Doc's Talk: Oil, Pro’s and Con’s (the Pro’s Win)

Wednesday, March 09, 2011

Oil, Pro’s and Con’s (the Pro’s Win)

David Goldman

I’m holding my position in oil futures, but notched my stop losses in line with Friday’s price spike. The Obama administration is trying to jaw prices down by threatening to release oil from the strategic reserve. One never knows how markets will react. But I see the crisis getting worse. The most important news last week regarding Egypt was that the military junta will not–despite earlier promises–re-open the natural gas pipeline to Israel. One story is that it was not damaged by sabotage (as earlier reported) but that the junta is somehow afraid that it would be damaged. That doesn’t quite make sense. I’ve heard this from senior Israeli officials, but don’t know what to make of it. The story at the Israeli spook site Debka makes more sense: The prospects of Egypt resuming its gas supplies to Israel dropped to zero Thursday, March 3 when Egypt’s state security prosecutor Abdel Magid Mahmud announced that deposed president Hosni Mubarak would be summoned for questioning next week about allegedly corrupt deals for selling Israel Egyptian gas at knock-down prices, DEBKAfile’s Cairo sources report. Mahmud claimed he had documentary evidence that Egypt lost more than half a billion dollars on its gas sales to Israel and sought to follow up suspicions that the difference was shared out between the Mubarak family and the Israeli and American partners in the transaction.
The flow of gas to Israel was suspended on Feb. 5 when Hamas blew up the pipeline running through Sinai during the Egyptian uprising. Our sources confirm that supplies will not be renewed until the end of the corruption inquiry which could go on for years.

Debka is hardly a reliable source, but something is very wrong here. Egypt needs about $54 billion a year in foreign exchange at 2010 prices to cover its import bill. It stands to lose about $13 billion in tourism, $2 billion due to expulsion of Egyptian workers from Libya who send remittances home, and another $2 billion from the natural gas exports to Israel. That’s nearly a third of its foreign exchange budget. And the rise in food prices probably adds another $3 billion or so to the bill. Egypt’s market remains shut. How these numbers are supposed to add up is past my ability to reckon with available information. The country could go into a tailspin.

Egypt doesn’t seem susceptible to stabilization. Israeli sources say that the Muslim Brotherhood is so convinced that the situation will fall apart that it doesn’t want to be in charge for the time being and take the blame for the chaos–which makes a good deal of sense. Libya remains in civil war. The Bahreini Shi’ites today barricaded the prime minister inside his office. Yemen is not in control.

The big question, of course, remains Saudi Arabia. Again, the unreliable Debka says that Tehran is stirring up Saudi Shi’ites (who happen to form a majority in the kingdom’s southern oil-producing region, right across the Persian Gulf from Iran).

Ahead of the first Day of Anger planned in Saudi Arabia for March 11, a senior Iranian figure close to Iranian President Mahmoud Ahmadinejad warned Riyadh Wednesday, March 2, against launching preventive security measures against, or cracking down on, the kingdom’s two million Shiites who live and work in the oil regions of the east.

The world’s biggest oil exporter, Saudi Arabia covers 40 percent of the world’s oil needs.

Saudi and other Gulf security sources called the Iranian warning unprecedented interference in the domestic affairs of Saudi Arabia and a call to the Shiite minority to rise up against the throne under the shield of Iran’s protection. It also struck the match for reigniting Shiite riots in Bahrain, fomenting the Shiite minorities in other Gulf emirates and further complicating the explosive situation in Yemen.
In Washington, Secretary of State Hillary Clinton came forward for the first time in the three-month wave of Arab uprisings to accuse Iran of using its Lebanese surrogate Hizballah to shape events in the Arab world. Addressing the Senate Budget Committee Wednesday, March 2, she said “They are doing everything they can to influence the outcomes in these places,” she said, citing Egypt, Bahrain, Yemen and the Palestinians, though not Saudi Arabia. “They are using Hizballah to communicate with counterparts. … in (the Palestinian movement) Hamas who then in turn communicate with counterparts in Egypt.”

Something is up–but how serious? Saudi Arabia detained and then released a Shi’ite cleric after protests. The Daily Telegraph reports today that twenty-two Shi’ites have been detained. Background on the Shi’ite problem in Saudi Arabia can be found in an older report from the Crisis Group (very lefty and sympathetic to Hamas and other malefactors).

The argument (per the New York Times) for sales from the reserve is simple:

The loss of more than a million barrels of sweet crude on world markets resulting from the turbulence in Libya is tightening supplies for European refineries that need high-quality oil to produce diesel fuel, which is popular in Europe.

By releasing sweet, or low-sulfur, crude oil from the reserve, Washington might relieve a bidding competition between American and European refiners for sweet crudes produced by Algeria and Nigeria, two producers that are straining to fill the gap left by Libya.

I would not be surprised if the US (and other governments) tried to whack oil prices down next week. My strategy: take the stop losses if they hit and refill positions at better levels. The scale of the prospective problem is simply out of the range of government intervention.

Even if the Saudi situation is dried out (and Saudi security is fearsome), the bigger danger lies on Israel’s northern border, where Hizbollah has some 50,000 rockets stockpiled, many hidden under homes and hospitals. Most of these rockets are long range and accurate, which means that Hizbollah could hit Israel’s air force bases, oil refineries, airports, and of course population centers. If Iran decides to make its play and let some of these devices fly, the Israelis will have no choice but to respond massively and quickly, which means very large numbers of civilian casualties. That’s all in the plan; Hizbollah is hoping that by staging supposed Israeli “war crimes” it can force an international “solution” to the regional conflict at Israel’s expense. This has been the plan all along. What the probably of this scenario might be, I don’t know, and neither does anyone else. But the distribution has a tail like a Stegosaurus, so that the price of hedges against this kind of tail risk ought to be elevated.

This entry was posted on Sunday, March 6th, 2011 at 1:02 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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The IDF’s Minorities in Numbers and Pictures

In honor of IDF Diversity Week, we present diversity through numbers and pictures. Each year, more and more Muslims, Christians, Druze, Bedouin and immigrants from around the world take on the responsibility of defending Israel.

MUSLIMS:

Muslim Arab Israelis are not required to draft in the IDF, but there are many who volunteer. In 2013, there were over 200 Muslims serving in the IDF and over 300 in the reserves.

Bedouins:

Bedouins are nomadic Muslims who were in Israel when modern borders were set in place and are now considered Israeli citizens. They are not required to draft but a growing number choose to enlist. In 2012, there were over 1,400 Bedouin Muslim soldiers doing regular IDF service and almost 1,500 in the reserves.

Read more:http://www.idfblog.com/2014/02/27/truth-idf-numbers-pictures/#more-34027

Are you aware that in 2013, Middle class taxes go up-significantly?

In January of next year, the federal income tax rate for middle-class taxpayers is scheduled to rise from 25 percent to 28 percent, and the payroll tax is scheduled to rise from 13.3 percent to 15.3 percent… This drives the marginal tax rate based on the aforementioned three taxes to 48.12 percent. Add in state and local property, corporate, excise, and other state and local taxes, and the percentage of each additional dollar that is taxed hovers around 50 percent… When half of each additional dollar earned is taxed away, taxpayers experience a disincentive to start businesses or expand existing ones. This leads to fewer jobs being created.

Why is HAMAS Inside Tampa Schools?

Clare Lopez

Kelly Miliziano, who teaches history classes at Steinbrenner High School in the Tampa, Florida area apparently thinks it’s perfectly OK to invite a senior official of a HAMAS-affiliated organization into her classroom to discuss Islam with her students. According to local media reports, not only has this been going on for years, but in spite of the civil and criminal proceedings that could result from such reckless negligence, the Hillsborough County school superintendent, Mary Ellen Elia, and the chairman of the school board, Candy Olson, also expressed approval for students under their responsibility to be exposed repeatedly to guest speaker, Hassan Shibly, who is the Executive Director for the Council on American-Islamic Relations (CAIR) in the Tampa area.
More...

Did You Know... Ignoring the Call to Islam will Bring Jihad

‘Conquest through Da’wa [proselytizing] that is what we hope for. We will conquer Europe, we will conquer America! Not through sword but through Da’wa.’
-- Yousef al-Qaradawi , Muslim Brotherhood spiritual leader The Arabic word ‘Da’wa’ means the “call to Islam.” But do not think that Da’wa is the same thing as an invitation to an optional holiday event. The classical Islamic doctrine of jihad mandates that enemies must be given the opportunity to convert to Islam or pay the jizya tax before it is permissible to attack them.
Clare M. Lopez

Who is being discriminated-facts tell the truth

Religious bias

Hate crimes motivated by religious bias accounted for 1,409 offenses reported by law enforcement. A breakdown of the bias motivation of religious-bias offenses showed:

65.4 percent were anti-Jewish.
13.2 percent were anti-Islamic.
9.5 percent were anti-other religion, i.e., those not specified.
4.3 percent were anti-Catholic.
3.8 percent were anti-multiple religions, group.
3.3 percent were anti-Protestant.
0.5 percent were anti-Atheism/Agnosticism/etc.

http://www.fbi.gov/about-us/cjis/ucr/hate-crime/2010/narratives/hate-crime-2010-incidents-and-offenses.

On March 31, 1977, the Dutch newspaper Trouw published an interview

with PLO executive committee member Zahir Muhsein. Here's what he said:

"The Palestinian people does not exist. The creation of a Palestinian state is only a means for continuing our struggle against the state of Israel for our Arab unity. In reality today there is no difference between Jordanians, Palestinians, Syrians and Lebanese. Only for political and tactical reasons do we speak today about the existence of a Palestinian people, since Arab national interests demand that we posit the existence of a distinct "Palestinian people" to oppose Zionism.

For tactical reasons, Jordan, which is a sovereign state with defined borders, cannot raise claims to Haifa and Jaffa, while as a Palestinian, I can undoubtedly demand Haifa, Jaffa, Beer-Sheva and Jerusalem. However, the moment we reclaim our right to all of Palestine, we will not wait even a minute to unite Palestine and Jordan."

In March 1977, Zahir Muhsein, a PLO executive, said:

"The Palestinian people does not exist. The creation of a Palestinian state is only a means for continuing our struggle against the state of Israel for our Arab unity. In reality today there is no difference between Jordanians, Palestinians, Syrians and Lebanese. Only for political and tactical reasons do we speak today about the existence of a Palestinian people, since Arab national interests demand that we posit the existence of a distinct Palestinian people to oppose Zionism."

"For tactical reasons, Jordan, which is a sovereign state with defined borders, cannot raise claims to Haifa and Jaffa, while as a Palestinian, I can undoubtedly demand Haifa, Jaffa, Beer-Sheva and Jerusalem. However, the moment we reclaim our right to all of Palestine, we will not wait even a minute to unite Palestine and Jordan."

The Arab Apartheid

Ben-Dror Yemini
In 1948, the Arab countries refused to accept the UN partition proposal and they launched a war of annihilation against the State of Israel which had barely been established. All precedents in this matter showed that the party that starts the war - and with a declaration of annihilation, yet - pays a price for it. Between 550,000 and 710,000 Arabs fled because of the war and a larger number of 850,000 Jews were expelled or fled from Arab countries (the "Jewish nakba").
Population exchanges and expulsions were the norm at that time, occurring in dozens of other conflict points and affecting about 52 million people. In all the population exchange precedents that occurred during or at the end of an armed conflict, there was no return of refugees to the previous region, which had turned into a new national state.
Only the Arab states acted completely differently from the rest of the world. Instead of assimilating the refugees, they crushed them despite the fact that they were their coreligionists and members of the Arab nation - instituting a regime of apartheid. So the "nakba" was not caused by the actual dispossession, which had also been experienced by tens of millions of others. The "nakba" is the story of the apartheid, oppression, abuse and denial of rights suffered by the Arab refugees at the hands of the Arab countries. (Maariv)

International Law and Military Operations in Practice - Col. Richard Kemp

"Islamist fighting groups study the international laws of armed conflict carefully and they understand it well. They know that a British or Israeli commander and his men are bound by international law and the rules of engagement that flow from it. They then do their utmost to exploit what they view as one of their enemy's main weaknesses. Their very modus operandi is built on the correct assumption that Western armies will normally abide by the rules, while these insurgents employ a deliberate policy of operating consistently outside international law. "

Lost Historical Moments

What Rabin’s last Knesset speech really said:repudiation of a Palestinian state

Rabin ruled out a fully sovereign Palestinian state :

“We view the permanent solution in the framework of State of Israel which will include most of the area of the Land of Israel as it was under the rule of the British Mandate, and alongside it a Palestinian entity which will be a home to most of the Palestinian residents living in the Gaza Strip and the West Bank. We would like this to be an entity which is less than a state, and which will independently run the lives of the Palestinians under its authority.”

Rabin ruled out a total withdrawal from Judea and Samaria and thus a return to the pre-June 1967 borders :

“The borders of the State of Israel, during the permanent solution, will be beyond the lines which existed before the Six Day War. We will not return to the 4 June 1967 lines.”

Rabin ruled out withdrawing form the Jordan Valley:

“The security border of the State of Israel will be located in the Jordan Valley, in the broadest meaning of that term.”

Rabin ruled out uprooting settlement blocs, like the Gush Katif bloc in Gaza (which was subsequently uprooted by former Prime Minister Ariel Sharon):

“The establishment of blocs of settlements in Judea and Samaria, like the one in Gush Katif.

AND

Rabin ruled out removing any settlement before coming to a full peace agreement with the Palestinians:

“I want to remind you: we committed ourselves, that is, we came to an agreement, and committed ourselves before the Knesset, not to uproot a single settlement in the framework of the interim agreement, and not to hinder building for natural growth.”

Rabin insisted on Israel retaining full security control of the borders with Egypt and Jordan, contrary to Israel’s relinquishment of the Philadelphia Corridor on the border with Egypt:

“The responsibility for external security along the borders with Egypt and Jordan, as well as control over the airspace above all of the territories and Gaza Strip maritime zone, remains in our hands.”

Correcting Oslo Myths-Part 2

3) Kuttab laments that the post-1993 Oslo process resulted in a Palestinian Authority "whose ministers and legislators are not guaranteed passage between Gaza and the West Bank ...."

Before free passage or other perquisites, PA leaders were obligated, among other things, to eliminate the terrorist infrastructure in the West Bank and Gaza Strip, end anti-Israeli, antisemitic incitement in schools, mosques, and communications media, and resolve all outstanding issues through peaceful negotiations. They met none of these commitments, sometimes bolstering terrorism and greatly increasing incitement.

4) Kuttab complains that under Oslo the PA got "lightly armed police ---- but no real sovereignty over the land or contiguity between our communities in Gaza and the West Bank."

Oslo agreements repeatedly were revised, regardless of Palestinian non-compliance, until the authorized number of police grew from 8,000 to 40,000. Though they were to be the only armed forces in the territories, Israeli estimates early in the second intifada put the number of gunmen - police, "security services," terrorists, and armed gangs - at 85,000. Their armament reportedly included not only heavy machine guns and rocket-propelled grenades, but also anti-tank and anti-aircraft missiles.

Sovereignty was to be negotiated in the envisioned 1998 "final status" talks - after a five-year period of confidence-building. Palestinian leadership chronically undermined the process. Palestinian terrorism made the 1993 - 1998 Oslo period more deadly for Israelis than the 15 years preceding it.

The United States doesn't have contiguity between the lower 48 states and Alaska and Hawaii; territorial contiguity between the West Bank and Gaza Strip - that is, through the 20 miles of Israeli territory between them - was never promised and would destroy Israeli contiguity.

5) "Palestinians have been made to endure hundreds of checkpoints in the West Bank, an eight-foot wall deep in our territories, and tight Israeli control over borders."

The security barrier is not "deep in Palestinian territories," but rather encompasses less than 8 percent of Judea and Samaria, and is mostly a fence, rarely a wall; the land in question is not "our [Palestinian] territories" but disputed territory to which, according to the authors of U.N. Security Council Resolution 242, Jews as well as Arabs have claims; and there are no international borders, only the 1949 armistice lines with Jordan. Under 242, borders remain to be negotiated. As for checkpoints - like the security barrier and "tight Israeli control" - Palestinian Arabs precipitated these measures themselves. No terrorism and there would be no fence or tight Israeli control and few checkpoints - like before the first intifada.

Correcting Some Oslo Myths

1) In Oslo "Israeli, Palestinian and other world leaders promised that ... Palestinian sovereignty would be solidified."

No, they didn't. The 1993 Declaration of Principles and subsequent Oslo agreements outlined a process by which final status negotiations about the West Bank and Gaza Strip would be reached. The process required an end to anti-Israel terrorism and incitement and a commitment to peaceful negotiations. The PA, Fatah, Hamas, Islamic Jihad, the Popular Front for the Liberation of Palestine, and other terrorist groups, sabotaged the process from the start.

2) "The reality is that, in defiance of U.N. Security Council Resolution 242, which states that it is inadmissible to occupy land by force, Palestinian territories are still under foreign military occupation."
Wrong again. Resolution 242 (1967) does note "the inadmissibility of the acquisition of territory by war." It also affirms the right of every state in the area "to live in peace with secure and recognized boundaries free from threats or acts of force." There were no "Palestinian territories." Jordan occupied the West Bank, Egypt controlled Gaza. Israel did not have "secure and recognized boundaries," so retention of some of those territories was possible under 242. Israel is not a "foreign" military occupier in the West Bank but, pending final negotiations, the lawful military administrator as a result of a successful war of self-defense.

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