2008 Oil Reserves Analysis

The Economist had a recent graph showing oil reserves as of the end of 2008, with the number of years remaining for each country's reserves at the 2008 rate of production. I posted a similar graph from The Economist back in June 2006, so we'll do a little analysis to see how things have gone in the past three years.

First, there have been some changes in the rankings for total reserves. The top four (Saudi Arabia, Iran, Iraq and Kuwait) remain the same, but Venezuela has moved up one notch, replacing the UAE in fifth place. Russia remains at #7, but Libya has moved up to #8, replacing Kazakhstan. Numbers 10 (Nigeria), 11 (United States) and 12 (Canada) remain the same, but Qatar has moved ahead of China for 13th place. Angola comes in at #15 in the 2008 chart, up four places. Eight countries that were on the 2005 chart were omitted this time (in alphabetical order): Algeria, Azerbaijan, Brazil, India, Mexico, Norway, Oman, and Sudan).

The 2005 chart mentioned that if production were to continue at 2005's level of production, the world would have 41 years' worth of oil left. The good news is that, three years on, global supplies should actually last for another 42 years.

Doing a quick-and-dirty analysis, we can find out which countries have been winners over the past three years and which were losers. Winners are those countries whose reserves will survive longer today than they were expected to last in 2005's estimate, taking into account the three years of production that have passed. (This could happen either because more oil reserves have been proved in the past three years, because production slowed down, or both.)

In fact, all of the countries were winners, except for three; the winners being: Saudi Arabia (3.5 years), Iraq (3), Kuwait (2.6), Venezuela (30!), Russia (3.8), Libya (4.6), Nigeria (10.6), United States (3.4), Canada (12.1), Qatar (19.1), China (2.1), and Angola (2.7).

The three losers were Iran (-3.1), the UAE (-4.3), and Kazakhstan (-7.0).

The full Economist article:

Although the price of oil peaked at $147 a barrel in 2008, the world’s proven oil reserves—those that are known and recoverable with existing technology—fell only slightly, to 1,258 billion barrels, according to BP, a British oil company. That is 18% higher than in 1998. OPEC tightened its grip slightly in 2008, and commands slightly more than three-quarters of proven reserves. Saudi Arabia and Iran together account for almost one-third of the total. Venezuela, with nearly 8%, has the largest share of any non-Middle Eastern country. BP reckons that if the world continues to produce oil at the same rate as last year, global supplies will last another 42 years, even if no more oil reserves are found.

Petroleum and Natural Gas Proved Reserves, 2009, Top 10

This is an annual post; the data is only updated annually. For the 2008 data, please click here.

The Energy Information Administration, a department of the U.S. Department of Energy, has recently released the January 1, 2009 proved reserves for petroleum and natural gas. Proved reserves are the amount of oil and gas in the ground that is "reasonably certain" to be extracted using current technology at current prices. The following are lists of the top ten countries for petroleum and natural gas proved reserves, with their quantities and percentage of the world total for 2009:

Petroleum - Billion Barrels
1. Saudi Arabia - 266.710 (19.87%)
2. Canada - 178.092 (13.27%)
3. Iran - 136.150 (10.14%)
4. Iraq - 115.000 (8.57%)
5. Kuwait - 104.000 (7.75%)
6. Venezuela - 99.377 (7.40%)
7. United Arab Emirates - 97.800 (7.29%)
8. Russian Federation - 60.000 (4.47%)
9. Libya - 43.660 (3.25%)
10. Nigeria - 36.220 (2.70%)

Notes:

• The world total of proved reserves is 1,342.207 billion barrels of petroleum, an increase of 10.164 billion barrels over 2008's total (a 0.76% increase).
  
• The total of the top ten countries makes up 84.71% of the world's proved reserves.
  
• Venezuela was the only country to move up in the rankings, having placed seventh in 2008; the United Arab Emirates dropped one place, to seventh.
  
• Canada's proved reserves are estimated to be 5.4 billion barrels of conventional crude oil and 173.2 billion barrels of oil sands reserves. (Oil sands are much more costly to refine than conventional crude oil.)
  
• Two countries had singificant increases in their amounts of crude oil proved reserves in 2008: Venezuela, with an increase of 12.342 billion barrels, and Libya, with an increase of 2.196 billion barrels. Ten other countries also had increases in their proved reserves as well; however, the highest amount of any of the ten was 442 million barrels (Brazil).
  
• Two countries had significant depletions in their amounts of crude oil proved reserves in 2008: Iran, with a decrease of 2.250 billion barrels, and Mexico, with a decrease of 1.149 billion barrels. Thirteen other countries also had decreases in their proved reserves.

Natural Gas - Trillion Cubic Feet
1. Russian Federation - 1,680.000 (26.86%)
2. Iran - 991.600 (15.85%)
3. Qatar - 891.945 (14.26%)
4. Saudi Arabia - 258.470 (4.13%)
5. United States - 237.726 (3.80%)
6. United Arab Emirates - 214.400 (3.43%)
7. Nigeria - 184.160 (2.94%)
8. Venezuela - 170.920 (2.73%)
9. Algeria - 159.000 (2.54%)
10. Iraq - 111.940 (1.79%)

Notes:

• The world total of proved reserves is 6,254.364 trillion cubic feet of natural gas, an increase of 42.029 trillion cubic feet (a 0.68% increase). (I've noted a discrepancy in the difference between 2008 and 2009, coming up with an increase of 41.714 trillion cubic feet, a difference of 0.315 trillion cubic feet.)
  
• The total of the top ten countries makes up 78.35% of the world's proved reserves.
  
• There were no changes in the top ten rankings.
  
• Twelve countries had increases in their total proved reserves in 2008, for a total of 83.968 trillion cubic feet; however, this was partially offset by decreases in a total of fourteen countries, with depletions of 42.254 trillion cubic feet.

VoxEU: Quo Vadis Islamic Finance?

A good article on Islamic finance (if you're interested in the subject) at VoxEU, the European economics blog. The three authors, all of whom work for the International Monetary Fund (IMF), give a brief analysis of the state of the Islamic finance market, a listing of significant challenges facing the industry, and some concluding remarks. Below are some excerpts, primarily from the introduction and the conclusion; the section on challenges is significant and noteworthy, but I'll let my readers go to the original post to read it if they're interested.

BTW, in case you're unfamiliar with the Latin phrase, "Quo Vadis?", it means, "Where are you going?"

Since the summer of 2007, the global financial system has undergone a period of dramatic turbulence, which has caused a widespread reassessment of risk in both developed and emerging economies. The global financial turbulence appears to have had a limited impact on the Islamic finance industry, which has been in an expansionary phase in recent years (Economist, 2008; Financial Times, 2008). This rapid growth has been fueled not only by surging demand for Sharia’ah compliant products from Muslim financiers but also by investors around the world, rendering the expansion of Islamic finance a global phenomenon. In fact, there is currently over $800 billion worth of deposits and investments lodged in Islamic banks, mutual funds, insurance schemes (known as takaful), and Islamic branches of conventional banks.

...

...[P]erhaps the most striking has been the growth of sukuk, the most popular form of securitized credit finance within Islamic finance. sukuk commoditize capital gains from bilateral risk sharing between borrowers and lenders in shari’ah-compliant finance contracts into marketable securities without interest rate charges.

The sukuk market has held its own amid groundswell concern about the credit crunch and dysfunctional money markets. Although the current level of issuance remains a fraction of the global volumes of conventional bonds and ABS, the sukuk market had soared in response to growing demand for alternative investments before the first episode of severe market disruptions in 2007 showed first effects (Jobst et al, 2008). Gross issuance of sukuk has quadrupled over the past few years, rising from $7.2 billion in 2004 to close to $39 billion by the end of 2007, owing in large part to enabling capital market regulations, a favorable macroeconomic environment, and large infrastructure development plans in some Middle Eastern economies (see Figure 1).

By 2008, however, sukuk volumes dropped to $15.2 billion (about 50%) while the structured finance market dried up with just $387 billion issued (down by about 80%) during the same time. Factors contributing to this decline include the presentation of new rules on sukuk, the global financial crisis, and Gulf states’ currency risk. The slowdown in issuance was most pronounced in Malaysia, where fewer domestic transactions at smaller volume have balanced the market shares of Gulf Cooperation Council and Southeast Asian countries.

The rapid evolution of Islamic finance activities points to the available profit opportunities that beckon. This in turn has prompted a vetting process among a number of jurisdictions around the world to establish themselves as leading Islamic financial centres. In this regard, the case of London is perhaps the most remarkable insofar as it has managed to extend its leading position in world financial markets to become a center for Islamic finance. Similarly, Hong Kong, New York, and Singapore are also making important advances to accommodate Islamic finance within their jurisdictions and aspire to join the ranks of the more established Islamic centers such as Bahrain, Dubai, and Kuala Lumpur.

...

Islamic finance faces many challenges, including recent regulatory changes, illiquidity issues, liquidity risk management concerns, need for harmonized regulation, regulatory disparity amongst national supervisors, and a potentially unlevel playing field.

...

Despite the number of challenges outlined above, the long-term prospects look promising for Islamic finance. Financial institutions in countries such as Bahrain, the United Arab Emirates, and Malaysia have realized considerable demand for shari’ah-compliant assets and are gearing up for more shari’ah-compliant financial instruments and structured finance. In addition, financial innovation, driven by both domestic and foreign banks, will promote alternatives modes of intermediation and contribute to further development and refinement of shari’ah compliant derivative contracts.

As Islamic finance comes into its own, greater regulatory harmonization will be inevitable. Recent efforts have addressed legal uncertainty imposed by Islamic jurisprudence, discrepancies of national guidelines, and poorly developed uniformity of market practices. The Islamic Financial Services Board has moved ahead with its standardization efforts of the Islamic financial services industry that will foster the soundness and stability of the system. Globally accepted prudential standards have been adopted by the Islamic Financial Services Board that smoothly integrate Islamic finance with the conventional financial system.

Finally, despite the declining global sukuk issuance in 2008, emanating from both the Accounting and Auditing Organization of Islamic Financial Institutions decision and the impact of the financial crisis, the sukuk market will regain momentum, driven by demand from financial institutions, insurance companies, and pension funds across Islamic and non-Islamic countries. Many challenges still lie ahead, but the banks’ search for profitable opportunities and the ensuing financial innovation process in tandem with favorable regulatory developments at domestic and international levels will ensure that the Islamic finance industry will continue to develop at a steady pace in the long-run. The jury is still out how Islamic finance will be affected in the short-run by the repercussions of the global financial crisis.

HT: Economist's View

The Economist: Faith-Based Finance

This is the second of two articles in this week's (September 4th) Economist about Islamic finance. This article is much shorter, and also easier to digest (even for most Muslims ;) ) than the main article, being more of an introduction to the topic of Islamic financing.

The modern history of Islamic finance is often dated to the 1970s, with the launch of Islamic banks in Saudi Arabia and the United Arab Emirates. But its roots stretch back 14 centuries. Islamic finance rests on the application of Islamic law, or sharia, whose primary sources are the Qur'an and the sayings of the Prophet Muhammad. Sharia emphasizes justice and partnership. In the world of finance that translates into a ban on speculation (or gharar) and on the charging of interest (riba). The idea of a lender levying a straight interest charge, regardless of how the underlying assets fare in an uncertain world, offends against these principles—though some Muslims dispute this, arguing that the literature in sharia covering business practices is small and that terms such as “usury” and “speculation” are open to interpretation.

Companies that operate in immoral industries, such as gambling or pornography, are also out of bounds, as are companies that have too much borrowing (typically defined as having debt totaling more than 33% of the firm’s stock market value). Such criteria mean that sharia-compliant investors steer clear of highly leveraged conventional banks, a wise choice in recent months.

Despite these prohibitions, Islamic financiers are confident that they can create their own versions of the important bits of conventional finance. The judgment of what is and is not allowed under sharia is made by boards of scholars, many of whom act as a kind of spiritual rating agency, working closely with lawyers and bankers to create instruments and structure transactions that meet the needs of the market without offending the requirements of their faith.

Non-Muslims may find the distinctions between conventional finance and Islamic finance a trifle contrived. An options contract to buy a security at a set price at a date three months hence is frowned upon as speculation. A contract to buy the same security at the same price, with 5% of the payment taken upfront and the balance taken in three months upon delivery, is sharia-compliant. Then again, winning over non-Muslims is not really the point.

There is no ultimate authority for sharia compliance. Some worry that this may hold the industry back. Malaysia has tackled this by creating a national sharia board. Some industry bodies, notably the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) in Bahrain, are working towards common standards. That a few scholars dominate the boards of the big international institutions also helps create consistency. But differences between national jurisdictions — between pious Saudi Arabia and more liberal Malaysia, say, are likely to remain.

Both of these countries feature in the top three markets for Islamic finance, measured by the quantity of sharia-compliant assets (see table). Top is Iran, although international sanctions keep its industry isolated. The Gulf states, awash with liquidity and with a roster of huge infrastructure projects to finance, are the most dynamic markets. Britain is the most developed Western center, although France, with a much larger Muslim population, wants to close the gap.

Petroleum and Natural Gas Proven Reserves, 2008, Top 10

Update: Please click on the link for the 2009 Petroleum and Natural Gas Proved Reserves.

The Energy Information Administration, a department of the U.S. Department of Energy, has recently released the 2008 proved reserves for petroleum and natural gas. Proved reserves are the amount of oil and gas in the ground that is "reasonably certain" to be extracted using current technology at current prices. The following are lists of the top ten countries for petroleum and natural gas proved reserves, with their quantities and percentage of the world total for 2008:

Petroleum - Billion Barrels
1. Saudi Arabia - 266.75 (20.03%)
2. Canada - 178.59 (13.41%)
3. Iran - 138.40 (10.39%)
4. Iraq - 115.00 (8.64%)
5. Kuwait - 104.00 (7.81%)
6. United Arab Emirates - 97.80 (7.34%)
7. Venezuela - 87.04 (6.54%)
8. Russian Federation - 60.00 (4.51%)
9. Libya - 41.46 (3.11%)
10. Nigeria - 36.22 (2.72%)

Notes: The world total of proved reserves is 1,331.70 billion barrels of petroleum. The total of the top ten countries makes up 84.50% of the world's proved reserves. Canada's proved reserves are estimated to be 5.4 billion barrels of conventional crude oil and 173.2 billion barrels of oil sands reserves. (Oil sands are much more costly to refine than conventional crude oil.)


Natural Gas - Trillion Cubic Feet
1. Russian Federation - 1,680.000 (27.16%)
2. Iran - 948.200 (15.33%)
3. Qatar - 905.300 (14.64%)
4. Saudi Arabia - 253.107 (4.09%)
5. United Arab Emirates - 214.400 (3.47%)
6. United States - 211.085 (3.41%)
7. Nigeria - 183.990 (2.97%)
8. Venezuela - 166.260 (2.69%)
9. Algeria - 159.000 (2.57%)
10. Iraq - 111.940 (1.81%)

Notes: The world total of proved reserves is 6,185.694 trillion cubic feet of natural gas. The total of the top ten countries makes up 78.14% of the world's proved reserves. Venezuela moved past Algeria into the 8th spot for the 2008 listing, having been listed 9th last year.

Stupid Sara

Sometimes non-Muslims are so blinded by their hatred for Islam that they blame Islam for things our religion has nothing to do with. Consider the post Islam's War on Women by one Sara Coslett. Sara had noticed some demographic statistics for certain Middle Eastern countries that show a sex ratio favoring men:

I wonder how is it [sic] that in the United Arab Emirates and Qatar the ratio of men to women is greater than 2/1, in Kuwait 1.5/1, Bahrain 1.34/1, Oman 1.26/1, and Saudi Arabia 1.22/1.

These particular ratios are for the population as a whole but, Sara, taking them at face value, doesn't dig deep enough. Instead, she comes up with two pathetic reasons for the skewed sex ratios:

Two possibilities come to mind. First, Muslim countries are notorious for practicing female infanticide.

Except, this isn't true. If Sara had said India or China are notorious for practicing female infanticide, I'd have quickly agreed with her. The problem is, the countries Sara highlighted don't have very high abortion rates to begin with. According to Johnston's Archive, which tracks historical abortion statistics, we find that the abortion percentage for all residents, in and out of the country, were extremely low for the six countries in question. While not all countries have a full listing for their statistics, the abortion percentage for Qatar was 1.3% in 2004, 0.05% for Kuwait in 2001, and 0.07% for Bahrain in 2004. The abortion ratio wasn't available for either the UAE or Saudi Arabia; however, the total number of abortions in 2006 for both countries among residents was 63 and 5, respectively. Note that all of those abortions were obtained overseas, meaning no abortions were performed among residents at all inside those countries. (No statistics are available for Oman.) With numbers so low, there's no reason to believe abortion is a cause for the skewed sex ratio.

In fact, it is not. If we next look at the CIA's World Factbook, we can look at the sex ratio at birth. Here, we find that for Bahrain, there were 1.03 boys born for every girl (2007 est.), 1.04 boys for every girl in Kuwait (2007 est.), and 1.05 boys for every girl in Oman, Qatar, Saudi Arabia and the UAE (2007 est.). Compare this to India (1.12 boys per girl; 2007 est.) and China (1.11 boys per girl, 2007 est.), and you see that Sara's argument with regard to female infanticide holds no water.

Sara's other argument is even more absurd:

The other possible reason for such a disparity between males and females is that census counters do not include females when polling the population. We know that Muslims regard women as property, so like a slave, they would not be considered a human and thus not counted.

Even if one were to accept Sara's argument at face value, the fact of the matter is that other sources, such as the World Factbook would provide fairly realistic estimates for the male-female population (see the "Age Structure" statistic).

Of course, there's one possibility that Sara hadn't considered, and that's immigration. Looking at NationMaster statistics, we see that immigrants make up the following percentages of the national population: Bahrain - 40.66%, Kuwait - 65.83%, Oman - 24.45%, Qatar - 78.34%, Saudi Arabia - 27.51%, and the UAE - 70.85%. And, as any expat will tell you, the vast majority of all expats are men. It's not surprising, then, that the sex ratio in the six Middle Eastern countries Sara highlighted should favor men: they're the ones who moved to these countries in search of work.

But Sara would rather blame Islam; that way she doesn't have to think too deeply about why things are the way they are:

It is obvious to me Islam has declared war on its female population.

Stupid Sara.

Update: Since writing this post last night, Sara has re-written her original post, plus written another. The problem is, while Sara realized that she made a mistake after reading my post, she compounded the original error by falling on another bogus claim:

Clearly something tragic is happening to females after age 15. Therefore, instead of two possibilities I realized there was a third - honor killings.

Most of the remainder of the re-written first post is merely a rehash of her original post. The second post, Erratum: Islam's War on Women is a strange mish-mash of retractions, corrections, and old allegations. On the one hand, she admits to forgetting about the impact of immigrants into the six countries she originally highlighted. She also admits that she was wrong "...in my assumptions that the Muslim practice of honor killings and a disregard for women as people..." However, she also makes some odd statements, such as:

Surprisingly I noticed Mr. JDsg did not refute or even mention anything about honor killings.

What Sara disregarded was the fact that she had not written anything about honor killings in her original post. What was there to refute or mention? Even so, honor killings is not going to be a high enough number to explain the skewed sex ratios. Honor killings do, of course, happen, but the number of killings committed is not going to be that high. This is merely Sara grasping at another straw.

Sara concluded her new post by writing:

While population data is a poor example for Islam’s War on Women, the war does continue.

That's it, Sara, keep beating your dead horse. You've been wrong in just about all your other "reasonings." Show us how more wrong you can be.

Update #2: Looked at Sara's blog once more, just to see if she had followed up on the comments I had made there the other day. No, she hasn't responded, and she's shut off her comments once again to only those who have "registered" (the usual cowardly BS tactic used by right-wing blogs who don't want to hear that the emperor wears no clothes.)

"All we are saying..."

The Economist Intelligence Unit, a division of the corporation that publishes The Economist, has come out with its first annual "Global Peace Index," an index that ranks 121 countries based upon their "peacefulness." One of the irritants I have about certain American Christians and Islamophobes (who are often one and the same) is their claim that the US is sooo peaceful and Muslims are sooo violent. Well, the Global Peace Index exposes the lie behind that claim. Of the 121 countries in this year's index, the US placed 96th, ahead of Iran, but behind Yemen. The most peaceful Muslim country is Oman (22) [see below for a list of the remaining Muslim-majority countries]. Countries of interest: Norway (1), New Zealand (2), Japan (5), Canada (8), Hong Kong (23), Australia (25), Singapore (29), South Korea (32), United Kingdom (49), China (60), India (109), Russia (118), and Israel (119).

The following comes from the press release that describes the objective of the Index and how the Index was created:

"The objective of the Global Peace Index was to go beyond a crude measure of wars by systematically exploring the texture of peace," explained Global Peace Index President, Mr. Clyde McConaghy, speaking in Washington. "The Index provides a quantitative measure of peacefulness that is comparable over time, and we hope it will inspire and influence world leaders and governments to further action."

The rankings show that even among the G8 countries there are significant differences in peacefulness: While Japan was the most peaceful of the G8 countries, at a rank of five in the Index, Russia neared the bottom at number 118. The Global Peace Index also reveals that countries which had a turbulent time for parts of the twentieth century, such as Ireland and Germany, have emerged as peace leaders in the 21st century.

The Economist Intelligence Unit measured countries' peacefulness based on wide range of indicators - 24 in all - including ease of access to "weapons of minor destruction" (guns, small explosives), military expenditure, local corruption, and the level of respect for human rights.

After compiling the Index, the researchers examined it for patterns in order to identify the "drivers" that make for peaceful societies. They found that peaceful countries often shared high levels of democracy and transparency of government, education and material well-being. While the U.S. possesses many of these characteristics, its ranking was brought down by its engagement in warfare and external conflict, as well as high levels of incarceration and homicide. The U.S.'s rank also suffered due to the large share of military expenditure from its GDP, attributed to its status as one of the world's military-diplomatic powers.

The main findings of the Global Peace Index are:

Peace is correlated to indicators such as income, schooling and the level of regional integration

Peaceful countries often shared high levels of transparency of government and low corruption

Small, stable countries which are part of regional blocs are most likely to get a higher ranking

Muslim-majority countries: Oman (22), Qatar (30), Malaysia (37), the UAE (38), Tunisia (39), Kuwait (46), Morocco (48), Libya (58), Kazakhstan (61), Bahrain (62), Jordan (63), Egypt (73), Syria (77), Indonesia (78), Bangladesh (86), Saudi Arabia (90), Turkey (92), Yemen (95), Iran (97), Azerbaijan (101), Algeria (107), Uzbekistan (110), Lebanon (114), Pakistan (115), and Iraq (121).

Raimondo on Dubai's Potential Backlash

Justin Raimondo over at antiwar.com has another interesting article on the Dubai Ports controversy. Published March 10, Raimondo's original thesis had to do with the demagoguery of Arianna Huffington, Sen. Barbara Boxer, et al, regarding the sale of the ports management. However, what I found interesting was the potential economic backlash America might face, insha'allah, from this rejection of allowing the sale of P&O to an Arab company. For example, while I doubt that Dubai will not cease doing business with the American merchant fleet, it wouldn't surprise me in the least if Boeing loses out to Airbus as Raimondo speculates. Now, what follows is most - but not all - of Raimondo's article. So, if you want to read the entire article, click on the title link above.

...

The threat of economic retaliation from Dubai hasn't hit home yet, but when it does, their threat to do business with Airbus instead of Boeing is sure to provoke howls of outrage from the same crowd. We're kicking them out of the American port business – and also out of any defense-related industries, it seems – but, heck, why do they have to go and reciprocate in kind? That's positively anti-American, and yet more proof that those emirs are terrorist-loving Ay-rab (is there any other kind?).

America does a lot of business with Dubai – a fact that La Huffington considers evidence of "corruption." Apparently she'd much rather we just bombed them. After all, if the UAE is the hotbed of terrorism she and her allies in the War Party make it out to be, then why not invade, occupy the country, and root out the bad guys? Huffington will never address these issues, because it would expose her utter hypocrisy and spoil her fun...

...

The economic consequences of severing ties with Dubai – which is what legislation now being pushed in Congress would effectively accomplish – could be substantial. The Hill reports:

"Retaliation from the emirate could come against lucrative deals with aircraft maker Boeing and by curtailing the docking of hundreds of American ships, including U.S. Navy ships, each year at its port in the [UAE]."

There is also Dubai Aerospace Enterprise, backed by $15 billion, which plans to buy a whole fleet of aircraft from either Boeing or Airbus in the near future. Can anybody doubt which company they'll choose in the wake of the hate campaign directed against them in the United States?

The irony is that the Democrats and their enablers in the punditocracy, who pine for the good old days when American workers stood at the pinnacle of the world market, will be the first to whine about how "foreign" labor is "stealing" American jobs. Being economic ignoramuses, however, as well as horses' asses in general, this crowd would rather not let reality get in the way of a bout of self-righteous fear-mongering.

...

"We want to protect the American people," declares House Speaker Dennis Hastert (R-Ill.):

"We've been doing it the last four and a half years. We fought a war in Iraq, fought a war in Afghanistan, stood up to the Homeland Security Department. We will continue to do that. We will maybe have our differences, but we think we're going to continue to oppose the Dubai deal."

Hastert is right to put the nixing of the Dubai deal in there with the various wars we're fighting (or in the process of starting) in the Middle East: it's all part of the Western campaign to denigrate and subjugate the Arab-Muslim world. The disgusting spectacle of the "antiwar" Democrats – like Sen. Barbara Boxer – jumping on this war-wagon recalls H. L. Mencken's definition of a demagogue:

"One who preaches doctrines he knows to be untrue to men he knows to be idiots."

The idea that Dubai represents a "security threat" to the West in any way, shape, or form has the pro-Western elements of the Arab world shaking their heads in stunned disbelief. Targeting as "terrorist" the UAE – which lets Uncle Sam use it as a lily pad to transport troops to Iraq and throughout the Middle East, and which has cooperated in efforts to root out terrorist networks, including the nuclear black market ring centered around A. Q. Khan – is just not credible. There must, insist our beleaguered allies in the region, be some other reason for this curt repudiation of all things Arabic, this open display of contempt and hostility even to America's loyal friends in the Gulf emirates.

The sanctions against Dubai, if carried to their logical conclusion, would rule out any and all Middle Eastern companies from doing business in the U.S. After all, one of their terrorist-loving employees could possibly be an al-Qaeda "sleeper" whose clever plan to smuggle a suitcase nuke onto American shores could conceivably be pulled off under cover of a shield of corporate invisibility.

The exclusion of an Arab company from an important sector of the U.S. economy strikes a significant victory for the War Party. Even if the Bush administration succeeds in partially defusing the issue, the brouhaha is in itself a great victory for the advocates of "World War IV." It draws a line in the sand, as it were, between the U.S. and the Arabic-speaking and Muslim world, and legitimizes the idea of a "war of civilizations" – the meme that motivates our militaristic foreign policy.

...

Oil: America's Smack

Another pop quiz, hotshot! Name the number one oil importer to the United States.

Saudi Arabia? Guess again. It's Canada. In fact, Saudi Arabia comes in third, after Mexico. Yes, you may have thought that the Middle East provided the United States with most of its oil, but that's not true either. In 2004, Persian Gulf countries (defined by the US Department of Energy as consisting of Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates) only provided 2,400 thousand barrels of oil per day (tbpd) or 23.80% of the 10,084 tbpd total imported. If you expand the list to include other Middle Eastern countries not located in the Persian Gulf (e.g., Algeria, Libya, Syria, etc.), the total goes up to a mere 2,648 tbpd or 26.26% of the total. Finally, if you expand the list to include all Muslim-majority countries around the world (e.g., Brunei, Indonesia, Malaysia, etc.), the quantity is 3,793 tbpd or 37.61% of the total. In other words, only a little over 1/3 of America's oil imports come from Muslim countries.

“America is addicted to oil, which is often imported from unstable parts of the world,” Mr Bush said in his State of the Union address. “By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past.” (Source: Financial Times)

I agree that America is addicted to oil. There's no question about that. And I have no problem with the Bush administration trying to move beyond a petroleum-based economy through "talent and technology." There's nothing wrong with that either.

But saying that the Bush administration's goal is to cut American consumption of Middle Eastern oil by 75% by 2025 is merely a smokescreen for the ignorant. There's nothing wrong with the goal per se, but the goal won't make any real dent in America's oil addiction. If the Bush administration really wanted to cut out 75% of Middle Eastern oil, they could do so now by stopping the importation of Saudi Arabian and Iraqi oil. Those two countries, in 2004, accounted for 2,150 tbpd out of the Middle East's total of 2,648 tbpd, or 85.08% of the Middle East's total. Boom! You've not only gone past the 75% mark, but cut an additional 10% beyond that.

But like any junkie, America will move from one supplier to another. Instead of Saudi Arabia and Iraq, the US will probably move on to one of the other big producers (if they can): Canada (1,616 tbpd or 16.03%), Mexico (1,598 tbpd or 15.85%) or Nigeria (1,078 tbpd or 10.69%). (Venezuela is the only other large importer, sending 1,297 tbpd or 12.86%, but - obviously - recent relations with that country's government would nix that idea.)

A better suggestion by the President would have been to cut overall oil imports into the country by, say, 25%. Instead of importing 10,084 tbpd, how about dropping the number by 2,521 tbpd to 7,563 tbpd? That would not only be equivalent to stopping all imports from the Middle East, but would also provide real incentives to car and oil companies to find a meaningful solution to America's oil addiction.

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In the meantime, the President's speech ignores reality. As he said, oil is "often imported from unstable parts of the world." And, of course, we're supposed to infer that the "unstable parts" include the Middle East and Venezuela. But even if the US imported oil from "stable parts of the world," that oil in the "unstable parts" will still be sought out by other countries. All of the world is "addicted" to oil, not just the United States. If the US stopped importing Saudi Arabian and Iraqi oil, as I suggested above, other countries (e.g., China, the European Union, Japan, etc.) would gladly pick up the slack. The oil is not going to go away. Moreover, as Frank Verrastro, director and senior fellow in the Center for Strategic and International Studies energy program said, “Even if America doesn’t import a drop of Middle Eastern oil, these countries will still play an increasingly important role in determining how much we pay for oil. You pay the global price and it doesn’t matter where you buy it from.”

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Other reactions to Bush's speech included:

Myron Ebell, director at the Competitive Enterprise Institute, a conservative think-tank: “The president’s hackneyed and dangerous energy rhetoric that we are addicted to oil is an indication that the administration is addicted to confused thinking about energy policies. [His goals] will be hindrances to creating a bright energy future for American consumers.”

Jim Footner of Greenpeace: “We’ll wait and see what concrete action [Mr Bush] takes before getting our hopes up. After all, there is a treaty to reduce America’s dependence on oil – it’s called Kyoto, and Bush walked away from it.”

Bill Prindle, the deputy director of the American Council for an Energy-Efficient Economy: "The administration has made much of its investment in energy efficient technology. However, much of this has been a reallocation of research funds. The budget requests from the White House for funding on energy efficiency has actually fallen 14 per cent in real terms since 2002."