Iran Moves to Dominate OPEC, Scuttle U.S. Oil Boom

oil drill in Texas

The Iranian regime is hoping to cloud the West’s judgment with economic incentives. The hope is that pressure from influential businesses and the desire for lower energy prices will build a shield from sanctions in the future.

By Ryan Mauro:

The Iranian regime is proceeding with a second leg of its energy strategy to immunize itself from international sanctions. It is conspiring with Iraq to undercut Saudi Arabia’s influence over the Organization of Petroleum Exporting Countries (OPEC).

The Iraqis are aiming to triple their oil production capacity by 2020, from 3 million barrels per day (BPD) to 9 million bpd. This is a major threat to Saudi Arabia, a rival of Iran. Saudi Arabia paved the way for sanctions against Iran by boosting its own output to keep down the price of oil. The Saudis produced 9.8 million BPD in December and have a capacity of 12.5 million.

The Iranians are hoping that a strengthened Iraq will allow its bloc to overtake Saudi Arabia as the main decider of OPEC policy. In addition, the two Shiite-led countries are trying to attract Western investments that will lure foreign countries towards Iran and away from the Saudis.

Russian company LukOil says the Iraqis will cause a “revolution” in the oil market. Billionaire and LukOil shareholder Leonid Fedunagrees, recalling that a “a top manager at a leading Western firm said the modern history of the oil business will be split into the pre-Iraq and post-Iraq periods.”

The good news for the West is that Iran and Iraq could potentially cause the cost of oil to fall, but that comes with a price. Iran’s grip on the world economy, in addition to the lucrative deals with Western businesses, will make future sanctions implementation dramatically more difficult. The world may not want Iran to have a nuclear bomb, but will it decide that confronting Iran is worth a sharp spike in oil prices?

Another objective of Iran’s oil strategy may be to slow down America’s own energy production. Christopher Helman of Forbes observes that Iran’s moves could “lead to the scuttling of the great U.S. oil boom” by reducing the incentive for domestic drilling.

“The concern for U.S. drillers is that successful Middle Eastern diplomacy could end up being the worst thing for their business. If crude oil benchmarks were to fall to $75 a barrel and stay there for a couple months, you’d see drilling rigs across Texas and North Dakota fall silent,” he writes.

The other leg of Iran’s energy strategy is to ally with Turkey in seducing Europe with natural gas.

Read more at Clarion Project

Mullahs Threaten Global Oil Crisis

ayatollah-ali-khamenei-450x330by :

A few days after the Obama administration signed the nuclear deal with the Islamist state of Iran, after the easing of sanctions on the ruling cleric and Iranian authorities began to take off, the Mullahs initiated their first hegemonic ambition to reclaim and regain its No.2 position in OPEC, threatening to trigger an oil price war if the other 12 countries oppose Iran’s plan. In addition, Iran has put forward a candidate for the position of OPEC secretary general, considered to be the voice of the OPEC organization between meetings.

If the next time you stopped to fill up your car at a gas station, or to buy any other product, and you notice a sudden increase in prices, this can be attributed to the tireless efforts of the Obama administration to start lifting sanctions on Iran, easing pressure on the nation and integrating the Islamists of Iran into the international community, legitimizing them, giving them credibility, calling them rational actors, and pushing for the recent nuclear deal with the ruling cleric in the Iranian regime.

Last week, ahead of the upcoming OPEC meeting, Iran threatened to trigger a price war in the global oil markets. Iranian authorities warned OPEC’s 12 members that Tehran will ratchet up its oil output, no matter what the consequences would be, in an attempt to gain its former influential position. Bijan Zangeneh, Iran’s Oil Minister, said before going into the closed meetings that “we will not give up our rights on this issue.” The sanctions, accumulated through many years in the international community, reduced Iran’s leverage to disrupt and control the world economy through managing oil prices. However, the recent agreement with President Obama gave the Iranian Ayatollah and leaders a freedom to more aggressively reclaim and reassert their Islamist ambitions in the region and on the international scale.

There is a special quota assigned for each main oil exporter at OPECIranian leaders stated that they will not comply with that quota. This will result in a disruption in supply and demand, which will ultimately create uncertainty in the market and lead to the rising of oil prices. For industrial countries, this will affect the prices of many other goods, because oil is used as a primary source for fuel. If Iran does not respect individual targets of oil sales in the global market and the quotas of OPEC members, Tehran’s attempts can definitely result in oil glut. In addition, this will lead to an increase in geopolitical tensions in the region and particularly among OPEC members.

Read more at Front Page

Dr. Majid Rafizadeh, an Iranian-American political scientist and scholar, is president of the International American Council and he serves on the board of Harvard International Review at Harvard University. Twitter @majidrafizadeh

We Can Bankrupt the Global Jihad

BANKRUPT-THIRD-JIHADCitizen Warrior:

After the “Arab Spring,” Saudi Arabia gave its citizens a raise. Saudis citizens don’t pay income taxes. Most of them don’t even work. The Saudi government pays them, and to avoid the fate of the leaders in Egypt, Libya and elsewhere, the Saudis increased their citizens’ pay and pensions. They committed future funds to these payoffs.

This has presented the counterjihad movement an opportunity to strike a decisive blow into the heart of the global jihad.

Jihadist projects are funded largely through Saudi Arabia and Iran, two OPEC nations. The Taliban is a Saudi oil-money project, for example. So is the Muslim Brotherhood and the OIC. Hezbollah is an Iranian oil-money project.

OPEC is a cartel formed of primarily Islamic countries. OPEC was founded for the purpose of raising world oil prices. Jihadist activities around the world have been on the rise because jihadist funding has been on the rise. The source of that funding is oil profits, which have been on the rise.

What keeps the whole thing functioning is oil’s monopoly over the most important commodity on earth — transportation fuel.

In the 1980′s, because the rising cost of oil, many new programs were started to create a freer fuel market. Brazil launched its ambitious ethanol program, many new ethanol distilleries were built in America, Roberta Nichols created a massive methanol experiment in California, etc. But in the mid-80′s, OPEC flooded the world market with oil in order to drop world oil prices, which made all of these potentially-competitive fuels no longer competitive on price, which crashed Brazil’s program, put half the U.S. ethanol facilities into bankruptcy, and prompted California to abandon its methanol experiment.

It was a classic monopolist move. It’s the oldest trick in the monopolist’s book: Drop your price to send the competition into bankruptcy.

Once their competitors were sufficiently crippled, OPEC started raising the world oil price again.

But competing fuels have recently begun to reappear. Brazil permanently changed to flex fuel vehicles (rather than ethanol-only vehicles) for example, which has protected them from OPEC’s manipulations (when oil prices drop, drivers buy gasoline; when oil prices rise, drivers buy ethanol). Brazil’s economy is booming.

In the United States there is a growing clamor to use methanol as a fuel, ideally in flex fuel vehicles. Methanol can be made inexpensively from America’s abundant natural gas, and can be sold for half the cost of gasoline without any subsidies. If it was available as a fuel, people would buy methanol because it would save them a lot of money. But right now, it is not available as a fuel in the U.S. One bill now in Congress is trying to change that.

So let’s say the bill passes into law and methanol becomes available, and people start using methanol for fuel. Gasoline would have to drop in price to compete, or it wouldn’t sell. Everything would be wonderful. But…

Wouldn’t OPEC just drop the world price of oil to crush this new competitor?

This is where things have changed in an important way. This is our new opportunity. Saudi Arabia controls what OPEC does. The Saudis are sitting on the easiest oil to produce in the world, and therefore theirs is the cheapest oil to produce. Because of this, they dictate what the rest of the OPEC nations will do. But if methanol becomes a fuel in America, Saudi Arabia (and the global jihad movement) will be between a rock and a hard place — and it could be the end of both OPEC and the third jihad.

Read more 

It’s time to shock O.P.E.C.

2739712755CSP, By Frank Gaffney:

Forty years ago this week, America received a harsh lesson about the dangers of relying on others for energy.  President Nixon’s decision in the midst of the Yom Kippur War to resupply Israel with U.S. weaponry gave members of the OPEC cartel an excuse to embargo oil supplies to this country and drive up prices worldwide.  It became known as the “oil shock” of 1973.

Ever since, politicians of both parties have promised to reduce our dependency on unreliable foreign sources.  To that end over the past four decades, they have invested untold sums on various schemes – from imposing price controls, producing synthetic fuels and subsidizing ethanol production, curbing demand and diversifying overseas sources of supply for oil and natural gas.

Thanks largely to private sector initiatives and funds, however, real progress has lately been made on this longstanding national objective. Finally, the widespread application of technology like horizontal drilling and hydraulic fracturing (better known as fracking) and a series of discoveries of vast quantities of natural gas around the United States and off its coasts have transformed our situation from one of energy dependency to potentially that of the largest energy exporter in the world.

The geopolitical and economic significance of this transformation will be the focus of conferences sponsored by two influential, bipartisan groups in Washington this week.  Former Cabinet and sub-Cabinet officers, senior military personnel and other experts will convene on Tuesday under the auspices of the U.S. Energy Security Council and on Wednesday under that of Securing America’s Future Energy (SAFE) to discuss the oil embargo, the intervening years and where we are today vis a vis those who used energy as an economic weapon against us in the past.

It is very much to be hoped that these conversations will not simply repeat nostrums about the inadvisability of being dependent upon unreliable – to say nothing of  actually hostile – energy sources.  Or, worse yet, simply revel in the change of fortunes that will, in the absence of further Obama administration obstructionism, enable us to become again a huge net producer of energy.  (Regrettably, between its pursuit of cap-and-trade restrictions on carbon emissions, overreaching EPA regulations, the campaign to destroy the coal industry and further shenanigans with respect to the Keystone XL pipeline, there is ample reason to expect more official impediments to our energy security, not fewer.)

What is needed now is a strategic approach to using our newfound energy leverage to cause some oil “shocks” of our own.

For starters, the windfall of natural gas deposits being found in this country opens up an opportunity to transform the sector in which we are still almost entirely dependent on oil and its byproducts: the transportation of people and goods via automobiles, busses and trucks.  If natural gas can become widely used in eighteen-wheelers and turned into methanol for use in most modern cars, we could dramatically reduce the amount of gasoline we are obliged to import from the Islamists of OPEC.

What is more, as Nobel laureate George Olah observed in an op.ed. article he co-authored in the Wall Street Journal last week, recent breakthroughs in chemistry are allowing another vast U.S. resource – carbon dioxide – to be cost-effectively converted into methanol.  Far better to burn it in our automobiles and in modified surface transportation and maritime diesel engines than to pay exorbitant sums, as Team Obama has in mind, to try to store it underground.

Best of all, by enabling these alternatives to oil and gasoline to become available across America, we can create fuel choice for consumers – and competition for the cartelists.  The predictable effect would be to drive oil prices down, especially as the scores of other developing nations capable of manufacturing their own alternatives to gasoline begin to do so, as Brazil has already done with ethanol.

The result could be to break the back of OPEC, once and for all.  That, in turn, would help dry up the funding that has done so much for decades to power jihadism and undermine our economy.

This is no longer simply a desirable thing to do.  It is absolutely imperative.  As Center for Security Policy Senior Fellow Kevin Freeman has observed, Mideast oil producers seem determined to join the Chinese and Russians, among others, in terminating the U.S. dollar’s status as the world’s international reserve currency.  Should they succeed in this gambit, the profound and debilitating economic and strategic ramifications will make the oil shock of forty years ago look like the good old days.

Adopting bipartisan Open Fuel Standard legislation and taking such other steps as are necessary to enable fuel choice can help us withstand as well disruptions in oil supply and/or skyrocketing price increases in the event of a new regional war in the Middle East.  We can and must be in a position to deliver the next oil shock, not be its recipient.

****************

US approaching energy independence? – H/T Money Jihad who had this to say,

Readers should take a look at this video from Fox News which addresses the strategic implications of this development for U.S. national security.  The shift means a reduced likelihood of U.S. entanglement in Middle Eastern affairs, less risk of disruption due to volatility in and hostility from that part of the world, and a reduced flow of petrodollars to regimes that fund terrorism.

Video: oil dependence

opec2Money Jihad:

Do you want OPEC to keep calling the shots in the 21st Century?  Do you enjoy seeing American presidents literally holding hands with or bowing down to the Saudi king?

Regular readers know that this blog supports expanded domestic oil drilling to help North America decrease its dependence on Middle East oil.  Although Eyal Aronoff of the Fuel Freedom Foundation (@fuelfreedomnow on Twitter) offers a different course of action to deal with the problem of oil financing terrorism, this video as a must-watch:

Aronoff lays out compelling ideas for reduced oil dependence, and Money Jihad has as well.  Wouldn’t it be nice if national political leaders embraced just some of these ideas as part of a genuine “all of the above” approach to energy to reduce our reliance on Saudi sharia oil?

View The Counter Jihad Report’s video playlist on oil independence

This one is particularly good:

Turning Oil into Salt, a 28-minute high-production value documentary that explains why the Open Fuel Standard is so important. It includes clips of interviews and powerful comments by Robert McFarlane, James Woolsey, Frank Gaffney, Anne Korin, Gal Luft, Paul Werbos, Edwin Black, Mark Dubowitz, Megan Ortagas, Bill Holmberg, Donald, Yale, Steve Marshall, Chelsea Sexton, Greg Breukelman, Johanna Mendelson Forman, and Jack Hidary. They point towards a solution of stripping Oil off its strategic status by making cars that can run with all different kind of fuels. Brazil has proven its feasibility with its ethanol from sugarcane concept. Important note: Biofuels can be made from all kind of Biomass and are not responsible for the rise of food prices. A film by Frederick von Sulle and Helmut Strasser about Energy Security.

Legalize Methanol – It would boost the economy, and our national security too

By Robert Zubrin at National Review

Last year, I conducted a highly publicized demonstration showing that ordinary American cars could readily be made to operate on methanol, achieving over 40 percent better fuel economy and much lower emissions than on gasoline. In that test, a 2007 Chevy Cobalt was shown to achieve 24.6 miles per gallon running on 100 percent methanol, with the only required physical alteration being the replacement of a non-methanol-compatible Viton fuel-pump seal with a 41-cent part made of methanol-compatible Buna-n. And methanol is now selling for just $1.32 per gallon, without any subsidy.

As methanol can be cheaply produced from natural gas, coal, biomass, or trash — all resources the United States holds in great abundance — this test showed that America could readily free itself from oil imports simply by passing the Open Fuel Standard (OFS) law requiring that all new cars sold in the U.S. be methanol-compatible flex-fuel vehicles. By forcing gasoline to compete at the pump with cheap methanol, such a measure would put a permanent constraint on the price of oil, thereby breaking the power of the Islamist-led OPEC cartel and protecting the nation from the economy-wrecking effects of petroleum price spikes, shown in the figure below:

Every oil-price hike over the past four decades was soon followed by a sharp rise in unemployment.

See also: Turning Oil into Salt (counterjihadreport.com)

Turning Oil into Salt

 

Turning Oil into Salt, a 28-minute high-production value documentary that explains why the Open Fuel Standard is so important. It includes clips of interviews and powerful comments by Robert McFarlane, James Woolsey, Frank Gaffney, Anne Korin, Gal Luft, Paul Werbos, Edwin Black, Mark Dubowitz, Megan Ortagas, Bill Holmberg, Donald, Yale, Steve Marshall, Chelsea Sexton, Greg Breukelman, Johanna Mendelson Forman, and Jack Hidary. They point towards a solution of stripping Oil off its strategic status by making cars that can run with all different kind of fuels. Brazil has proven its feasibility with its ethanol from sugarcane concept. Important note: Biofuels can be made from all kind of Biomass and are not responsible for the rise of food prices. A film by Frederick von Sulle and Helmut Strasser about Energy Security.

 

 

Open Fuel Standard Act: Fuel Competition at the Pump

The Open Fuel Standard Act (OFS), lead in the House by Reps. Shimkus (R-IL), Engel (D-NY), Bartlett (R-MD), and Israel (D-NY), is a technology neutral bill that would ensure most new vehicles sold in the U.S. enable fuel competition starting in 2014.

• The economic and security vulnerabilities associated with petroleum dependence stem from oil’s status as a strategic commodity, which in turn stems from its virtual monopoly over transportation fuel.

The purpose of OFS is to break this monopoly in order to turn oil from a strategic commodity — as salt once was, due to its virtual monopoly over food preservation — to just another commodity, as salt is today.

• Oil’s domination over transportation fuel provides the oil cartel OPEC unacceptable leverage over the global economy. OPEC holds 78% of world oil reserves and yet, due to a policy of constraining supply, produces less oil today than it did 38 years ago even as global oil consumption and non-OPEC production have doubled over the same period.

• Competition and consumer choice in the transportation fuel market would, by enabling drivers to choose to purchase a different fuel on the fly should it be less expensive on a per mile basis, serve to dampen the impact of oil price volatility, and OPEC supply manipulation, on our economy.

• A variety of existing technologies enable vehicles to run on other fuels in addition to or instead of petroleum based fuels. For example, vehicles capable of operating on gasoline as well as alcohol fuels such as ethanol and methanol, or any combination of such fuels, cost about $100 more to manufacture than gasoline only cars.

• The ratio of flex fuel vehicles in Brazil increased from zero to 70% of new cars within three years, and thus as oil prices fluctuate consumers in Brazil can choose the least expensive of a variety of fuels.

• Alcohol fuels can be made from a wide variety of domestic energy resources including natural gas, coal, agricultural waste, energy crops, and trash.

 

Bill Summary 

• The CEOs of the Big Three auto companies have repeatedly stated their willingness to commit to making 50% of new cars flex fuel vehicles or warranted to operate on biodiesel by 2012.

• The Open Fuel Standard Act (OFS) would buttress this commitment with law, thus providing certainty for investors in a variety of alternative fuels to ramp up production and fuel station owners to install pumps. 

• Specifically, OFS requires that starting in 2014, 50% of new automobiles, starting in 2016, 80% of new automobiles, and starting in 2017, 95% of new automobiles are warranted to operated on non- petroleum fuels in addition to or instead of petroleum based fuels. Compliance possibilities include the full array of existing technologies as well as a catch-all for new technologies.

You can print or download a PDF of the above fact sheet by clicking here.

 

 

 

How to Stop Putting Gas in the Islamist Tank

 

By Clifford D. May in The National Review Online:

Islamists are a diverse lot. Some are what diplomats like to call “violent extremists.” They want to kill you. Others are less eager to shed blood, more confident that by mastering electoral politics, manipulating international organizations, and designing effective public-relations campaigns, they can achieve their objectives. What are those objectives? Islamism implies a commitment to the imperative of Islamic power. Hassan al-Banna, founder of the Muslim Brotherhood, articulated the basic idea succinctly:

It is the nature of Islam to dominate, not to be dominated, to impose its law on all nations and to extend its power to the entire planet.

If those championing Islamism were only stateless terrorist groups and tin-pot dictators, their geostrategic significance would be minimal. But the regime that rules Iran is dedicated to waging what it calls a global Islamic revolution. And in Saudi Arabia, the state religion is Wahhabism, a strain of Islam that preaches the inferiority of infidels and the rejection of Muslims who do not share Wahhabi ideals.

These regimes float atop an ocean of oil, a commodity that is valuable thanks to those the Islamists despise. It was the Western mind that figured out how to pump oil out of the ground and refine it into a variety of fuels, including those used in internal-combustion engines, another history-bending Western invention.

Imagine you are one of the rulers of Iran or Saudi Arabia: Fabulous wealth is yours due to no intellectual or physical labors on your part. If you invest that wealth wisely, you’ll make even more, but if not, so what? Wealth will flow to you every single day as surely as rivers run to the sea. To sell rugs, olives, or computers requires salesmanship. But oil sells itself: Those who depend on it for their cars, ships, and planes have no other options. Well, theoretically, they do: They could take it by force. But you need not worry about that because, as you are well aware, modern Western ethics prohibit such behavior.

If there were even one oil-rich, Muslim-majority nation solidly committed to liberal democratic values, to freedom of religion and speech, to tolerance and minority rights, the challenges of the 21st century would not be so formidable. But there is no such nation. 

Almost 80 percent of global oil reserves are controlled by the Organization of Petroleum Exporting Countries (OPEC), a cartel, a conspiracy in restraint of trade. Most OPEC countries are autocracies. Many are hostile toward America and other free nations. From the income produced by OPEC oil comes most of the money used to train and arm terrorists around the world, and to build nuclear-weapons facilities in Iran. 

That makes the price of oil and the West’s dependence on it national-security problems of the first order. What can be done? Robert C. McFarlane, who served as then-president Reagan’s national-security adviser, wrote last week that we can and should be producing more of our own oil, but “that is not enough. To outmaneuver OPEC we need to eliminate oil’s monopoly as the only transportation fuel.”

Clifford D. May is president of the Foundation for Defense of Democracies, a policy institute focusing on national security and foreign policy.