methane emissions from oil and gas production.
In the context of COP 21, the ministers call for explicit recognition and a signal that an energy transformation is necessary to achieve climate goals and that the transformation is underway. They further pledge to support their negotiators to successfully conclude an ambitious agreement.
During the meeting, ministers heard from IEA Executive Director Fatih Birol on three pillars for modernizing the IEA, the first being the opening of the IEA’s doors to membership of emerging economies. On 16 November 2015, Mexico announced its decision to pursue membership of the IEA. The second pillar, according to Birol, is broadening the IEA’s core mandate of energy security, and the third pillar relates to “transforming the Agency to become a global hub for clean energy technologies and energy efficiency.” According to the Chair’s Summary, ministers also noted an analysis by the IEA Secretariat that energy efficiency is the “first fuel” and is supporting economic growth without increasing emissions.
The meeting was held 17-18 November 2015, in Paris, France. All 29 IEA countries were represented by ministers or other high-level officials at the meeting. Nine partner countries and 30 top business executives also attended. [IEA Press Release] [Chair’s Summary] [IEA Ministerial Statement on Energy and Climate Change]
The rumblings of revolt against Saudi Arabia and the Opec Gulf states are growing louder as half a trillion dollars goes up in smoke, and each month that goes by fails to bring about the long-awaited killer blow against the US shale industry.
Algeria’s former energy minister, Nordine Aït-Laoussine, says the time has come to consider suspending his country’s Opec membership if the cartel is unwilling to defend oil prices and merely serves as the tool of a Saudi regime pursuing its own self-interest. “Why remain in an organisation that no longer serves any purpose?” he asked.
Saudi Arabia can, of course, do whatever it wants at the Opec summit in Vienna on December 4. As the cartel hegemon, it can continue to flood the global market with crude oil and hold prices below $50.
It can ignore desperate pleas from Venezuela, Ecuador and Algeria, among others, for concerted cuts in output in order to soak the world glut of 2m barrels a day, and lift prices to around $75. But to do so is to violate the Opec charter safeguarding the welfare of all member states.
“Saudi Arabia is acting directly against the interests of half the cartel and is running Opec over a cliff. There could be a total blow-out in Vienna,” said Helima Croft, a former oil analyst at the US Central Intelligence Agency and now at RBC Capital Markets
The Saudis need Opec. It is the instrument through which they leverage their global power and influence, much as Germany attains world rank through the amplification effect of the EU.
The 29-year-old deputy crown prince now running Saudi Arabia, Mohammad bin Salman, has to tread with care. He may have inherited the steel will and vaulting ambitions of his grandfather, the terrifying Ibn Saud, but he has ruffled many feathers and cannot lightly detonate a crisis within Opec just months after entangling his country in a calamitous war in Yemen. “It would fuel discontent in the Kingdom and play to the sense that they don’t know what they are doing,” she said.
The International Energy Agency (IEA) estimates that the oil price crash has cut Opec revenues from $1 trillion a year to $550bn, setting off a fiscal crisis that has already been going on long enough to mutate into a bigger geostrategic crisis.
Mohammed Bin Hamad Al Rumhy, Oman’s (non-Opec) oil minister, said the Saudi bloc has blundered into a trap of their own making - a view shared by many within Saudi Arabia itself.
“If you have 1m barrels a day extra in the market, you just destroy the market. We are feeling the pain and we’re taking it like a God-driven crisis. Sorry, I don’t buy this, I think we’ve created it ourselves,” he said.
The Saudis tell us with a straight face that they are letting the market set prices, a claim that brings a wry smile to energy veterans. One might legitimately suspect that they will revert to cartel practices when they have smashed their rivals, if they succeed in doing so.
One might also suspect that part of their game is to check the advance of solar and wind power in a last-ditch effort to stop the renewable juggernaut and win another reprieve for the status quo. If so, they are too late. That error was made five or six years ago when they allowed oil prices to stay above $100 for too long. But Opec can throw sand in the wheels. More
For the last few years, the Saudi kingdom’s insistence on pumping oil at high capacity has dramatically depressed oil prices. The result has undermined Saudi’s major oil rivals in OPEC – like Iran and Venezuela.
It has also hit Russia, hard.
Rating agency Standard & Poor forecasts that Russia’s budget deficit is set to swell to 4.4 per cent of GDP this year. Russia’s own finance ministry concedes that if expenditures continue at this rate, within sixteen months – by around the end of next year – its oil reserve funds will be exhausted.
Meanwhile, over the last year real incomes have dropped by 9.8 per cent, and food prices have spiked by 17 per cent, heightening the risk of civil unrest.
Rumbling along beneath the surface of such financial woes are deeper systemic issues.
A report from the Swedish Defence Research Agency notes that “prolonged dry periods in southern Russia are having the effect of reducing the level of food production”.
Most of Russia’s wheat imports come from Kazakhstan, “where climate change is expected to exacerbate droughts. These impacts would make farming harder and food more expensive,” observe Dr. Marina Sharmina and Dr. Christopher Jones of the Tyndall Centre for Climate Change Research.
Russia’s looming energy crisis is the other elephant in the room. In 2013, HSBC forecasted that Russia would hit peak oil between 2018 and 2019, experiencing a brief plateau before declining by 30 per cent from 2020 to 2025.
That year, Fitch Ratings came to pretty much the same conclusion. And last year, Leonid Fedun, vice-president of Russia’s second largest oil producer, Lukoil, predicted that the production could peak earlier due to falling oil prices and US-EU sanctions.
Faced with overlapping economic, food and energy crises, Russia is well and truly on the brink. More
Furthermore, According to a recent report from the IMF, Saudi Arabia’s public debt is estimated to rise from below 2 percent of its GDP in 2014 up to 33 percent by the end of 2020. The report also shows that in the past three years, Saudi Arabia’s budget surplus was turned into a deficit reaching 21.6 percent of GDP in 2015. More
As if there weren’t already enough problems to worry about in the Middle East, Saudi Arabia might be headed for trouble.
From plummeting oil prices to foreign-policy missteps to growing tensions with Iran, a confluence of recent events is mounting to pose some serious challenges for the Saudi regime. If not properly managed, these events could eventually coalesce into a perfect storm that significantly increases the risk of instability within the kingdom, with untold consequences for global oil markets and security in the Middle East.
Here are some of the percolating problems that could throw the country off kilter.
Fissures Within the Royal Family. Last week, the Guardian published two letters that an anonymous Saudi prince recently circulated among senior members of the royal family, calling on them to stage a palace coup against King Salman. The letters allege that Salman, who ascended to the throne in January, and his powerful 30-something son Deputy Crown Prince Mohammed bin Salman have pursued dangerous policies that are leading the country to political, economic, and military ruin. In an interview with the Guardian, the prince insisted that his demand for a change in leadership not only had growing support within the royal family but across broader Saudi society as well. “The public [is] also pushing for this very hard,” he claimed. “They say you have to do this or the country will go to disaster.” The article, which includes the letters, written in Arabic, has been shared more than 15,000 times.
The Yemen War. The longer it drags on, the greater the risk that the Saudi intervention against Houthi rebels could become a serious source of internal dissension. In its story on the prince’s letters, the Guardian reported that “many Saudis are sickened by the sight of the Arab world’s richest country pummelling its poorest.” Particular blame is attached to Prince Mohammed bin Salman, who also serves as the kingdom’s defense minister and by all accounts has been the driving force behind the war effort. Tagged with the unofficial nickname “Reckless,” Prince Mohammed bin Salman has been accused of rushing into Yemen without a clear strategy or exit plan, resulting in mounting costs in blood and treasure, an ever-expanding humanitarian crisis, and growing international criticism.
Economic Problems. Thanks largely to Saudi policy, oil prices plummeted by more than 50 percent in the past year. Facing a market glut due to the U.S. oil boom, Saudi strategy has been to maintain high production, fight for market share, allow prices to collapse, and wait for higher cost producers, particularly in America, to be driven out of business. With cheaper oil spurring increased demand and squeezing out excess supply, the theory was that higher prices would return before the kingdom ever felt any real economic pinch.
But it hasn’t quite worked out that way — at least not as quickly as the Saudis anticipated. Indeed, Saudi Arabia’s 2015 budget was based on the assumption that oil would be selling at about $90 per barrel. Today, it’s closer to half that. At the same time, the Saudis have incurred a rash of expenses that weren’t planned for, including those associated with King Salman’s ascendance to the throne (securing loyalty for a new king can be expensive business) and the war in Yemen.
The result is a budget deficit approaching 20 percent, well over $100 billion, requiring the Saudis to deplete their huge foreign exchange reserves at a record rate (about $12 billion per month) while also accelerating bond sales. The Saudis have reportedly liquidated more than $70 billion of their holdings with global asset managers in just the past 6 months.
While there’s no danger that the kingdom will run out of money anytime soon, the longer this trend of large budget deficits, lower oil prices, and declining foreign exchange reserves continues, the more nervous international markets will become — with potential implications for key indicators like credit rating and capital flight. Adding to long-term concerns is the fact that Saudi net oil exports have been in slow decline for years as internal energy consumption rises dramatically. Indeed, analysts now suggest that rapidly expanding domestic demand could render the kingdom a net importer of oil by the 2030s. It goes without saying that such a development poses a mortal threat to the kingdom, where oil sales still account for 80 to 90 percent of state revenues. More
The debate over rooftop solar has grown increasingly contentious, pitting solar PV companies against utilities in many parts of the country. But nowhere has the debate been more heated than in sunny Arizona, where many customers have flocked to rooftop solar as prices have come down in recent years. Most recently, utility Salt River Project (SRP) has introduced a demand charge for solar customers.
Already common among commercial rate structures but much less so among residential, a demand charge is a component of the overall bill based on a customer’s maximum demand (kW) each month, in addition to more-traditional charges based on total consumption (kWh).
SRP argues that it needs to recover costs from its solar customers that they impose on the grid through high demand. The utility position is that solar customers use the grid in much the same way as non-solar customers, and impose similar costs. Yet traditional rates coupled with existing net energy metering (NEM) riders mean that solar customers pay much less per month than other customers. SRP’s new rate is designed to recover the difference by imposing a charge on a customer’s peak demand each month, which generally occurs after the sun sets.
However, solar companies and others claim that this pricing structure is unfair. The largest PV developer in the U.S., SolarCity, has sued the utility, arguing that SRP is practicing anti-competitive behavior. In any case, whether the new rate is fair or unfair, it means that the PV market is growing much more slowly in SRP than it was a year ago; interconnect requests have More
A recent press release from Canadian-owned utility Fortis TCI, contradicting an earlier pronouncement by the Rufus Ewing-led government that the company was considering a change in part from inefficient diesel generation to renewable or green energy, has reopened debate on a number of related issues, including the cost of electricity in the TCI and the relationship between successive TCI governments and Canadian firms.
|Fortis TCI headquarters in Providenciales|
Fortis Inc. is the largest investor-owned gas and electric distribution utility in Canada. Its regulated utilities account for 90 percent of total assets and serve more than 2.4 million customers across Canada and in New York State and the Caribbean – Belize, Cayman Islands and the TCI.
In 2011, the government of Belize expropriated the approximately 70% ownership interest of Fortis Inc. in Belize Electricity Ltd (BEL) an integrated electric utility and the principal distributor in Belize.
Fortis still owns Belize Electric Company Limited (BECOL), a non-regulated hydroelectric generation business that operates three hydroelectric generating facilities in Belize. There is an ongoing controversy over a secret and possibly unenforceable agreement between the then government of Belize and Fortis over alleged pre-emption rights in relation to national waterways.
In 2013, in opposing a proposed $1.5 billion acquisition of CH Energy Group in New York, a local grassroots group pointed to what they say is Fortis’ poor record in dealing with projects in Belize and British Columbia and citing "misinformation and a lack of trust" on the part of Fortis.
Meanwhile, Fortis TCI has possibly the highest cost of electricity in the western hemisphere and five times higher than those charged by the closest mainland utility Florida Power and Light (FPL). Further, the company returns to its Canadian parent a profit averaging $1,000 per year per household from a customer base numbering only 9,000 consumers, which equates to more than $80 per month per household in pure profit.
Notwithstanding the extraordinarily high profit margins enjoyed by Fortis, the company is permitted to import supplies and equipment duty free and constantly upgrades its distribution system in order to lower its long term costs.
While the internal operating statements of Fortis TCI have yet to be made public, it has long been suspected that the utility uses accelerated depreciation to write off capital expenditures quickly and therefore reduce their publicly reported profits. US accounting practices require that capital equipment and assets be depreciated more closely in line with the life expectancy of the asset, reducing the annual write off and therefore showing a more accurate, and possibly higher net profit.
The latest Fortis policy on renewable energy sources puts a halt to the hope of generating power from wind energy from the prevailing trade winds or from solar panels.
Fortis defended its new position on a reported failure of German green power efforts. However, Germany is a northern European country with far less solar energy available, which in spite of huge labour costs and social benefits is now expected to raise its electricity rates to less than $0.09 per Kwh or just 1/6th the cost of Fortis power.
Fortis purchased the former assets of Provo Power Company (PPC) in 2006, three years after the PNP came to power in a 2003 by-election. At the time of the purchase, then premier Michael Misick denied any knowledge of the buyout saying he had nothing to do with the buyout and could not forecast the fate of the employees. However, the stamp duty on the purchase would have yielded the country upwards of $9 million and was subject to negotiation with the Misick government and undoubtedly Misick himself.
At the time of the buyout, PPC was charging $0.26 per Kwh and now Fortis charges an additional surcharge that almost doubles the old rate to $0.51 per Kwh.
Last year, during the first year of the newly elected Progressive National Party (PNP) government, Fortis purchased the Grand Turk power company, Turks and Caicos Utilities from an American firm.
Following the initial Fortis buyout in 2006, the Misick government, which then included current premier Dr Rufus Ewing as director of medical services, proceeded to enter into a hugely expensive and controversial healthcare contract with another Canadian company, Interhealth Canada.
Interest in the Misick connection with Canada has also been revived by some so far unconfirmed but informed reports that he may be a person of interest so far as the Canadian authorities are concerned.
Speculation that the Canadians may have had a hand in Misick’s travel back to the TCI following his recent extradition from Brazil has led to questions as to whether this was designed to protect or pursue significant political and other figures in Canada.
In fact, Canadian interest in the TCI has been around since 1917, when then Canadian prime minister Robert Borden suggested that Canada annex the islands. In 2004, Nova Scotia’s three parties voted unanimously to let the TCI join their province if they ever became part of Canada.
Similar discussions were held by former premier Misick.
As recently as last year, Canadian MP Peter Goldring wanted to revive the proposal for the TCI to join Canada, following the return of elected self-government in the territory in November 2012.
Goldring has been a consistent advocate of increased cultural and economic ties between the TCI and Canada for more than ten years but the idea was dropped when Britain imposed direct rule in 2009, following a commission of inquiry that uncovered widespread and systemic government corruption in the territory.
Goldring, who has visited the islands several times, said they would fit in nicely with the rest of Canada.
But Canada stands to gain more than simply a vacation destination from such a union, he said: "From my perspective, certainly it goes far behind sun and sand. South Caicos Island, for example, is on a deep water channel. It could be readily developed into a deep-water port, which would give Canada tremendous advantage for trans-shipment throughout the entire region."
He added the islands would be a strategic location from which to increase engagement with Haiti and Cuba.
The law has finally caught up with Chevron.
Today's unanimous decision from the Supreme Court of Canada opens the door for Ecuadorian indigenous and farmer communities to enforce their $9.5 billion USD verdict against Chevron and is a major victory for human rights and corporate accountability.
Chevron's deliberate dumping of 18 billion gallons of toxic waste water and 17 million gallons of crude into the Ecuadorian Amazon created a massive health crisis and remains one of the worst oil-related environmental crimes in history. After being found guilty of its drill and dump tactics in Ecuador, Chevron has been on the run, spending billions on retaliatory legal attacks seeking to delay justice rather than fulfilling its legal obligations to carry out a full-scale environmental clean-up and provide potable water and health care to the communities it poisoned.
Chevron's $15 billion USD in Canadian assets are more than enough to satisfy the verdict, and the Canadian court's decision to allow the Ecuadorian rainforest communities to pursue action to collect their verdict is a significant step towards justice long denied. The verdict should be a major wake-up call to Chevron shareholders and senior management that despite spending billions to make this issue go away, the company faces major risk to its assets and brand in Canada and beyond. Rather than spend hundreds of millions more on legal fees in Canada to delay justice further, it's time for Chevron to finally do the right thing. More
Last week reporters at the Wall Street Journal sat down and did some arithmetic.
They looked at how much oil was selling for in the spring of 2014 (over $100 a barrel); looked at what it is selling for today (under $50); and concluded that if prices stay low for the next three years, the global oil industry and the countries it finances will be out $4.4 trillion in revenues. As these oil companies, nationalized and publically traded, will be producing roughly the same amount of oil in the next few years, the $4 trillion will have to come mostly out of profits or capital expenditures.
This is where the problem for the future of the world’s oil supply comes in. The big oil companies, especially those that export much of their production, have been doing quite well in recent years. National oil companies have earned vast profits for their political masters. Publically traded ones have developed a tradition of paying out good dividends which they are loathe to cut.
This leaves mostly capital expenditures on exploring for and producing more oil in coming years to take a dive as part of the $4 trillion revenue hit. Even if oil prices of $50 a barrel or less do not continue for the next three years, this still works out to a revenue drop of $1.5 trillion a year or about three times the planned capital expenditures of some 500 oil companies recently surveyed.
The International Energy Agency just came out with a new forecast saying that while current oil prices have the demand for oil products increasing rapidly, there is still so much over-production that the oil glut is expected to last for another year or more before supply/demand comes back into balance. The return of Iran to unfettered production would not help matters.
In looking at the next five years there are several trends or major issues that are likely to impact the supply and demand for oil. First is the recent price collapse that no longer makes it profitable to start projects to produce new oil, most of which now comes from deepwater, tar sands, or shale oil fields and is far more expensive to produce than "conventional" oil. As a result, investment in new oil production projects has dropped substantially in the last year and is likely to fall further.
On the demand side of the equation China is the biggest unknown. For the last 30 years the Chinese have enjoyed unprecedented economic growth, but recently the "world’s factory" has not been doing as well. Its government has been thrashing around wildly trying to stimulate growth and fend off a collapse in its stock market. Some believe China is a huge economic bubble that is about to collapse taking much of the world with it, and obviously reducing its ever-increasing demand for more oil.
The other 800-pound gorilla looming out there is climate change. Except for the drought in California and the storm that flooded New York a few years back, much of America and China for that matter has not been hurt badly enough by anomalous weather to reach an agreement that stopping climate change is the number one priority of all of us. Reports of "feels like" 159°F coming out the Middle East this summer have little impact on those convinced that climate change is a hoax. Should the effects of climate change worsen in the near future to the point that "do something before life on earth becomes impossible" becomes the majority perception of the issue, consumption of fossil fuels could be severely restricted. Although not widely appreciated, there do seem to be viable alternatives to fossil fuels waiting to be exploited.
The violence in the Middle East has grown worse in recent years. Although oil production in some areas has been restricted by geopolitics and violence, most of the oil continues to be produced. It is useless to talk about the next five years in the Middle East; however, we should keep in mind that there are at least a half dozen confrontations going on in the region that could morph into situations where oil production becomes more restricted.
When we net this all together, what do we have? Conventional wisdom currently says that oil prices are likely to be closer to $50 a barrel than to $100 for the next year or more. Capital spending on new production to offset declining production from existing oilfields is likely to drop still further leaving us in the situation where depletion may exceed the oil coming from new wells or fields. This is the argument that those who believe that we are at or near the all-time peak of world oil production about now are using.
The International Energy Agency says that the demand for the cheaper oil is rising rapidly, that production of shale oil currently is falling and the rest of world’s production is relatively static so we should be seeing oil prices rising again by 2017. This is where the turning point in the history of oil production could occur. In recent history rising prices have led oil producers to increase drilling for new oil production again. However the next time around, as mentioned above, there are new factors that may come into play. Will China be increasing its demand for oil in another two years? Will the Middle East still be exporting as much oil, and producing oil given the turmoil and the need to increase air conditioning? Will the world have decided the time has come to clamp down seriously on carbon emissions?
If global oil production does reach some kind of a peak this year and is lower in 2016, can it recover to reach new highs in the years following? Anything from inadequate investment stemming from persistently low oil prices to a major conflict in the Middle East could keep production from rebounding to new all-time highs. We are living in interesting times and just could see peak oil before we realize it. More
The latest attack in Saudi Arabia could be the beginning of a resistant movement against the current regime, as well as with Yemeni hostilities carried out by the House of Saud, Catherine Shakdam, Beirut Center for Middle East Studies told RT.
At least 15 people were reportedly killed in an attack on a mosque in Asir province in Saudi Arabia yesterday. A suicide bomber struck a mosque used by the army. The Interior Ministry claims the attack was carried out by Islamic State (IS, formerly ISIS).
RT: Do you think this was Islamic State again?
Catherine Shakdam: I don’t think so. I think it has more to do with the beginning of resistance movements against the Saudi regime, inside of Saudi Arabia rather than just some form of ISIS backlash. Because of where the attack actually took place - in Asir, which is a southern province of Saudi Arabia; we had province right next door to it, in Jizan, where tribes have already declared that they were against the Saudi regime and that they would organize resistance movements against them and actually fight them and reject the legitimacy.
I think that what we’re seeing today is really just an extension of this. And it has a lot to do with the Yemeni war. I’m not saying that the Yemeni are responsible - not at all. What I’m saying is that because of this war a lot of people now within the kingdom are going to react against Riyadh and trying to organize a resistance movement against them, against this dictatorship. And they are reacting. I think even though it was an attack directed against a mosque, it has more to do with who they were targeting - and it’s really just security forces rather than just civilians. So it is not to be confused with the type of the time that we have seen previously, for example, in Qatif, where Shia mostly was directly targeted. It is kind of a different type of attack here.
RT: Compared with other countries in the region, Saudi Arabia was seen as relatively safe from terror attacks until recently. Do you see such attacks becoming more frequent in the future?
CS: It is a possibility. And only because the Saudi have actually funded… terrorism, for decades. You can trace it back to the 1960s when they first allowed elements from the Muslim Brotherhood to come into exile in Saudi Arabia - they were welcomed them with the open arms. And this is today coming back to bite them. All those funds that have been allocated to radical movements across the Middle East and even beyond this. They have tried to open up, I would say, radical fronts in America, in Europe and all over the world. And today those elements that they have leaned on to maintain a strong hand on the Saudi people is actually coming back to haunt them. And they are paying the price today.
The rules are the final, tougher versions of proposed regulations that the Environmental Protection Agency announced in 2012 and 2014. If they withstand the expected legal challenges, the regulations will set in motion sweeping policy changes that could shut down hundreds of coal-fired power plants, freeze construction of new coal plants and create a boom in the production of wind and solar power and other renewable energy sources.
As the president came to see the fight against climate change as central to his legacy, as important as the Affordable Care Act, he moved to strengthen the energy proposals, advisers said. The health law became the dominant political issue of the 2010 congressional elections and faced dozens of legislative assaults before surviving two Supreme Court challenges largely intact.
"Climate change is not a problem for another generation, not anymore," Mr. Obama said in a video posted on Facebook at midnight Saturday. He called the new rules "the biggest, most important step we’ve ever taken to combat climate change."
The most aggressive of the regulations requires the nation’s existing power plants to cut emissions 32 percent from 2005 levels by 2030, an increase from the 30 percent target proposed in the draft regulation.
That new rule also demands that power plants use more renewable sources of energy like wind and solar power. While the proposed rule would have allowed states to lower emissions by transitioning from plants fired by coal to plants fired by natural gas, which produces about half the carbon pollution of coal, the final rule is intended to push electric utilities to invest more quickly in renewable sources, raising to 28 percent from 22 percent the share of generating capacity that would come from such sources.
In its final version, the rule retains the same basic structure as the draft proposal: It assigns each state a target for reducing its carbon pollution from power plants, but allows states to create their own custom plans for doing so. States have to submit an initial version of their plans by 2016 and final versions by 2018.
But over all, the final rule is even stronger than earlier drafts and can be seen as an effort by Mr. Obama to stake out an uncompromising position on the issue during his final months in office.
The anticipated final climate change regulations have already set off what is expected to be broad legal, legislative and political backlash as dozens of states, major corporations and industry groups prepare to file lawsuits challenging them.
Senator Mitch McConnell of Kentucky, the Republican majority leader, has started an unusual pre-emptive campaign against the rules, asking governors to refuse to comply. Attorneys general from more than a dozen states are preparing legal challenges against the plan. Experts estimate that as many as 25 states will join in a suit against the rules and that the disputes will end up before the Supreme Court.
Leading the legal charge are states like Wyoming and West Virginia with economies that depend heavily on coal mining or cheap coal-fired electricity. Emissions from coal-fired power plants are the nation’s single largest source of carbon pollution, and lawmakers who oppose the rules have denounced them as a "war on coal."
"Once the E.P.A. finalizes this regulation, West Virginia will go to court, and we will challenge it," Patrick Morrisey, the attorney general of West Virginia, said in an interview with a radio station in the state on Friday. "We think this regulation is terrible for the consumers of the state of West Virginia. It’s going to lead to reduced jobs, higher electricity rates, and really will put stress on the reliability of the power grid. The worst part of this proposal is that it’s flatly illegal under the Clean Air Act and the Constitution, and we intend to challenge it vigorously."
Although Obama administration officials have repeatedly said states will have flexibility to design their own plans, the final rules are explicitly meant to encourage the use of interstate cap-and-trade systems, in which states place a cap on carbon pollution and then create a market for buying permits or credits to pollute. The idea is that forcing companies to pay to pollute will drive them to cleaner sources of energy.
That new rule also demands that power plants use more renewable sources of energy like wind and solar power
Mr. Obama tried but failed to push through a cap-and-trade bill in his first term, and since then, the term has become politically toxic: Republicans have attacked the idea as "cap and tax."
But if the climate change regulations withstand legal challenges, many states could still end up putting cap-and-trade systems into effect. Officials familiar with the final rules said that in many cases, the easiest and cheapest way for states to comply would be by adopting cap-and-trade systems.
The rules take into account the fact that some states may refuse to submit plans, and on Monday, the administration will also unveil a template for a plan to be imposed on such states. That plan will include the option of allowing a state to join an interstate cap-and-trade system.
The rules will also offer financial benefits for states that choose to take part in cap-and-trade systems. The final rules will extend until 2022 the timeline for states and electric utilities to comply, two years later than originally proposed. But states that begin to take actions to cut carbon pollution as early as 2020 will be rewarded with carbon reduction credits — essentially, pollution permits that can be sold for cash in a cap-and-trade market.
Climate scientists warn that rising greenhouse gas emissions are rapidly moving the planet toward a global atmospheric temperature increase of 3.6 degrees Fahrenheit, the point past which the world will be locked into a future of rising sea levels, more devastating storms and droughts, and shortages of food and water. Mr. Obama’s new rules alone will not be enough to stave off that future. But experts say that if the rules are combined with similar action from the world’s other major economies, as well as additional action by the next American president, emissions could level off enough to prevent the worst effects of climate change.
Mr. Obama intends to use the new rules to push other countries to commit to deep reductions in their own carbon emissions before a United Nations summit meeting in Paris in December, when a global accord to fight climate change is expected to be signed.
Mr. Obama’s pledge that the United States would enact the climate change rules was at the heart of a pact that he made last year with President Xi Jinping of China, committing their nations, the world’s two largest carbon polluters, to substantially cut emissions.
"It’s the linchpin of the administration’s domestic effort and international effort on climate change," said Durwood Zaelke, president of the Institute for Governance and Sustainable Development, a research organization. "It raises the diplomatic stakes in the run-up to Paris. He can take it on the road and use it as leverage with other big economies — China, India, Brazil, South Africa, Indonesia."
While opponents of the rules have estimated that compliance will cost billions of dollars, raise residential electricity rates and slow the American economy, the administration argues that the rules will save the average American family $85 annually in electricity costs and bring additional health benefits by reducing emissions of pollutants that cause asthma and lung disease.
The rules will be announced at a White House ceremony on Monday and signed by Gina McCarthy, the Environmental Protection Agency administrator. While the ceremony is scheduled to take place on the White House’s South Lawn, officials said it might be moved indoors to the East Room after forecasters predicted that the weather would be too hot.
The Iran nuclear deal signals a major shift in the geopolitics of the Middle East. Integral to the equation is oil, economics, terror – and US hegemony.
The Bush administration had initiated a long-term covert strategy to undermine Iranian influence in the Middle East and Central Asia, combined with overt pressure through diplomatic initiatives and economic sanctions.
Under Obama, this strategy accelerated, largely in concert with other Gulf powers like Saudi Arabia, Qatar and the UAE, who have long sought to roll-back Iranian influence.
Yet even as the strategy accelerated, unlike its predecessors which openly declared their warmongering hostility to Iran, the Obama administration had used the pressure to forge an unprecedented deal with the country.
The reasons for the shift are, of course, pragmatic. For years, US intelligence agencies have told the White House that there is simply no evidence Iran is trying to build a nuclear bomb.
And the International Atomic Energy Agency (IAEA) has repeatedly certified that uranium is not being enriched to levels necessary for weaponisation, nor is it being diverted to a secret weapons programme.
Meanwhile, senior US military officials have long warned that the sort of US-Iran military confrontation which frothing neoconservatives have been pining for would likely fail and destabilise the entire region.
What about an Israel-Iran confrontation? A classified Pentagon war simulation held in 2012 found that an Israeli attack on Iran would also lead to a wider regional war.
Unlike the neocons, for the military pragmatists in successive US administrations, war with Iran could never be a preferred option.
The added bonus is that Iran might notch down its involvement in Iraq and Syria.
Earlier this year, the US assured its allies at the Camp David summit that under the nuclear deal, Iran’s growing geopolitical influence in the region would be curtailed. Simultaneously, the US gave Saudi Arabia, Qatar, the UAE and others the green light to accelerate support to the Islamist militants of their choice in Syria.
George Friedman, founder and CEO of private US intelligence firm Stratfor – which operates closely with the Pentagon and State Department – forecasted the US-Iran détente four years ago.
His prescient assessment of its strategic rationale is worth noting. Friedman explained that by reaching “a temporary understanding with Iran,” the US would give itself room to withdraw while playing off Iran against the Sunni regimes, limiting Iran’s “direct controls” in the region, “while putting the Saudis, among others, at an enormous disadvantage”.
“This strategy would confront the reality of Iranian power and try to shape it,” wrote Friedman.
Ultimately, though, the US is betting on the rise of Turkey – hence the latter’s pivotal role in the new anti-IS rebel training strategy, despite Turkey’s military and financial sponsorship of IS. More