America’s New Path of Energy Restructuring

02/22/2006

by Paul Munnis

Tim Russert of ”Meet The Press,” delivered an interesting analysis of the sale of the U.S. Ports today on the Don Imus show, on MS-NBC. His take was pretty much as follows:

The President will dig his heels in, saying in effect that even though he may be a lone voice crying in the wilderness that he will honor international investment in America and that the U.S. needs to build allies in the Arab world, and that there is life after the Iraq War ends and it must include global trade, etc. He will take the long view and make it appear as wisdom.

The Congress will ask how Bush could have blindsided them in an election year and likely pass blocking legislation as a political necessity for their own re-election. The president is likely to veto that legislation and the GOP members of Congress will be betting that he will do so or else they will be left swinging in the breeze. They will then blame Bush who vetoed their attempts and who isn’t running for re-election anyhow.

Democrats will observe that it’s the GOP that’s on the hot-seat over this subject and they will not allow themselves to be hurt by the soft on terrorism argument of the GOP anymore. They will vote with the GOP to ban the port sale maintaining that it’s all about national safety and show a bi-partisan stance. Democrats know there is more than cargo involved in these ports. They are also ports for foreign oil delivery and energy is a strategic issue for America and is undergoing a shift in attitudes and approaches as a result. This then is an opening skirmish in the American energy independence paradigm shift.

The battle is then thought to become loud, raucous, nasty, and will allow plenty of mud to be splashed on all who are involved. The end game is cutting the deficit from a growth curve to a reduction curve even though the deficit will not be talked about very much. Oil imports are a major factor in driving the deficit upwards.

As we said, this is an interesting analysis.

Yet what counts in the end is not the battle but the outcome. Will UAE become an Arab government owner of the ports? Will they simply withdraw their offer as they listen to the loud mating dinosaurs of Washington? Will they act to discourage Arab investment in America in the future? Will this all become a part of a bigger picture of life for the mid-east after the oil shakedown lessens?

As the American public watches our nation being hustled by the Arab oil consortium the public believes that we can and we must end the dependence upon oil importation and act to reverse the trend of mid-east oil dependency. That attitude has unleashed the Arab’s worst fear and will hasten the end of Arabian wealth from the west and shift the focus to the east.

At the same time the American public is watching the behavior of Arab governments over the Islamic cartoon issue and the government support of nations like Iran and Syria for the rioters in Islamic cities where mob riot, looting, and embassy burning, is rampant and is encouraged and supported by rogue Islamic nations.

Many Americans are now quietly expressing the idea that if the UAE doesn’t like having their investment stiffed then they need to take their complaint to the Arab League who is creating a mockery of the mid-east by using religion as a pawn against the west.

The image coming through to the American public is that these are irresponsible governments and they deserve no consideration. That image is splashing all of the Arab nations with mud. Americans think that the UAE and all of the Arab states can go hang. To politicians the need to form an American Oil Consortium is becoming obvious and that means that Canada, Mexico, Central America, and South America will be forced to join hands. That will set much of the U.S. foreign policy agenda for the future and alter the wealth of nations.

As America is forced to reverse the oil import trend the same is true of Europe who learned that Russia is not a reliable source for oil. One cannot bet their future on Russian oil supply. So they too will be forced into more regional reduction of oil imports. In many ways Europe is a giant step ahead of America and they will be forced to focus EU resources on further avoiding oil imports. They will thus act as the research arm for America who can cruise in their wake of discovery and investment avoiding the pitfalls and reaping the benefit of lessons learned.

Asian nations seeking to become the new industrialists are the natural growth market for the Arabs and so far they are in ideological alignment and will thus get quota preference from the international oil consortium even though there is a myth of open market oil purchasing.

This could drive a nail into the coffin of the African continent. All they had to offer was oil and now they have raped the goose that lays the golden egg.

Meanwhile America is discovering the need for a national transportation system with bus, rail, bike, and fuel efficient autos in our immediate future. This is the place that Europe has been at for the last 45 years. Cities like Boston, New York, and Chicago with extensive inner city transportation systems are in great shape while cities like Minneapolis, Denver, and Atlanta have much to invest in. They will have plenty of States and Nations to learn from.

Thus the future of American investment is becoming less cloudy on a daily basis. “It’s all about oil, stupid.” This will change the outlook for the American stock market big time and we should see it now recover.

Yet for airlines, national interstate rail, trucking, and natural gas, there are gathering storm clouds of necessary change and new legislation must pave the way.

Airlines and trucking industries need gas and oil in huge quantity in order to function. Interstate rail can be integrated to form low cost mass transit of interstate goods using regional trucking to the final destination but that also requires large investment of government capital to rebuild an aging rail system. Natural gas is shifting to off-shore production in the form of LPNG and is sourced from the same Arabian oil nations causing a prediction that the future of imported LPNG is poor for the mid-term with a suspicion of wasted capital investment as a consequence. In its place is rising up the prospect of expanded investment in nuclear power generation and coal gasification.

The genie is out of the bottle now and there is no going back to the good old days of cheap gas, fuel guzzling cars, and massive energy waste. America is forced down a new energy vector and we must follow it. Many feel that the recognition of this is long overdue in Washington.

In places like Boeing there will be a new emphasis on energy efficient aircraft design. Canadian firms will look at increasing investment on tar sand reclamation. The American military will focus on a low energy military force. The Air Force and Navy will have a need for fuel efficient ships and planes while the Army will mothball tanks. A foreign policy of “no more occupation” has already resulted from the lessons of Iraq occupation. America and Venezuala will kiss and make up.

Smart Congressional candidates for the 2006 Congressional elections will build their platform around American energy independence and the consequences of various options open to Americans.

Smart investors will start to evaluate alternatives to the mid-eastern oil patch.

Smart citizens will have dinner table talks about revising family energy use.

Smart Arabs will learn to farm the desert and to speak Chinese.

All will wonder about how to reduce green-house gas emmission that is impactng our world climate.