WAR & PETROLEUM RESERVES
By JC Collins
In the interest of analytical
balance, we would do well to consider the possibility of war strategies when it
comes to the global stockpiling of petroleum reserves. In the years
leading up to the German invasion of Poland, the world witnessed dramatic decreases
in the price of oil as well as massive increases in petroleum inventories,
especially as the Texas fields began to produce.
These shifts in the global oil
markets ran parallel to the deflation which had begun in October, 1929, and as
such, we can see the same pattern repeating today as oil prices collapse,
inventories are growing, and world wide deflation is deepening.
The United States and China are
both increasing their Global Strategic Petroleum Reserves, with stockpiling
taking place in Cushing, Oklahoma, and in provinces throughout China. The
promoted script is that America is seeking energy independence and China is
taking advantage of low oil prices to increase stockpiles, as they are an
energy importer.
But other countries around the
world are stockpiling oil and petroleum products as well, from the construction
of massive storage tanks in Nigeria, to hundreds of oil tanker ships full of
crude floating of coastlines. Crude and petroleum product stockpiles are
increasing to record levels.
Here are just a few links to
increasing stockpile articles:
There are numerous reasons why
petroleum stockpiles are increasing.
One is the obvious opportunity to
capitalize on low oil prices, and a second would have to do with the global
demand decreasing while the game of production chicken continues between low
cost and high cost oil producers around the world.
A third possibility, and one I’ve
been reluctant to discuss, mainly because it feeds the fear hysteria which is
being promoted on many other alternative sites, is the preparation for war.
For any military to wage war a
large and steady supply of oil and petroleum products are required. Just
some of the materials and products which are rapidly consumed in warfare are
the following:
– Fuel (including synthetic as
the Germans attempted in WW2)
– Lubrication (such as grease and
de-greasers)
– All forms of plastic
– Rubber (used in various
applications, such as tires for vehicles and planes)
– Ethanol Production
– Anti-Freezing Agents
– Acrylics
– Resins
– Nylon (for use in parachutes,
etc..)
Some of the primary purposes, or
usage’s of oil, are in:
– Aircraft (both fixed wing and
helicopter)
– Construction Equipment
– Naval Ships
– Road Vehicles
Some of these products and items
may seem painfully obvious, but defining them does help us formulate a proper
approach when considering the broader implications of war preparations.
Another vital aspect of war
preparation is the relationships which exist between governments and private
industry. The dynamics between Nazi Germany and companies such as IG
Farben, as well as vast western corporations, were important strategic
partnerships which were focused on realizing the common objectives which had
been determined before the outbreak of hostilities.
We have often drawn attention
here to the American industrial objectives in Ukraine and Syria, in attempts to
secure access to resources, but this could also be the early signs of a shift
away from the proxy war formula which has been used to buffer direct warfare
between Russia and the West, and towards open and direct military contact.
Assumptions are made that the
flex allowed for in the global financial system can be managed by the
regulations and mandates of the international banking system, as determined by
the Bank for International Settlements. Even though I feel certain that
this is the case, only a fool would completely discount the possibility of the
fragmentation of the control framework.
With that being said, the BIS had
the ability to direct the course of the WW2 while doing business with
industrial and governmental interests on both sides of the conflict. All
the while the banking interests enriched themselves further with gold and
other assets which had been captured and transferred during the war years.
So it is with interest we
consider that 33% of all GPSR, or Global Strategic Petroleum Reserves, are held
by governments, and the remainder of strategic reserves are held by private
industry. The same private industry that gets its funding from the
international banking system.
It’s interesting to reference
that the League of Nations, in the pre-war years, as Italy and Germany were
building up their strategic reserves, did not include petroleum products on the
economic sanctions list against those countries. And of course, the
League of Nations, the precursor to the United Nations, was an extension of the
international banking interests as represented in the Bank for International
Settlements.
Whether by design or not, the
lack of reduction in crude production around the world, and the growing
stockpiles which isn’t slowing down, will only mean further decreases in the
price of oil.
The growing deflation will
obviously drive down the demand for petroleum products even further, while at
the same time decreasing oil prices will continue to feed the deflationary
pressure from the opposite macro position.
The emerging framework of the
multilateral financial system will create large systemic pressure on the
current USD based system, which the growing deflation is a product of.
But could the stockpiling of petroleum products only be the strategy to account for
the systemic instability as the framework shifts, or is there a broader
strategy which involves preparations for war and the petroleum products which
would be required to wage that war?
The collapse of the Baltic Dry
Index, and other economic metrics, could be the first manifestations of a reallocation
of products and resources as they are sucked towards the front lines of a war
that has not yet overtly started.
It is still my contention that
the multilateral architecture will emerge and be implemented without a larger
war involving the global players, such as America, China, and Russia.
That is not to say that there aren’t any geopolitical and socioeconomic
advantages to be obtained by the Bank for International Settlements by allowing
and funding another expanded war. But let us hope that the massive
stockpiling of crude and petroleum products, along with global deflation, and a
collapse of consumer demand, does not mean the approaching rumbles of war and
all the horrors it will pertain.
If a larger war does breakout,
whether in Eastern Europe or the Middle East, perhaps even the South Pacific,
expect the opening months to be savage and intense as powers rush to secure
alternative petroleum sources before their own reserves are depleted.
As it stands right now, all major
powers have developed Joint Strategic Petroleum Reserves in their regions of
the world. This would suggest a balance in availability of petroleum
products in the opening months of the war. – JC
No comments:
Post a Comment