Shifting centers of balance: trends undermining OPEC, Russia, and (possibly) China!

Equilibria are shifting. One more reason not to let Bushes (or their factotums) back anywhere near where they can mess up these trends. For example:

Ramin Jahanbegloo writes in response to the historic nuclear deal and opening with Iran, "from now on Iran will be a full partner in the big game in the Middle East and the world," including through "intensified sectarian proxy wars" in the region. (From the WorldPost.)

But I like to go behind the news to deeper implications. For example the fact that this deal is likely to open opportunities back home for more than a million Iranian expatriates, whose money and cultural influence could become a tipping factor in that nation's internal Culture Wars.

Moreover, in the wake of the deal to end sanctions on Iran, in exchange for severe limitations on its nuclear program… have you seen all the headlines lumping together two U.S. allies who are strange bedfellows, united in opposition? The Saudis and Israelis are both hyper worried about Iran. Oh really?

In that case, might I suggest that... um... you make peace with each other? 

It would require the Saudis to realize something that you or I would call minor and symbolic, but to them might seem catastrophic... that the "caliphate" brand (their secret dream for 80 years) has been spoiled by the spawn of their own propaganda mills. The word is now unusable -- at least without rousing total alarm in the West. So maybe... just maybe a change in strategy? Instead try on for size  the dream of the Hashemite Faisel -- to unify the Sons of Abraham -- Jews and Arabs – combining their strengths and soothing grievances? Perhaps that might offer greater long range prospects than Ummayid fantasies.

With Saudi money, Palestine could be solved and more friction points eased. The resulting alliances might be spectacularly powerful, calming the entire region. But it would take actual brains and guts to make such a Super-Camp-David swing. Lots and lots of guts.  I'm not holding my breath.

Oh but might there be signs? Here's one hint that higher Arab powers are testing the waters of rapprochement.  

And another hint? Saudi Arabian billionaire – and Fox News co-owner -- Prince Alwaleed bin Talal has said he will donate his entire $32bn fortune to charity. The money would be used to "foster cultural understanding", "empower women", and "provide vital disaster relief", among other things, he said, adding he had been inspired by the Gates Foundation. That amount, alone, could transform Palestine… But no no.  I will believe it when they stop subsidizing Rupert Murdoch’s campaign to destroy America by eliminating politics as a problem-solving skill.

Oh, one more factor. 

== The End of OPEC? ==

Not only was "peak oil" off-base... it was way, way off base. Out in the shale fields, it appears that a new kind of Moore's Law is at work, with incredible new technologies making wells up to 50% more efficient per year! You may not like carbon -- and indeed over the span of a decade, neither do I. But it is in all of our interests that (1) coal be driven out of business by natural gas, (2) American manufacturing be spurred by cheap natural gas, (3) the Middle East lose its compulsory power over our attention, (4) that some powers in the Middle East, especially, come to realize they are not unlimited gods.  

John Mauldin recently ran down a long list of these technologies. And the foolish self-destruction by OPEC that has led to this boom. "OPEC countries have no one to blame but themselves. Those years when they kept prices at $90 and higher gave the fracking industry, as well as solar and other alternatives, time to develop. They can’t put that genie back in the bottle."  In other words, it is a GOOD thing that prices were high for a time. It helped drive us toward efficiency and sustainables, till the latter are starting to really ramp up on their own merits.  Still, we will not cross the next ten years to sustainables-heaven without doing the best we can with the best fossil fuels we can.  And did I mention that domestic methane is a lot better, for many reasons, than coal and Middle-Eastern oil?

Do not get me wrong on this!  We must have politics that emphasizes sustainables, getting them online as fast as possible!  Sustainables and efficiency are core to our survival and the political wing that has opposed and obstructed them deserves to roast in hell. They are no less than traitors.

Still. Try to map and negotiate the transition decade with realism and care.  A healthy economy and energy independence will allow us to think rationally and have the wealth to invest in the sustainables push.

== Who will feel the pain? ==

Mauldin continues: "Saudi Arabia is trapped. If prices go up, US shale producers will uncap some wells and produce more. And if it isn’t the US, it will be Australia, Canada, or even China’s growing shale industry. Argentina has potentially massive shale oil plays. Ditto Mexico. There is oil and natural gas all over Eastern Europe. Oil-producing nations (and not just OPEC members) are losing the ability to subsidize their government spending with oil revenues. Look at this table of the oil price they need in order to balance their budgets."

Mauldin is that rare commodity these days -- a genuinely sane Republican (though delusional in imagining that some of his party's leaders share this trait.) For one thing, he does not deny climate change is urgent, but couches it is safer (for a conservative pundit) terms: "Does cheap shale mean solar, wind, and other alternative energy sources will lose momentum? I don’t think so. Governments around the world still want to reduce carbon emissions. For that matter, so do I. I prefer not to see the air I am breathing, thank you very much." 

Okay John.  Now convince Rupert and the Elders.

The fight isn't yet won. Coal is still cheapest, though part of that is due to cheating subsidies which should be reversed and turned into harm-taxes.  But my friend Ramez Naam shows that solar costs are plummeting so fast that they will cross natural gas soon... though solar's inherent cycle problems mean we desperately need RandD to smooth that out.  RandD that will not happen, if Republicans have their way.

Finally, John offers the following insight on how solar will change economic calculations: "For simplicity sake, let’s say you buy $10,000 worth of electricity a year from your local utility. That is $10,000 of GDP. Now let’s say you spend $40,000 to put in a solar system that allows you to get off the grid. That is a one-time boost to GDP of $40,000. But now you no longer pay $10,000 a year to the utility, so as long as you are on the solar system, you are no longer contributing to GDP. Further, if you buy an electric car and charge it, you are no longer buying gas, and thus the portion of your money previously spent on fuel is no longer contributing to GDP."

Fascinating times.

== An energy-related debacle ==

The sheer magnitude of the Tianjin catastrophe is simply stunning.  It is a war zone.  Movie directors should be rushing in to get footage because no special effects wizardry could emulate the apocalyptic video. And this one.

Though in fairness… it seems similar to the Texas City disaster of April 1947, which involved an explosion of 2300 tons of ammonium nitrate in a ship.  It was the worst industrial accident in US history.  (The worst in world history was at Bhopal, mostly not due to the explosion but poisons released by the explosion.) The Texas City disaster killed 581 and injured 5000.  The resulting fire also led to a later second explosion that broke windows up to 40 miles away, supposedly by "earthshock." Here is a pretty good list of AN-caused disasters.

Then there's the 1917 Halifax harbor explosion -- a munitions ship blew up, leveling half the town. I understand that the Chinese disaster involved a warehouse for storing a variety of dangerous chemicals.  So, does history console us that China, too, will swing over to a rule of law that reduces such calamitous failures of governance to a minimu?  We should hope so and pray that it happens soon.

== Trans Pacific Partnership? Or predation?  ==

Finally, rounding out this international roundup. Asian economics expert Scott Foster on the Strategic News Service offered up the following insights about the Trans Pacific Partnership, unknown by most American (simplistic) political factions:

1) The Trans Pacific Partnership (TPP) emphasizes protection of intellectual property and aims to limit government intervention in the economy - the two biggest problems foreign companies have when dealing with China. China is not part of the TPP now and would not be allowed to join in the future without conforming to its principles. Meanwhile, Japan must -- under stringent TPP rules -- at last abandon its own predatory-mercantilist practices of the past.

Japan will be tying its economy at the hip to one of two industrial behemoths. Do you want that to be China?

2) Worrying about the TPP creating an open road for Asian exporters to the US is a waste of time; that open road already exists. Tell me what your plan is, to crank that back. Greater access for us into the world's largest and fastest-growing market is more important.

3) Japan's Prime Minister Abe has been using the TPP as a tool to weaken Japan's agricultural lobby and other structural impediments to economic recovery - and, by extension, foreign access to Japanese markets. 

There are other aspects.  So many of them. But let’s start from a position that's rare, nowadays -- considering a mentally difficult-to-grasp possibility.  That all the nations who are joining TPP actually may want a positive sum game. They are all scared by (among other things) recent territory grabs in the South and East China Seas.

Perhaps... (and yes, the devil is in the details)... these folks may also be sincere.

Meanwhile, conservative Republicans are trying to shut down the U.S. Export-Import Bank. A completely insane idea with just one aim, to ecconomically harm blue states that make most of our valuable manufactured exports. Gridlock resolved: I'll shoot this foot, you shoot that one.