NPR Disinformation

I listened to this story this morning while taking my daughter to sports conditioning. All during the broadcast, I was deeply intrigued by the apparent need to lie. Why the narrative imperative to mislead the public in light of the fact that the USAF has already taken its decision on what next vis a vis meeting its exorbitant thirst for fuel?

The Defense Department is the government's largest consumer of petroleum products, like gasoline, diesel and jet fuel.

And if it costs $100 to fill up an SUV, just imagine what it takes to gas up a stealth bomber.

The Air Force is the biggest user of fuel, consuming 71 percent of the military's gallons. Those huge aircraft that transport personnel and equipment all over the world are not economy boxes. Take the C-5 Galaxy, which can carry 135 tons: It gets .07 miles per gallon.

And the armies on the ground in Iraq and Afghanistan aren't driving hybrids. In Iraq alone, the military burns more than a million and a half gallons a day.

Lt. Col. Brian Maka puts the Pentagon's fuel expenses in perspective. "Generally, a $1 increase in the price of a barrel of oil on the open market translates into an increase for the whole department of $130 million," Maka says.

Over the last six months, oil prices have increased by roughly $50 a barrel. Naturally, that translates into a huge spending increase.

The Defense Department prepares its budget 18 months in advance and had no way of predicting that oil prices would increase this much in such a short period of time.

"The implication of that is since these fuel costs go into our ... operations and maintenance budgets, those are going to be the budgets that are hit the hardest," says Dov Zakheim, a former controller for the Defense Department. "The problem is that those are the very same budgets that are ... paying for our operations in places like Iraq and Afghanistan. So it's kind of a vicious circle, and a very, very difficult one to deal with."

And it's probably not going to get any better any time soon.

"We anticipate over the next three months that the increase in fuel costs for the department [will be] $1.2 billion," Maka says, adding that the Defense Department will likely have to go back to Congress to ask for additional funding.

In Congress, several senators have proposed that Iraq should start paying for some of the military's fuel costs because of its large oil reserves.

But Zakheim says he doesn't think that's going anywhere.

"I'm just not sure that the Iraqi government would respond the way we might hope them to," he says.

Instead, Zakheim thinks the Pentagon will throw its considerable research and development resources into finding alternative fuels.

"My guess is that we are going to see something like other cases in the past where the Pentagon forged ahead in the science and technology world because it was impelled to do so," he says. "After all, the Internet did start with the Pentagon."

But that kind of research and development takes time. Meanwhile, the meter is still running — faster and faster.

Why is the public message at odds with the actual intentions released not too long ago into the public domain? Or, is this the USAF's way of gradually socializing coal gasification as the shape of things to come on both the mission and the domestic energy production fronts?

Back to the Great Depression

The UK Times Online had the temerity to post this article with a question mark.

“Some of it is clearly to do with the oil price but essentially what we are seeing is a slow-motion car crash,” said George Magnus, senior economic adviser at UBS.

“The first act was the housing market, the second act was the credit crunch, and what we are now seeing in this third act is the bigger picture of a downturn that has a long way to run.”

Few are gloomier about that prospect than Albert Edwards, strategist at Société Générale in London. “America is leading the way, diving into deep recession as a collapse in consumer confidence induces the great unwind,” he said. Edwards compares the economy with a pyramid scheme that is poised to crash to earth and interest-rate changes can do nothing to avert it.

He thinks Wall Street and the other main markets have a lot further to drop, and will end up 70% below the peaks of last year. That would imply a level of just 500 for the S&P 500, which was at 1,280 on Friday, and 4,500 for the Dow, compared with Friday’s closing level of 11,346.

The FTSE 100, which closed at 5,530 on Friday, will plunge to 3,000, he predicts. The good news is that he expects the oil price, which was above $142 on Friday, to slump to $60 a barrel. The bad news is that he sees this occurring as a result of “deep” recession in the advanced economies and a sharp slowdown in emerging markets.

“The last time loan losses were at these levels was 1934,” he added. “I don’t believe we are going back to a 1930s environment with people living in tents.” That's because people nowadays lack the gumption and knowhow to pitch a simple tent to protect themselves from the elements and to survive. The 1930's environment was rife with folks who had initiative, knowhow, basic survival skills, and some semblance of community to which to turn in the face of systemic governance catastrophe.

Flat, Hot, and Crowded.....,

Thomas Friedman is such a ridiculous windbag. It's pretty clear that his Flat World puffery is out the window and one wonders why the Times/IHT would even trouble itself to publish anymore of his preposterous chindribble. Reading him three days late and three dollars short is a hoot;

I continue to be appalled at the gap between what is clearly going to be the next great global industry - renewable energy and clean power - and the inability of Congress and the administration to put in place the bold policies we need to ensure that America leads that industry.[...]If the old saying - that "as General Motors goes, so goes America" - is true, then folks, we're in a lot of trouble. General Motors' stock-market value now stands at just $6.47 billion, compared with Toyota's $162.6 billion. On top of it, GM shares sank to a 34-year low last week.

That's us. We're at a 34-year low. And digging out of this hole is what the next election has to be about and is going to be about - even if it is interrupted by a terrorist attack or an outbreak of war or peace in Iraq. We need nation-building at home, and we cannot wait another year to get started. Vote for the candidate who you think will do that best. Nothing else matters.

I continue to be appalled that a pompous gasbag incapable of seeing the writing on the wall years ago that spelled the end of the era of cheap energy and globalization is still permitted to write about anything of consequence in public. When in the same paper we find the following treatment of increasing global balkanization and contraction;

“People are in a panic, so they are buying more and more — at least, those who have money are buying,” said Conching Vasquez, a 56-year-old rice vendor who sat one recent morning among piles of rice at her large stall in Los Baños, in the Philippines, the world’s largest rice importer. Her customers buy 8,000 pounds of rice a day, up from 5,500 pounds a year ago.

The new restrictions are just an acute symptom of a chronic condition. Since 1980, even as trade in services and in manufactured goods has tripled, adjusting for inflation, trade in food has barely increased. Instead, for decades, food has been a convoluted tangle of restrictive rules, in the form of tariffs, quotas and subsidies.

Now, with Australia’s farm sector crippled by drought and Argentina suffering a series of strikes and other disruptions, the world is increasingly dependent on a handful of countries like Thailand, Brazil, Canada and the United States that are still exporting large quantities of food.

The Food Chain Hoarding Nations Drive Food Costs Ever Higher

Uh Oh......,

No special oil deal for the big'uns...,

Iraq is still negotiating with Shell, BP, ExxonMobil, Chevron and Total, and a consortium of other smaller oil companies, to develop six oil blocks and two gas fields, Oil Minister Hussein al-Shahristani told a press briefing.

"We did not finalise any agreement with them because they refused to offer consultancy based on fees as they wanted a share of the oil," he said.

Add that to no special 30 year leases, and this whole war for oil adventure has degenerated into an abject failure of epic proportions.

Amid concerns about foreign firms reaping huge financial rewards, Baghdad said the successful firms would have to have an Iraqi partner and give 25% of the value of contracts to locally owned firms.

The BBC's Nicholas Witchell in Baghdad said the move was highly significant since it paved the way for large foreign firms to re-enter a market they have been effectively barred from since Saddam Hussein nationalised Iraq's main oil company in 1972.

"It is not possible for Iraq, which has large oil reserves, to stay at the current level of production," said oil minister Hussain al-Shahristani.

"Iraq should be the second or third source of oil exportation."

Iraq's courting of foreign investment is at an early stage but has already attracted controversy due to claims that some contracts might be awarded without competitive bids.

Troubling National Sovereignty....,

U.S. Advised Iraqi Ministry on Oil Deals;

A group of American advisers led by a small State Department team played an integral part in drawing up contracts between the Iraqi government and five major Western oil companies to develop some of the largest fields in Iraq, American officials say.

The disclosure, coming on the eve of the contracts’ announcement, is the first confirmation of direct involvement by the Bush administration in deals to open Iraq’s oil to commercial development and is likely to stoke criticism.

In their role as advisers to the Iraqi Oil Ministry, American government lawyers and private-sector consultants provided template contracts and detailed suggestions on drafting the contracts, advisers and a senior State Department official said.

It is unclear how much influence their work had on the ministry’s decisions.

The advisers — who, along with the diplomatic official, spoke on condition of anonymity — say that their involvement was only to help an understaffed Iraqi ministry with technical and legal details of the contracts and that they in no way helped choose which companies got the deals.

Repeated calls to the Oil Ministry’s press office for comment were not returned.

At a time of spiraling oil prices, the no-bid contracts, in a country with some of the world’s largest untapped fields and potential for vast profits, are a rare prize to the industry. The contracts are expected to be awarded Monday to Exxon Mobil, Shell, BP, Total and Chevron, as well as to several smaller oil companies.

The deals have been criticized by opponents of the Iraq war, who accuse the Bush administration of working behind the scenes to ensure Western access to Iraqi oil fields even as most other oil-exporting countries have been sharply limiting the roles of international oil companies in development.

For its part, the administration has repeatedly denied steering the Iraqis toward decisions. “Iraq is a sovereign country, and it can make decisions based on how it feels that it wants to move forward in its development of its oil resources,” said Dana Perino, the White House spokeswoman.

Guess there'll have to be some recalibration on the viability and legitimacy of that Maliki gub'mint....,

Only Obama Ready to Put in Work....,

While the other wannabe, gonnabe, pranksters and wanksters pooh-poohed it at the time, only Sen. Barack Obama clearly asserted the narrative imperative to put in serious work in accordance with U.S. foreign policy stipulations regarding the global war on terror - in today's NYTimes;

Intelligence reports for more than a year had been streaming in about Osama bin Laden’s terrorism network rebuilding in the Pakistani tribal areas, a problem that had been exacerbated by years of missteps in Washington and the Pakistani capital, Islamabad, sharp policy disagreements, and turf battles between American counterterrorism agencies.

The new plan, outlined in a highly classified Pentagon order, was intended to eliminate some of those battles. And it was meant to pave a smoother path into the tribal areas for American commandos, who for years have bristled at what they see as Washington’s risk-averse attitude toward Special Operations missions inside Pakistan. They also argue that catching Mr. bin Laden will come only by capturing some of his senior lieutenants alive.

But more than six months later, the Special Operations forces are still waiting for the green light. The plan has been held up in Washington by the very disagreements it was meant to eliminate. A senior Defense Department official said there was “mounting frustration” in the Pentagon at the continued delay.

After the Sept. 11 attacks, President Bush committed the nation to a “war on terrorism” and made the destruction of Mr. bin Laden’s network the top priority of his presidency. But it is increasingly clear that the Bush administration will leave office with Al Qaeda having successfully relocated its base from Afghanistan to Pakistan’s tribal areas, where it has rebuilt much of its ability to attack from the region and broadcast its messages to militants across the world.

While Baraka was ready to ride, and caught flak for saying as much, flatfooted, greenhorn republican presidential nominees were making unintelligible mouth noises about staying in Iraq for another 100 years....,

Iran: The Threat

Thomas Powers in the NY Review of Books brings yet further insight into the makings of WW-III. First the escalation in foreign policy, then the escalating resistance to this movement from within the Pentagon;

At a moment of serious challenge, battered by two wars, ballooning debt, and a faltering economy, the United States appears to have lost its capacity to think clearly. Consider what passes for national discussion on the matter of Iran. The open question is whether the United States should or will attack Iran if it continues to reject American demands to give up uranium enrichment. Ignore for the moment whether the United States has any legal or moral justification for attacking Iran. Set aside the question whether Iran, as Secretary of Defense Robert Gates recently claimed in a speech at West Point, "is hellbent on acquiring nuclear weapons." Focus instead on purely practical questions. By any standards Iran is a tough nut to crack: it is nearly three times the size of Texas, with a population of 70 million and a big income from oil which the world cannot afford to lose. Iran is believed to have the ability to block the Straits of Hormuz in the Persian Gulf through which much of the world's oil must pass on its way to market.

Keep in mind that the rising price of oil already threatens the world's economy. Iran also has a large army and deep ties to the population of Shiite coreligionists next door in Iraq. The American military already has its hands full with a hard-to-manage war in Iraq, and is proposing to send additional combat brigades to deal with a growing insurgency in Afghanistan. And yet with all these sound reasons for avoiding war with Iran, the United States for five years has repeatedly threatened it with military attack. These threats have lately acquired a new edge.

Whether the threats of massive escalation materialize, or not, the consequences to the American way of life are going to be pretty much indistinguishable.

With its time in power rapidly running out, the Bush administration is mired in two frustrating wars, stretched thin militarily, living on borrowed money, and exhausted intellectually. It would be hard to name a time when the United States faced a wider range of political problems, or had better reasons to avoid additional military entanglements. Bush and Cheney concede nothing of the kind, but promise "serious consequences" for continued Iranian defiance. It is a strange fact that the locus of opposition to attack on Iran is not in Congress but in the Pentagon, where an insider told the reporter Seymour Hersh two years ago, "There is a war about the war going on inside the building." When the administration planned to add a third aircraft carrier group to the Fifth Fleet in the Persian Gulf, the move was blocked by the then newly promoted chief of Central Command, Admiral William Fallon, who told friends that war with Iran "isn't going to happen on my watch."

Until his resignation in March, Fallon often contradicted and undermined the tough talk of the administration, speaking dismissively about the prospects of war with Iran. "Another war is just not where we want to go," he told the Financial Times. "This constant drumbeat of conflict...is not helpful and not useful," he said to al-Jazeera television. In recent months Fallon also traveled in Afghanistan and spoke at candid length with the military writer Thomas Barnett, who was working on an article for Esquire. When the article was ready to go to the printer Fallon invited an Esquire photographer to Central Command headquarters in Tampa, Florida, to take his picture. War with Iran, yes or no, Barnett wrote, would "all come down to one man"—Fallon. The White House was not happy with Fallon's interference, Barnett reported. Washington rumor said Fallon's time was short. His removal, Barnett predicted, "may well mean that the president and vice-president intend to take military action against Iran before the end of this year...." A week after Barnett's piece appeared in Esquire, Gates announced that Fallon was retiring at his own request. The Esquire article had been the talk of the Pentagon nonstop; leaked stories were coming from all directions. Fallon wasn't just on his way out; Gates said he would be gone by the end of the month.

Fallon's open and outspoken resistance to the idea of war with Iran represents something new and extraordinary—maybe. It is too early to be sure. But beneath the surface of recent statements by Fallon, Gates, and the chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, something large seems to be swelling up—resistance by the Pentagon to passive acceptance of a wider war. To see the shape of the conflict one must first accept the seriousness of both parties—the administration in making its threats to stop Iran's nuclear program, and Pentagon officials when they say a wider war would be practically difficult and strategically unnecessary.

This showdown—if it is truly taking place—has been a long time coming. Ten years ago a young Army major, H.R. McMaster, published a history of American escalation of the war in Vietnam, Dereliction of Duty: Lyndon Johnson, Robert McNamara, the Joint Chiefs of Staff, and the Lies that Led to Vietnam. McMaster's argument, stripped to its core, was that against their own best judgment the joint chiefs passively acquiesced to White House pressure to expand the war. Johnson, with his eye on a second term, did not want to be the first American president to lose a war, and the joint chiefs did not want to run their careers aground. Despite the harshness of McMaster's conclusion his book was widely read in the Pentagon and made a deep impression on a generation of rising officers, many of them now of flag rank and in positions of responsibility.[*]

National bankruptcy with or without the reorganization and force majeure of world war is going to prove a wrenching and protracted period in the history of the republic no matter what.

Occupation Plan for Iraq Faulted in Army History

The NYTimes brings you all the history you can use on the U.S. debacle in Iraq. The story of the American occupation of Iraq has been the subject of numerous books, studies and memoirs. But now the Army has waded into the highly charged debate with its own nearly 700-page account: “On Point II: Transition to the New Campaign.”

In 2005, the RAND Corporation submitted a report to the Army, called “Rebuilding Iraq,” that identified problems with virtually every government agency that played a role in planning the postwar phase. After a long delay, the report is scheduled to be made public on Monday.

But the “On Point” report carries the imprimatur of the Army’s Combined Arms Center at Fort Leavenworth. The study is based on 200 interviews conducted by military historians and includes long quotations from active or recently retired officers.

Preparing the Battlefield

In next week's New Yorker, Seymour Hirsch continues his coverage of activity prefatory to the outbreak of WW-III in earnest, enjoy.

Late last year, Congress agreed to a request from President Bush to fund a major escalation of covert operations against Iran, according to current and former military, intelligence, and congressional sources. These operations, for which the President sought up to four hundred million dollars, were described in a Presidential Finding signed by Bush, and are designed to destabilize the country’s religious leadership. The covert activities involve support of the minority Ahwazi Arab and Baluchi groups and other dissident organizations. They also include gathering intelligence about Iran’s suspected nuclear-weapons program.

Clandestine operations against Iran are not new. United States Special Operations Forces have been conducting cross-border operations from southern Iraq, with Presidential authorization, since last year. These have included seizing members of Al Quds, the commando arm of the Iranian Revolutionary Guard, and taking them to Iraq for interrogation, and the pursuit of “high-value targets” in the President’s war on terror, who may be captured or killed. But the scale and the scope of the operations in Iran, which involve the Central Intelligence Agency and the Joint Special Operations Command (JSOC), have now been significantly expanded, according to the current and former officials. Many of these activities are not specified in the new Finding, and some congressional leaders have had serious questions about their nature.

quoth my man T3; Is not the government of this nation b.r.o.k.e.? busted? de-looted? on "e"? Sho' nuff...and for years at that.

If the gubment wasn't called a gubment and was just called a bully - what would you call a bully with a big-ass club, no job and fewer and fewer kids from whom to steal lunch? A hungry muhphukkin' bully. That's your "global economy" of too-day.

$200 just means the bully is gonna will have officially eaten everyone's lunch.

Peak Phosphorus?

Battered by soaring fertiliser prices and rioting rice farmers, the global food industry may also have to deal with a potentially catastrophic future shortage of phosphorus, scientists say.

Researchers in Australia, Europe and the United States have given warning that the element, which is essential to all living things, is at the heart of modern farming and has no synthetic alternative, is being mined, used and wasted as never before.

Massive inefficiencies in the “farm-to-fork” processing of food and the soaring appetite for meat and dairy produce across Asia is stoking demand for phosphorus faster and further than anyone had predicted. “Peak phosphorus”, say scientists, could hit the world in just 30 years. Crop-based biofuels, whose production methods and usage suck phosphorus out of the agricultural system in unprecedented volumes, have, researchers in Brazil say, made the problem many times worse. Already, India is running low on matches as factories run short of phosphorus; the Brazilian Government has spoken of a need to nationalise privately held mines that supply the fertiliser industry and Swedish scientists are busily redesigning toilets to separate and collect urine in an attempt to conserve the precious element.

Dana Cordell, a senior researcher at the Institute for Sustainable Futures at the University of Technology in Sydney, said: “Quite simply, without phosphorus we cannot produce food. At current rates, reserves will be depleted in the next 50 to 100 years. From the U.K. Times Online.

u.k. rural gangs move into the oil business

Now from the Guardian;

It may not be quite like the film Mad Max out there, with violent gangs roaming Britain in search of the few remaining drops of fuel, but for farmers like Eddie Cowpe it feels a little bit like it.

He returned to his farm shop in Lancashire recently to find that thieves had emptied his 10,000-litre diesel tank. What they did not take they let drain away on to his stone yard and into the water course, leaving Cowpe facing a bill of almost £70,000 for the fuel lost and the clean-up.

"I said two years ago that this country was going to see serious civil unrest and riots because of food and fuel shortages," said Cowpe. "It's going to come true. It's a frightening scenario. These people are morons and vandals. They just don't care. I don't know where it's going to end."

In the week that Rosemary Dove, a farmer's wife from Co Durham, collapsed and died after an alleged diesel raid, the fuel crisis is hitting farmers, truckers, motorists and householders in the pocket - and making them feel rather less safe.

With oil prices jumping to another record high yesterday to break through the $142 a barrel level, it is likely to become an even more attractive target for thieves.

Oil prices have been on an upward trend since the millennium, when they were around $10-20 a barrel. The huge increases have led to gangs of thieves in lorries or vans fitted with drums and pumps roaming the countryside, often tailing tankers so they can be sure of finding freshly topped-up containers.

It appears that Collapse Criminality is rife throughout the anglosphere....,

Bully in Decline....,

By pumping out money in an effort to forestall recession and paper over balance sheet problems, the Federal Reserve is driving up commodity and food prices in general. Yet American real incomes are not growing. Even without jobs offshoring, US economic policy has put the bulk of the population on a path to lower living standards.

The crisis that looms for the US is the loss of world currency role. Once the dollar loses that role, the US government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive US trade deficit. This crisis will eliminate the US as a world power.

Paul Craig Roberts says what T3 said......,

10 Million Fewer Cars on U.S. Roads

A new forecast calls for gasoline prices to hit $7 (U.S.) a gallon in the next two years and oil to soar to $200 a barrel by 2010.

The report by CIBC World Markets also predicts there will be 10 million fewer cars on the road in the United States by 2012.

“Over the next four years, we are likely to witness the greatest mass exodus of vehicles off America's highways in history,” Jeffrey Rubin, the lead author, wrote in Thursday's report.

Economist Benjamin Tal, who co-authored the report with Mr. Rubin, said Canadians can expect to pay about $1.85 to $2.00 per litre of gas at the pumps by 2010. Mr. Tal also expects the numbers of Canadian vehicles on the road to drop by 700,000 by 2012 – much less than the 10 million predicted in the U.S.

“We don't have the same story in the sense that most low income Canadians have better access to public transportation,” he said, referring to the report's U.S. calculations that estimates that about half the cars coming off the road will be from Americans who make less than $25,000.

In Canada, the decrease will be mainly come from middle-class families that own two or three cars, Mr. Tal said. From the Globe and Mail.

Final Warning

This is the article that accompanied the dangerzones interactive media map below. Available to NewScientist subscribers only, I found a copy at TMC.net, enjoy.

a few well-placed explosives, an energy-sapping cold winter or an unusually intense hurricane season could send shock waves across the globe. The potential consequences are so serious that governments are drawing up emergency plans to cope should the worst happen. According to one analyst who took part in a simulation of just such a crisis, the situation most experts fear is what they call a "psychological avalanche".

Here's what happens. A small, distant country one day finds it can no longer import enough oil because of a spike in prices or problems with local supply. The news media whip this up into a story suggesting an oil shock is on the way, and the resulting panic buying by the public degenerates into a global grab for oil.

Most industrialised countries keep an emergency reserve as a first line of defence, but in the face of worldwide panic buying this may not be enough. Countries in which the oil runs out face transport meltdown, wreaking havoc with international trade and domestic necessities such as food distribution, emergency services and daily commerce. Without oil everything stops.

The roots of our oil addiction can be traced back to the end of the 19th century, when petroleum began to be pumped from wells across America. It wasn't long before it become obvious what a great transport fuel it could provide. Oil-based fuels paved the way for intensive farming and extensive road networks; they drove the influx of populations into cities, drove growth in shipping and eventually made mass air travel possible. "Oil has shaped our civilisation. Without crude oil you'd have no cars, no shipping, no planes," says Gideon Samid, head of the Innovation Appraisal Group (IAG) at Case Western Reserve University in Ohio.

And it's not just about fuels. A giant chemical industry relies on oil as its feedstock, and without it many of the products we now take for granted would vanish. "You'd see no plastics, no bags, no toys, no cases on TVs, computers or radios. It's absolutely everywhere," says Samid.

"Much of the economic expansion and growth of the human population in the 20th century is directly tied to the availability of large amounts of cheap oil," says Cutler Cleveland, director of the Center for Energy and Environmental Studies at Boston University. "There isn't a single good or service consumed on the planet, except in rural economies, that doesn't have oil embedded in it. Oil is the lifeblood of the global economy."

The secret of oil's success is its portability and extraordinarily high energy density. One barrel of oil contains the energy equivalent of 46 US gallons of gasoline; burn it and it will release more than 6 billion joules of heat energy, equivalent to the amount of energy expended by five agricultural labourers working 12-hour days non-stop for a year.

The vast majority of oil is consumed by transport. In the US, that sector accounts for nearly 70 per cent of the 20.7 million barrels the country gets through each day.

More than half of the world's oil comes from seven countries, the leading supplier being Saudi Arabia, which produces more than 10 million barrels a day. Then come Russia, the US, Iran, China, Mexico and Canada. Twenty years ago, there were 15 oilfields able to supply 1 million barrels a day. Now, there are only four. The largest is the Ghawar field in Saudi Arabia.

Danger Zones

A huge proportion of the world's oil supply flows through just a handful of pipelines and shipping lanes. Knocking out just one of these would have dangerous consequences. Click on the image to visit the interactive map and drilldown for the salient details.

The Bonga Offshore Oil Platform Attack

On the heels of this weekend's Saudi Oil summit, Nigerian production has dropped to the lowest level in 25 years. This was in part because militant attacks shut in as much as 345,000 barrels per day of Nigerian production in the past few days. The Nigerian militant group MEND (Movement for the Emancipation of the Niger Delta) has demonstrated a continuing ability to interrupt production from Nigeria's mature, onshore fields. However, the future promise of Nigerian oil is not onshore. Rather, it is the 1.25 million barrels per day of offshore production scheduled to come on line in the next 6 years. Analysts previously believed these offshore facilities were out of MEND's reach.

This assumption--that far offshore facilities are beyond the reach of militants--must now be reconsidered. The week's most successful attack, shutting in 225,000 barrels per day, came against Shell's Bonga facility. At 120 km offshore, the Bonga attack demonstrated a new militant capability in the offshore environment. As Nigeria is one of the few states with the geological potential to significantly increase oil production and exports, the Bonga attack may prove to be an extremely important development.

Offshore facilities are highly complex and vulnerable feats of engineering. While they are generally engineered to withstand extreme natural environments, they may not be well fortified against intentional attack. We do not know the extent of fortifications, as the specific security considerations and plans for each platform are not publicly available. It makes sense, however, that to the extent the threat from MEND was considered to be non-existent at the time that all scheduled Nigerian megaprojects entered development, fortification against attack was not a significant design criteria.

Full Monty at the Oil Drum. Be sure to read the conclusion and discussion of geopolitical feedback loops.

Fertiliser shortage hits India's farms

From the BBC News;

Increasingly many countries across the world are beginning to recognise that expensive fertilisers, or even a supply shortage, is not just a problem for the farmers.

It has a direct effect on the cost and availability of food. Across the world countries are looking at farmers to produce a bumper crop this year to overcome global food shortage. As fertiliser prices go up – food prices go up as well, threatening to force millions of poor people into starvation.

Back on the farms, Mr Sehrawat is still waiting for his supply.

"It is really urgent that we get our supplies," he says.

"You can wait for monsoons - that's not under anyone's control - but you can't be made to wait for fertilisers.

"At this rate, people have to keep waiting for rice on their plates. Nothing is going to grow on our fields."

With general elections next year, the government in India could suffer the political consequences of poor agriculture output.

And the anger of unhappy farmers who cannot reap the benefits of a good monsoon.

It's always the details that come around to bite really, really hard. Fertilizer - as we all know - is a petrochemical dependent on natural gas feedstocks.

India consumes millions of tonnes of fertiliser each year.

Production costs have risen on the back of soaring crude oil prices.

Globally fertilizer rates have tripled in the last year.

Prices of the three main fertilizers, nitrogen, potash and phosphate, have gone up by almost 300%.

Diammonium phosphate costs nearly $1,300 (£650) per tonne whereas farmers in India pay around $250.

The Indian government subsidises the price by nearly 85% for farmers, which in turn means India's subsidy bill is getting bigger each year. At the current forecasts it amounts to almost 2.5% of the country's gross domestic product.

U.S. Cities Cut Services

Surging fuel prices are forcing cities across the United States to cut back on services and dip into cash reserves to keep their fleets on the road, according to a survey released on Friday.

Ninety percent of the 132 mayors surveyed by the U.S. Conference of Mayors reported that climbing fuel prices have had a significant impact on city budgets and operations.

The average retail price of diesel used in city buses and garbage trucks has shot up 65 percent over the past year. Gasoline prices jumped about 35 percent over the same period, as many local governments are feeling the pinch of the wider nationwide economic slowdown.

"It's just a snowball. It all hits at once. So, governments, mayors are having to make tough choices," said Mayor Douglas Palmer of Trenton, New Jersey.

"Everything is on the table except for a reduction in public safety."

from Reuters

Taxpayers Fund Bank of America's Countrywide Takeover

According to Bloomberg.com

Bank of America Corp.'s $3 billion takeover of Countrywide Financial Corp. will be financed by 138 million tax-paying Americans.

Bank of America, led by Chief Executive Officer Kenneth Lewis, can use tax write-offs to pay for Countrywide, the country's biggest mortgage lender, said Robert Willens, a former managing director at Lehman Brothers Holdings Inc. who now runs his own accounting firm. Taxpayers may pick up about $5 billion of Countrywide's losses over 20 years, he said. Countrywide shareholders approved the sale today.

``Ken Lewis got a break,'' Willens said. ``What these losses do is reduce the effective cost of the deal so the headline price isn't really what they're paying. It's entirely possible that the entire equity purchase price could be financed by tax savings.''

The tax benefit may explain why Lewis continues to back the purchase even as analyst Paul Miller of Friedman, Billings, Ramsey Group Inc. said he should ``walk away.'' Miller, the top-ranked analyst in Bloomberg's latest survey of stock-pickers, estimates Countrywide will lose as much as $33 billion on bad home loans. Lewis said this month Bank of America, the biggest U.S. consumer bank, will come out ahead even if home prices drop by more than 25 percent in the next two years.

Countrywide and its CEO, Angelo Mozilo, were sued yesterday by the states of California and Illinois for hiding fees and using false marketing claims, said California Attorney General Jerry Brown and Robyn Ziegler, a spokeswoman for Illinois Attorney General Lisa Madigan. Countrywide was the biggest U.S. subprime lender in 2006 and 2007, according to Inside Mortgage Finance, a Bethesda, Maryland- based industry newsletter. Subprime mortgages were available to borrowers with bad or incomplete credit histories.

Illinois to Sue Countrywide

The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.

The lawsuit, which is expected to be filed on Wednesday in Illinois state court, accused Countrywide and Mr. Mozilo of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised “no closing costs loan.” Countrywide also created incentives for its employees and brokers to sell questionable loans by paying them more on such sales, the complaint said.

In reviewing one Illinois mortgage broker’s sales of Countrywide loans, the complaint said the “vast majority of the loans had inflated income, almost all without the borrower’s knowledge.”