Table Scraps

March/18/2008 1:58AM
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The rest of the world is busy working out deals with oil producing countries while the US misses the potluck and eats table scraps. I will give you a few examples that will really raise your blood pressure.

Angola committed to supply China with 200,000 bbls. of crude a day for $60 a bbl for the next 10  years. In return the Chinese will invest in infrastructure projects such as railroads, roads, and bridges.

India imports about 24 million tons of crude from Saudi Arabia every year, which is 26% of its total imports. They have oil and gas projects in Vietnam, Sudan, Russia, Iraq, Iran, Myanmar, Libya, Syria, Australia, Ivory Coast, Qatar, and Egypt.

China National Petroleum Corp. has entered joint development agreements with Sudan, which  produced as much as 300,000 bbls per day by the end of 2006 and is growing. Another Chinese firm, Sinopec Corp., is erecting a pipeline from that complex to Port Sudan on the Red Sea, where the Chinese are building a tanker terminal for shipping raw crude to the Chinese mainland.

In November 2005, Chinese President Hu Jintao toured Latin America and completed a number of economic deals, including an oil deal with Argentina. Hugo Chavez, the President of Venezuela, has said Chinese firms would be allowed to operate 15 mature oil fields in eastern Venezuela, which could produce more than one billion bbls. Chavez has also invited Chinese firms to bid for natural gas exploration contracts.

Sinopec, China’s state-owned oil giant, signed a $70 billion deal with the Iranians in November 2004 to develop the Yadavaran oil field. Sinopec will also buy 250 million tons of liquefied natural gas over 30 years. Iran is committed to export 150,000 bbls per day of crude oil to China for 25 years. 

Testimony before the Congressional Committee on National Security, Emerging Threats and International Relations, outlined how China’s three state-owned oil companies have managed to establish control over 3 million bbls a day of crude production which could reach up to 6 million bbls this year. 

The fact is that 90% of the world reserves are controlled by national oil companies, as opposed to market-driven public companies. Exxon is not big oil, these national companies dwarf Exxon.

While the US is busy waging war, and buying friends, China and India have been going around the world cutting deals to get contract crude and natural gas. Taking this crude off the market raises spot prices. Not allowing Exxon and other public corporations into the areas where national oil companies operate limits their choices and thus they are running out of reserves. These actions taken together drive up the market price of crude. Plus, they limit our choices of crude to very few options.

China builds cities the size of New York twice a year. They have a plan and are working their plan. They are sitting at everyone’s table dining on the entrees while the purported world leader picks up the scraps off the floor. You are paying a big price to eat scraps while they pay less for the main course. Who has a better plan?

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Comment (1)

  1. Ken says:

    Bill, I pretty much agree with most of your comments and views and at times, find myself trying to figure out what my political persuasion truly is? I have always claimed to be a Republican, but think that Republican is too narrow of a description and requires further definition.

    After reading your daily Blog, I have also tried to figure out where you are at times in terms of this same issue, and like me, see you wearing different hats on certain issues. I have almost come to the conclusion we can not limit ourselves to one word descriptors like Republican, Conservative, Democrat, Liberal, Libertarian and so on. Depending on some of the issues, I can see myself wearing different hats. That is not to say I am wishy washy, because I do have clear positions on certain subjects, but those opinions do not neatly fit into little boxes.

    I do know this, regardless of the party or candidate that eventually gets in the Whitehouse; they are going to have their hands full and I just hope and pray they are up to the task of getting our current state of affairs turned around. Although not my first choice, I have to support McCain, because the other 2 choices don’t have a clue and neither of them is qualified to hold the office.

    For me, my top two issues are Oil and the failing US economy, which is creating and sending us into a tale spin and is not being addressed for the long term. Everything that is being done is just band aids and is not addressing the longer term issues.

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