Blood Oil By David Galland
Last year marked the first time ever that U.S. imports of African crude oil surpassed imports of oil from the Middle East. This trend is accelerating in 2007. So far, three African countries (Nigeria, Angola, Algeria) account for 26% of crude oil imports, while three Middle Eastern countries (Saudi Arabia, Iraq, Kuwait) account for just 23%.
Our drift toward dependence on African oil goes hand in hand with dwindling production in Mexico, the U.S.' number-two foreign source...and with the continuing ugly business in Iraq, where oil production is still off about 27% from its pre-war high.
Of course, as perpetually troubled as the Middle East is, Africa is no slouch in the chaos derby. That Africa is now a leading source of oil imports for the U.S. has far-ranging implications, above and beyond providing regular content for the nightly mayhem shows... I mean, news.
On that front, you may have noted—but probably only in passing—just a few of the back-page items related to Africa over the past few weeks. For instance...
Nigeria – which tops the list of Africa oil producers with its 2.1 million barrels per day – is in the process of transferring power through a "democratic" election. Meanwhile CNN et al. relate the tales of murder and corruption that customarily accompany third-world voting. In the case of Nigeria, the key to reliable production now lies in the ability of the newly elected president, Umaru Yar'Adua, to gain sufficient political control to strong-arm his militant opponents.
Unfortunately, while the prospects for law and order in Nigeria are dim, the prospects for just plain order aren't much brighter. So it's no wonder that oil prices jumped on the news of the election outcome – a bookie's odds, if you will, on the likelihood of a coup or widespread unrest, either of which would bring work stoppages and sabotage in the foreseeable future. Therefore, as goes the fate of Africa's largest oil-producing nation, so goes the cost of your daily commute.
Elsewhere in Africa, we recently learned that the Ogaden National Liberation Front (OGNF) attacked a Chinese-operated oil field in Ethiopia, leaving 74 dead and taking as many as 5 Chinese hostages. The OGNF is a separatist rebel movement operating along the border of Ethiopia and Somalia. Although a representative of the group claimed the Chinese dead had been "caught in the crossfire," the fact that guns were ablazing in the oil field — not to mention the hostage taking — casts those claims in a suspicious light.
And in Algeria, the group formerly known as the Salafist Group for Preaching and Combat (they like to do both at the same time), now renamed as the more serious sounding "al-Qaeda in the Maghreb," recently set off a couple of bombs, killing 17 people who may have been expecting a gentler sermon. The bombs suggest a return to the bad old days in Algeria and a decided acceleration in violence aimed at anyone the Islamists find offensive by their extreme religio-political ideology. Invariably, the targets include all infidel dogs... aka foreign oil executives and workers.
Regardless, now that Africa's importance to meeting U.S. energy needs has risen to lofty levels, strife on that perennially troubled continent will continue to trigger price spikes in crude oil and, between spikes, produce a solid floor under prices.
With the busy summer driving season looming and U.S. gasoline supplies dropping for 12 straight weeks, turmoil in either Africa or the Middle East will likely lead to much higher gasoline prices coming to a pump near you soon. In fact, talk on the street is now for consumers to pay over $3.50 a gallon – and maybe as high as $4.00 - once the summer driving season kicks in...or the Nigerian post-election terrorism season kicks in.
And, that, of course, adds further pressure on a U.S. economy being squeezed by the deflating housing bubble.
Last year marked the first time ever that U.S. imports of African crude oil surpassed imports of oil from the Middle East. This trend is accelerating in 2007. So far, three African countries (Nigeria, Angola, Algeria) account for 26% of crude oil imports, while three Middle Eastern countries (Saudi Arabia, Iraq, Kuwait) account for just 23%.
Our drift toward dependence on African oil goes hand in hand with dwindling production in Mexico, the U.S.' number-two foreign source...and with the continuing ugly business in Iraq, where oil production is still off about 27% from its pre-war high.
Of course, as perpetually troubled as the Middle East is, Africa is no slouch in the chaos derby. That Africa is now a leading source of oil imports for the U.S. has far-ranging implications, above and beyond providing regular content for the nightly mayhem shows... I mean, news.
On that front, you may have noted—but probably only in passing—just a few of the back-page items related to Africa over the past few weeks. For instance...
Nigeria – which tops the list of Africa oil producers with its 2.1 million barrels per day – is in the process of transferring power through a "democratic" election. Meanwhile CNN et al. relate the tales of murder and corruption that customarily accompany third-world voting. In the case of Nigeria, the key to reliable production now lies in the ability of the newly elected president, Umaru Yar'Adua, to gain sufficient political control to strong-arm his militant opponents.
Unfortunately, while the prospects for law and order in Nigeria are dim, the prospects for just plain order aren't much brighter. So it's no wonder that oil prices jumped on the news of the election outcome – a bookie's odds, if you will, on the likelihood of a coup or widespread unrest, either of which would bring work stoppages and sabotage in the foreseeable future. Therefore, as goes the fate of Africa's largest oil-producing nation, so goes the cost of your daily commute.
Elsewhere in Africa, we recently learned that the Ogaden National Liberation Front (OGNF) attacked a Chinese-operated oil field in Ethiopia, leaving 74 dead and taking as many as 5 Chinese hostages. The OGNF is a separatist rebel movement operating along the border of Ethiopia and Somalia. Although a representative of the group claimed the Chinese dead had been "caught in the crossfire," the fact that guns were ablazing in the oil field — not to mention the hostage taking — casts those claims in a suspicious light.
And in Algeria, the group formerly known as the Salafist Group for Preaching and Combat (they like to do both at the same time), now renamed as the more serious sounding "al-Qaeda in the Maghreb," recently set off a couple of bombs, killing 17 people who may have been expecting a gentler sermon. The bombs suggest a return to the bad old days in Algeria and a decided acceleration in violence aimed at anyone the Islamists find offensive by their extreme religio-political ideology. Invariably, the targets include all infidel dogs... aka foreign oil executives and workers.
Regardless, now that Africa's importance to meeting U.S. energy needs has risen to lofty levels, strife on that perennially troubled continent will continue to trigger price spikes in crude oil and, between spikes, produce a solid floor under prices.
With the busy summer driving season looming and U.S. gasoline supplies dropping for 12 straight weeks, turmoil in either Africa or the Middle East will likely lead to much higher gasoline prices coming to a pump near you soon. In fact, talk on the street is now for consumers to pay over $3.50 a gallon – and maybe as high as $4.00 - once the summer driving season kicks in...or the Nigerian post-election terrorism season kicks in.
And, that, of course, adds further pressure on a U.S. economy being squeezed by the deflating housing bubble.
1 comment:
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