Oil Will Only Fall So Far 66 comments
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While the peoples of the world settled into their easy chairs to watch the much anticipated opening ceremonies of the Olympic games in Beijing, Vladimir Putin had athletics of a very different sort on his mind. Putin's timing was as perfect as a military invasion of another country can be. I just wish I could have heard the conversation he and Bush had in the bird's nest.
Now, I'm not going to pretend I know the history of the Georgian/Russian relationship, but I do know this much: the invasion had little to do with democracy or separatists and everything to do with the so-called "BTC" pipeline (Baku-Tbilisi-Ceyhan) that carries oil from Azerbaijan and Caspian Sea area to the Turkish port of Ceyhan on the Mediterranean Sea. The BTC is a strategic energy conduit for Europe. I believe there is also a natural gas pipeline along this route, but don't quote me on that.
Faithful SA readers will note during the "Iran debate" I wondered out loud how long Russia and China will look the other way while the US plants troops on top of the largest oil reserves in the world. Think about it: invading Iran would have brought three of the world's largest oil producing nations under the US umbrella (for lack of a better term): Saudi Arabia, Iraq, and Iran. At the same time, the US was backing Georgia's wish to join NATO and planning to install a "missile defense shield" directly on the Russian border in Poland. How could Russia stand by and do nothing, especially when most of this action was much nearer to its own backyard? The answer came on the opening night of the Olympics: no longer will they be passive.
Faithful SA readers will also note my May 18th, 2008 article, "Russian Energy and US Implications", was quite clear in pointing out what is at stake and how US policy was playing right into Russia's hands. Now, all the US can do is watch and talk (similar to Bernanke and Paulson with regard to US monetary policy) while Russia strengthens its stranglehold on European energy supplies. Meanwhile, the US's own soft under-belly is increasingly more exposed because there have been no significant changes in the non-existent US energy policy.
Here again is my own comprehensive long-term energy policy, updated and perfected. I have submitted this twice to the Wall Street Journal. Once, after they printed several of my letters to the editor with respect to energy, and again after Jenkins' pathetic article on the WSJ's "Opinion" page criticizing Boone Pickens' plan while offering no plan of his own. I sent the article in to the "Opinions" editor as requested, but alas, no ink could be spared for the one thing that can save this country going forward: a strategic, comprehensive, long-term energy policy. I say that so much I'm sure I just bore the hell out of all of you. That said, I believe it is the single most important issue facing the United States of America. I mean, don't those idiots in Congress have children or do they only care about under-the-table money?
Meanwhile, the markets continue to act completely insane. The Russian attack on Georgia should have lifted oil, but it didn't. StatOil (STO), a critical supplier of European energy should have popped big-time, it didn't. ConocoPhillips (COP), Chevron (CVX), Exxon (XOM) and Petrobras (PBR) all recently reported outstanding earnings - and all of them traded down. Even Barron's had to take note and devote some space pointing out that these stocks are trading at 6 and 7 times forward earnings, pay a dividend, and supply the energy with which the world is addicted (note: Barron's came a week after this piece).
Yet, the stocks continued to trade down this week as though no one is reading Barron's any longer. I continue to get emails from around the world questioning my investing intelligence (some just call me an idiot - or worse). Well, sorry folks, I just don't believe oil will get back to $35 or $40/barrel, which is damn near where it would have to go in order to value the energy stocks as they are. Nor is the geopolitical scene calming down - the exact opposite is true. I believe I'll wake up one morning and see oil spike $20 or $30/barrel based on some geopolitical event. I believe on that day the entire energy complex will rise so fast it will be shock and awe of a different kind.
So, why are these energy stocks trading at such bargains today? The dollar strengthening? I don't buy it - the US dollar is the biggest fiat currency in the world today. With no energy policy, huge debt levels, and no energy policy,the long-term case for a strong US dollar is non-existent. Perhaps investors believe financials, retail, automotive, and consumer stocks are the place to be these days. Give me a break, but good luck with that.
One real possibility, in light of recent Bush administration support for nationalizing the mortgage, banking, and financial sectors would be for the US government to take over the US oil majors. That would complete the fascist overthrow of what used to be the wonderful experiment of an American constitutional democracy. If the US people fail to demand its leaders deliver an energy policy, take-over of the energy companies by the military could indeed be a possible endgame in a world in which oil supply will very soon fail to keep up with demand. In that situation, the only card we have to play against Russia (which has the energy we will need), is a superior military. The bad news there is that Russia, of course, has nukes too.
Meanwhile, gold continues to melt down along with oil. I'm buying a lil bit here and there and making the investor's big mistake of averaging down. I like to swim against the tide I suppose (even though I know to swim parallel to shore during rips). Gold going down in this environment makes as much sense as oil going down. So, this way I get to be wrong twice in the same article.
Bottom line for investors: buy COP, XOM, CVX, STO, SLB and PBR. Buy gold coins along with your favorite energy service firms or the ETF. I still believe energy service firms will be the single best long-term investments in the years to come. Good luck!
Disclosure: The author owns every investment recommended in this article.
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This article has 66 comments:
I am Russian,only living in Frankfurt far away from the waste and industry in FSU.
Mr.Medvedev (or Mr.Putin as you quote) really catched all the Western European and American politicos on the balls and Russian bear will not losen his grip.The power have already shifted to the East,THAT'S IT.
The best thing would be for Americans to learn from Europeans,which is to shut up,sit put and buy Oil/Gas from Russia while it is still available at acceptable prices.And soon to learn to pay more and more but still sit put as nothing can be done about it,the Oil/Gas belongs to Russian federation and there is no legal framework o take it away,Russia is not stupid Iraq,it will never let it happen,never.
The author is right to point out that one day probably very soon Oil/Gas will continue to go back up and it have sense to hold Oil/Gas other resources stocks,but I would advise to buy this stocks directly from the company not through the bank or broker,as FDIC guarantees each American's deposit up to 100,000USD is insured and only if it is CD's,cash or Treasury Bonds.
All else is not guaranteed,even if investor have 50,000USD in Exxon or in Newmont Mining that he bought through his/her bank or broker,in the event broker goes bankrupt or bank,this investors will be left with nothing.As stocks they helded with their bank/broker is on the books of that institution and be written down with everything else if bank's debts exceed it's equity,capital base.
So if one prepares for Dow Jones at 5000 points (it will not take too long,already by December we will see the animal at 9000 at best) or lower,please inquire how to buy your big cap Oil/Gas/Mining stocks directly fro the company as only then you will have the prove that you are direct shareholder,not a holder of shares that are sitting on bank's balance sheet together with CDO's and other atomic junk.
Great article,you must write for the WSJ,FT and Barron's.
...
Meanwhile, the markets continue to act completely insane. The Russian attack on Georgia should have lifted oil, but it didn't.'
kommersant.com/p-13078.../
Fitzy,
Don't ASSume, BRAINsume! The same headline was aired by Reuters as well. The next time you make statements of fact, bother at least to verify them, don't just ASSume that you can join the political propaganda bandwagon and manipulate the sheeple. You could have called British Petrol and verified the same information independently.
bbzzz24: wrt the article you reference, do you really believe russia could not have taken out the pipeline if they wanted to? jeez man, THINK. they are sending a message. they are saying that they COULD take out the pipeline any time they wanted to.
bbzz24: i never blamed the pipeline outage on russia, that was your interpretation. what i AM saying is that russian troops are on the ground in georgia and have the POTENTIAL to control the pipeline any time they want. there is a difference, but apparently geopolitical nuances are not your specialty.
The larger problem is that since at least 1973 we have failed to take steps required to defend ourselves against dependency on unfriendly foreign governments for energy. We Americans have become too fat, dumb, and happy to do the hard work required to free ourselves of dependency.
This principle coined by Mussolini seems to be deeply engraved into U.S. geopolitics.
Russia went there to prevent genocide against Russian citizens. Matters of fact are:
1. Saakashvili is a CIA puppet (studied common law on State Department stipend, and common law is practiced ONLY in British colonies, present and past);
2. His 'revolution' was funded from outside (you guess by whom);
3. His country has waged war on 4 distinct ethnic groups within it's borders;
4. Russia is pissed off with gun touting in it's face by U.S. 'ally' who was propped to behave like this.
5. Russia has secured long term deals with Azerbaijan and Kazahstan to make sure there is very little gas left (at present none) for the Nabucco pipeline;
I can go on and on. Just check to see if you can find in any U.S. newspaper coverage on the latest story from the region: 2 U.S. diplomats caught in Kyrgizstan with 53 guns and 15,000 cartrages of ammonition. Maybe you only are seeded classified information.
With respect to energy policy: it seems the whole U.S. economy (and foreign policy) is planned around abundant and cheap oil: huge urban sprawls, huge SUVs, invasion of sovereign countries rich on oil, support of non-democratic governments (Saudi Arabia, Georgia). There is no easy fix to this, not smaller cars, not alternative fuels, not public transportation. What was easy though was to invade a country and further constrain oil supplies at time when everyone was pushed into SUVs and further driven into the periphery of urban areas. Your grandparents really thought they escaped feudalism from Ireland. Ask them again what they think.
'i'd rather know and use one language correctly then know 3 and not understand any of them. '
- learn the difference between than and then.
1. agreed
2. agreed
3. i don't know about this
4. agreed
5. not sure
all that said, what does this have to do with my article except to support my point of view?
wrt energy policy, perhaps you did not read mine as that is exactly what i am saying!
please leave my grandparents out of this discussion as you don't have a friggin clue, ok? and i would love to ask them what they think, but they are no longer around to ask, so, bug off on this will ya?
your debating skills are lacking though, because you simply gave up on your original points once i pointed out how incorrect they were. so, giving up on the original argument is basically conceeding that you were wrong to begin with.
> jack
In 1979 when oil prices were at record levels, they invaded Afghanistan to expand their empire and setup a stepping stone into Iran . No doubt, Iran was probably the next target after the dust would settle from the Islam revolution and the Iran-Iraq war.
Interesting enough, when Canterall, Prudhoe Bay and the North Sea came on line in full force in 1985, the global market was glutted with 20% spare capacity. Since the USSR's major export is oil and gas, they immediately saw 75% drop in revenues as oil prices plumetted from $40 to $10 a barrel in 1985. This combined with their costly campaign in Afghanistan and trying to keep up with Reagan's SDI program eventually bankrupted the USSR and forced their breakup in 1991. They would be in an economic mailaise for next 10 years.
As prices started rising in 2001-2002, they paid off all their debt and Putin starting consolidating his power base. He orchestrated the phony tax evasion charges against Lukoil and promptly put its CEO Mikhail Khodorkovsky in jail, thus neutralizing his primary political rival. Then the company was liquidated at bargain basement prices to Putin's friends at the remaining oil companies.
Putin and Medvedev are obviously rebuilding the "evil empire" starting with the strategic areas (with pipelines) first. They know Europe will keep its complaining to a minmium since GAZPROM is the primary supplier of natural gas into Europe.
I would be very worried, if I lived in Estonia, Lithaunia or Latvia right now. When Russia expands, the Baltics are usually swallowed early on in the campaign.
I like how Bush refused to cut short his little China vacation and let the real President, Cheney, do the saber-rattling back home--if that's what you call the pathetic mews out of Washington. Disengaged moron.
All three pipelines operated by BP are shut down: BTC due to a fire in Turkey plus the gas line and Baku-Supsa to the Black Sea due to force majeure because of the Russian miltary action in Georgia.
I agree that oil and gas producers are valued too low by the current market.
Any action by Congress on the Oil Speculation Bill in September or October will drive more speculators out of the futures market.
A few weeks ago, you didn't listen to me. Oil prices are going lower....below $100.00
Starting in DC - Detroit to Houston - and then the people.
We have to point nowhere outside the US to examine the causes of our own energy problems - we've stared it in the face for 40 years and thumbed our noses at it (oh yes, we reduced our own production, BUT WE DIDN'T REDUCE OUR CONSUMPTION - SHAME ON US!!!).
Those outside the US have the opportunithy AND THE RIGHT to bring that to our attention - we, inside the US, appear to be unable (inable) to do it.
NOT ONLY DID WE NOT REDUCUE OUR CONSUMPTION OF CRUDE,
WE DID NOT DEVELOP AND IMPLEMENT OUR ALTERNATIVES!!!!
SO, go Boone, Warren and Bill!
And there are CONSEQUENSES TO CHANGES IN CAUSES OF PROBLEMS: INTENDED (of course) and UNINTENDED.
CAUSES SHOULD BE PRIOITIZED FOR A VARIETY OF REASONS: ease of implementation, feasibility [technical and economical], etc.,
I suggest you (being an engineer, etc) find, read, and apply an old but helpful book "The Rational Manager" to you plan; it may strengthen it mightily, and simplify it. Then, maybe, those it's intended for would be able to understand and use it.
"US Crude Reduction Exceeds Increasing World Demand!! Gasoline Prices Drop!!!!!!"
byline: "15% cut in US daily diet of 20,000,000 barrels of crude floods India and China in Oil."
Aug 13 03:05 PMHere's a new thought - consider it a future Media Headline:
"US Crude Reduction Exceeds Increasing World Demand!! Gasoline Prices INCREASE!!!!!!"
byline: "15% cut in US daily diet of 20,000,000 barrels of crude floods India and China in Oil AND GASOLINE PRICES STILL INCREASE."
Enjoyed your blog immensely, and will be looking for you in the future.
Perhaps, you could add me to your mailing list?
Thanks, Jeff Knorr
jaksons4@yahoo.com
P.S. Nice trout!
Conservation is good for a 10-15% immediate reduction in demand; no new technologies required. We proved it in 1973 and 1978-9. Supply WILL be made available somewhere if we stop demanding it.
Most blogs or responses on read here and other energy related blogs talk about various ways to continue eating crude, or modified crude etc. Just like most diets talk about exchanging carbs, fat, protein, - EVERYTHING IS FOCUSED ON CHANGING THE INTAKE OF SOME SORT, BUT WHERE IS THE ELIMINATION?
I, WE, NEVER SAW A FAT PRISIONER OF WAR............
I don't know that we'll have a chance to do much of anything before a real shooting war begins. Mistakes are the rocket fuel of history.
Estimated oil off California's coast is about 10 billion barrels. At U.S. consumption of 7.5 billion barrels a year, that's enough oil for 1 year and 4 months. To think that that is worth risking the ecosystem of California's seacoast is shortsighted. We can't drill our way out of this problem, as Boone Pickens likes to say.
As far as energy plans, there are three that make a lot of sense, that I know of. Picken's plan has much merit, as does the proposal published by Scientific American, ("A Solar Grand Plan"). And setamericafree.org has a plan called "A Blueprint For U.S. Energy Security". While none of these is probably the absolute best plan, they all have very good ideas, and show what we can really do with renewable energy.
The Sci Am and Set American Free plans are available online.
According to estimates by setamericafree.org, oil and gas companies receive over $80 billion annually in tax credits and subsidies. Now McCain wants to give them more $billions. But Repuplicans won't give $6 billion for solar wind and geothermal and other renewables combined. Their estimate for total annual hidden costs of oil is over $800 billion a year. And then there is the $700 billion a year that oil adds to our trade deficit.
Then they criticize Pelosi for not bringing congress back in session to vote for offshore drilling. What a joke!
No substitute????? Come on.
The irony s that Western countries with high emissions standards predominately buy sour that sells at $10 to $20 discount per barrel and have the high tech facilities (li.e. Valero, Tesoro, etc) to refine into clean fuel.
The countries with low emissions standards (i.e China and India)
buy sweet crude at a premium price since they do not have refining facilities that can handle the more complex process needed to refining sour crude. Furthermore, they predominately produce low grade fuel (i.e. greater polluting) to generate power with it.
Everything goes in cycles. Oil peaked when the pain was too much and people cut back on driving and increased US offshore drilling (probably off Florida Coast) looks probable. Oil will spike back upward soon.
This is a good time to buy Oil and oil service stocks. I own NOV, SU, OII, FTI, PWE and DUG (oil SHORT ETF). Looking to buy PBR below $50.
johns. - yes it was, and it points to yet another US failure in foreign policy (wrt our backing of georgia in such an antagonistic way to russia)
longoil - yup, russia's an energy giant with oil production rivaling the saudis and huge nat gas reserves. not sure how important the baltics are from an energy perspective - they may not be worth the trouble. bottom line is, US energy policy (ie. the lack thereof) strengthens russia the same way it strengthens saudi, iraq, iran, venezuela, etc. etc. of those, obviously russia is the bigger threat. too bad bush didn't see this when he "gazed into Putin's eyes".
leh: i agree bush is a moron, unfortunately for the US and the world he and cheney haven't been "disengaged". i am sure he didn't leave China cause the US can't do anything in georgia anyway. france and the EU, who are on the receiving end of the pipeline's oil, lost no time sending Sarkozy over to the region to talk to both sides....
stuytown: exactly! that is why the rest of the world simply laughs off US objections to the "violence by Russia". they just look at what the US has done in iraq and think, what hypocrits.
bowman711: as powerful as the bush cartel are, i don't think they can control oil prices as fully as they would like by the mere fact that the majority of it is being pumped by nationalized sources like russia, venezuela, etc.
jjason: i never said oil prices wouldn't go lower, and they could even fall below $100. what i AM saying is that long term, worldwide oil supply won't keep up with worldwide oil demand, and the price will respond accordingly. interesting that US inventories appear to be tightening up even as the price falls...
bbrad: thanks, check's in the mail
GMiki: i agree. not so sure about peak. supply may actually go up in the next few years, but not nearly as much as demand. regardless, the argument isnt so much are we at the absolute peak, but what should a country that imports 70% of its oil do when we are aware that oil can either a) peak or b) supply not keep up with demand. the only choice we have is a comprehensive long-term energy policy.
User93017(Jeff): thanks. there is a way, on both Seeking Alpha and google's blog to subscribe to any user you chose, with email alerts and the like. i'll let you do it so you can control your own destiny.
wizard: i agree it borders on treason! but when your leader arranges airplane flights for saudi arabian 9/11 conspirators during an airspace lockdown (denies it, then admits it), outs a CIA agent, and politicizes the justice department ... all that.... and congress does nothing no special prosecutor, no investigation...the i doubt seriously anyone will hold the administration accoutable for the energy debacle. glad to hear you got an energy policy in the congressional record! perhaps you can call some friends and get them to view mine or discuss the issue with you. good luck.
issactheterrible: well, i agree with you, and i think the buying opportunity for energy stocks is now. it might not be the bottom of this sell off, but i would start buying in incremental fashion. unfortunately, i also agree that recent evidence would prove your assumption that we won't respond to peak oil properly to be correct. notice the lack of support for pickens, or the WSJ not wanting to print a strategic, long-term, comprehensive energy policy even as Wall Street investments returns (S&P500 has averaged a 2.8% annual return the last 10 years) show the economic impact of an addiction to 70% imported oil.
samadams: thanks, and no i haven't read the book, but thanks for mentioning it to me because i heard about it, forgot the title, and want to get it for my dad for his birthday (i will read it too). thanks!
vonAlendorf: that is why an alternative to the internal combustion engine, and the way to power it, is a central theme in my energy policy.
dr.duru: thanks, you get a check in the mail too.
frfryer: it is absolutely a fact the US cannot drill its way out of the "oil problem". that said, every bit helps and the magnitude of the energy problem is such that the economic future of the country is in grave danger. with that staring us in the face (and the social implications thereof...), i think it's worth it to drill off-shore. besides, off-shore drilling has become much much safer in the past couple decades from an environmental perspective. no leaks or spills in hurricanes katrina and rita from offshore rigs is pretty impressive, no?
frfryer: i agree that tax breaks to oil should stop. at the same time, windfall profits taxes are a bad idea!! i mean, if you are hungry, why tax the gardener? ridiculous.
LazyAl: yeah, it cut me. but long term, i will heal and be stronger :)
raybay: yup, oil services are the place to be for a long-term investors. i picked up a lil PBR myself recently (and of course it then went down a point). am i worried? not at all (unless the US invades Brazil for the reserves...). i still remember the interview i saw on TV of a brazilian asked what he thought about PetroBras' big oil finds. he said, "i wish they'd quit finding oil down here, bush will invade us soon!".
TAKE ACTION CHILDREN, THE CAUSE FOR ALL THIS IS YOU--your acceptance of status quo may be evidence of your failure to perform beyond pi..ing here.
signed--GERRYMANDERING...
Yeah, in fact I’ve sent numerous communications to my elected representatives on this very subject.
They’ve either been ignored, or answered with a form letter--sometimes comically inappropriate. I wrote Senator Evan Bayh of Indiana to suggest I’d rather see the oil industry regulate the government than vice-versa and received an email which began, “Dear Fellow Hoosier, I fully understand your concern about rising gasoline prices”.
Vox populi.
And there is NO substitute to BURN??
My remark about sour vs sweet crude was to provide additional details to your argument that we are quickly running out of sweet crude and are using sour crude more and more.
Incidently, the fact that 75% of oil produced in the world is sour crude and 25% is sweet crude reinforces the Peak Oil argument. Why are we painstaking processing large quantities of sour crude (full of sulfur, hydrogen cyanide, parafin, etc) if we are not running out of the easy to process stuff (i.e. sweet crude) ?
david white: you are obviously correct that the commodity trades are being unwound. i also agree it is a temporary situation. i try to follow all the markets, but i focus on the oil, precious metals, and inflation as i believe those will be the dominant themes of the future. i just can't get excited about retail or autos or consumer discretionaries or financials in a market and economy like this. so, i basically disregard all the talking heads on CNBC when it comes to these sectors. perhaps i shouldn't....but until i see a fundamental solution to the "oil problem", i doubt i will change my perspective. interesting that everyone is celebrating $112/barrel oil when only 18 months ago that price would have been considered disastrous...what has changed other than psychology and the propagandists on TV?
wizard: oh, i definitely agree both parties in Congress are to blame. just the mere fact that each party in the last 20 years has had control of the presidency and both houses of Congress yet nothing wrt a REAL energy policy was accomplished. i agree using the SPR is ignorant. i agree that we should be drilling off-shore. there is just too much money being moved around under the table by the lobbyists and our dishonest politicians to make the obvious, common sense changes that we so badly need. i mean none of it is rocket science.
Three major US naval strike forces due this week in Persian Gulf
DEBKAfile Special Report
August 12, 2008, 10:04 PM (GMT+02:00)
New America armada around Iran
New America armada around Iran
DEBKAfile’s military sources note that the arrival of the three new American flotillas will raise to five the number of US strike forces in Middle East waters – an unprecedented build-up since the crisis erupted over Iran’s nuclear program.
This vast naval and air strength consists of more than 40 carriers, warships and submarines, some of the last nuclear-armed, opposite the Islamic Republic, a concentration last seen just before the US-led invasion of Iraq in 2003.
Our military sources postulate five objects of this show of American muscle:
1. The US, aided also by France, Britain and Canada, is finalizing preparations for a partial naval blockade to deny Iran imports of benzene and other refined oil products. This action would indicate that the Bush administration had thrown in the towel on stiff United Nations sanctions and decided to take matters in its own hands.
2. Iran, which imports 40 percent of its refined fuel products from Gulf neighbors, will retaliate for the embargo by shutting the Strait of Hormuz oil route chokepoint, in which case the US naval and air force stand ready to reopen the Strait and fight back any Iranian attempt to break through the blockade.
3. Washington is deploying forces as back-up for a possible Israeli military attack on Iran’s nuclear installations.
4. A potential rush of events in which a US-led blockade, Israeli attack and Iranian reprisals pile up in a very short time and precipitate a major military crisis.
5. While a massive deployment of this nature calls for long planning, its occurrence at this time cannot be divorced from the flare-up of the Caucasian war between Russia and Georgia. While Russia has strengthened its stake in Caspian oil resources by its overwhelming military intervention against Georgia, the Americans are investing might in defending the primary Persian Gulf oil sources of the West and the Far East.
DEBKAfile’s military sources name the three US strike forces en route to the Gulf as the USS Theodore Roosevelt , the USS Ronald Reagan and the USS Iwo Jima . Already in place are the USS Abraham Lincoln in the Arabian Sea opposite Iranian shores and the USS Peleliu which is cruising in the Red Sea and Gulf of Aden.
www.debka.com/headline...
----------------
Order of Battle of the US/EU Naval Armada
The US Naval forces being assembled include the following:
Carrier Strike Group Nine
USS Abraham Lincoln (CVN72) nuclear powered supercarrier
with its Carrier Air Wing Two
Destroyer Squadron Nine:
USS Mobile Bay (CG53) guided missile cruiser
USS Russell (DDG59) guided missile destroyer
USS Momsen (DDG92) guided missile destroyer
USS Shoup (DDG86) guided missile destroyer
USS Ford (FFG54) guided missile frigate
USS Ingraham (FFG61) guided missile frigate
USS Rodney M. Davis (FFG60) guided missile frigate
USS Curts (FFG38) guided missile frigate
Plus one or more nuclear hunter-killer submarines
Peleliu Expeditionary Strike Group
USS Peleliu (LHA-5) a Tarawa-class amphibious assault carrier
USS Pearl Harbor (LSD52) assult ship
USS Dubuque (LPD8) assult ship/landing dock
USS Cape St. George (CG71) guided missile cruiser
USS Halsey (DDG97) guided missile destroyer
USS Benfold (DDG65) guided missile destroyer
Carrier Strike Group Two
USS Theodore Roosevelt (DVN71) nuclear powered supercarrier
with its Carrier Air Wing Eight
Destroyer Squadron 22
USS Monterey (CG61) guided missile cruiser
USS Mason (DDG87) guided missile destroyer
USS Nitze (DDG94) guided missile destroyer
USS Sullivans (DDG68) guided missile destroyer
USS Springfield (SSN761) nuclear powered hunter-killer submarine
IWO ESG ~ Iwo Jima Expeditionary Strike Group
USS Iwo Jima (LHD7) amphibious assault carrier
with its Amphibious Squadron Four
and with its 26th Marine Expeditionary Unit
USS San Antonio (LPD17) assault ship
USS Velia Gulf (CG72) guided missile cruiser
USS Ramage (DDG61) guided missile destroyer
USS Carter Hall (LSD50) assault ship
USS Roosevelt (DDG80) guided missile destroyer
USS Hartfore (SSN768) nuclear powered hunter-killer submarine
Carrier Strike Group Seven
USS Ronald Reagan (CVN76) nuclear powered supercarrier
with its Carrier Air Wing 14
Destroyer Squadron 7
USS Chancellorsville (CG62) guided missile cruiser
USS Howard (DDG83) guided missile destroyer
USS Gridley (DDG101) guided missile destroyer
USS Decatur (DDG73) guided missile destroyer
USS Thach (FFG43) guided missile frigate
USNS Rainier (T-AOE-7) fast combat support ship
Also, likely to join the battle armada:
UK Royal Navy HMS Ark Royal Carrier Strike Group with assorted guided missile destroyers and frigates, nuclear hunter-killer submarines and support ships
French Navy nuclear powered hunter-killer submarines (likely the Amethyste and perhaps others), plus French Naval Rafale fighter jets operating off of the USS Theodore Roosevelt as the French Carrier Charles de Gaulle is in dry dock, and assorted surface warships
Various other US Navy warships and submarines and support ships. The following USN ships took part (as the "enemy" forces) in Operation Brimstone and several may join in:
USS San Jacinto (CG56) guided missile cruiser
USS Anzio (CG68) guided missile cruiser
USS Normandy (CG60) guided missile cruiser
USS Carney (DDG64) guided missile destroyer
USS Oscar Austin (DDG79) guided missile destroyer
USS Winston S. Churchill (DDG81) guided missile destroyer
USS Carr (FFG52) guided missile frigate
The USS Iwo Jima and USS Peleliu Expeditionary Strike Groups have USMC Harrier jump jets and an assortment of assault and attack helicopters. The Expeditionary Strike Groups have powerful USMC Expeditionary Units with amphibious armor and ground forces trained for operating in shallow waters and in seizures of land assets, such as Qeshm Island (a 50 mile long island off of Bandar Abbas in the Gulf of Hormuz and headquarters of the Iranian Islamic Revolutionary Guards Corps).
The large and very advanced nature of the US Naval warships is not only directed at Iran. There is a great fear that Russia and China may oppose the naval and air/land blockade of Iran. If Russian and perhaps Chinese naval warships escort commercial tankers to Iran in violation of the blockade it could be the most dangerous at-sea confrontation since the Cuban Missile Crisis. The US and allied Navies, by front loading a Naval blockade force with very powerful guided missile warships and strike carriers is attempting to have a force so powerful that Russia and China will not be tempted to mess with. This is a most serious game of military brinkmanship with major nuclear armed powers that have profound objections to the neo-con grand strategy and to western control of all of the Middle East's oil supply.
The Russian Navy this spring sent a major battle fleet into the Mediterranean headed by the modern aircraft carrier the Admiral Kuznetsov and the flagship of its Black Sea Fleet, the Guided Missile Heavy Cruiser Moskva. This powerful fleet has at least 11 surface ships and unknown numbers of subs and can use the Russian naval facility at Syria's Tartous port for re-supply. The Admiral Kuznetsov carries approximately 47 warplanes and 10 helicopters. The warplanes are mostly the powerful Su-33, a naval version (with mid-air refueling capability) of the Su-27 family. While the Su-33 is a very powerful warplane it lacks the power of the stealth USAF F-22. However, the Russians insist that they have developed a plasma based system that allows them to stealth any aircraft and a recent incident where Russian fighters were able to appear unannounced over a US Navy carrier battle group tends to confirm their claims. The Su-33 can be armed with the 3M82 Moskit sea-skimming missile (NATO code name SS-N-22 Sunburn) and the even more powerful P-800 Oniks (also named Yakhonts; NATO code name SS-N-26 Onyx). Both missiles are designed to kill US Navy supercarriers by getting past the cruiser/destroyer screen and the USN point-defense Phalanx system by using high supersonic speeds and violent end maneuvers. Russian subs currently use the underwater rocket VA-111 Shkval (Squall), which is fired from standard 533mm torpedo tubes and reaches a speed of 360kph (230mph) underwater. There is no effective countermeasures to this system and no western counterpart.
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As Russian troops and air force pilots, and thousands of Russian civilians die in combat in Europe for the first time since 1945, only miles from their homeland (on land that was part of the Russian Empire and Soviet Union for centuries), the sleeping Russian Bear has been awaken and filled with a terrible resolve. The fact that only within the last few weeks have the 1,000+ American Marines - sent in to train the Georgians for this very war - left is not overlooked by the Russians.
The fact that (according to DEBKA the well-connected Israeli strategy and military site) over 1,000 Israeli "mercenaries" are actively engaged in combat with the Russian Army on the side of the Georgians is also not overlooked. The fact that the American neo-con administration and the Israelis have been engaged in a fury of advanced arms sales and deliveries over the last year, and that these weapons are killing Russians on their own historic territory, is not overlooked.
The fact that the Bush administration tried very hard to get its European NATO partners to accept Georgia as a NATO member without success (too many European nations saw the trap and smelled a rather large rat), and the fact that had this neo-con gambit succeeded NATO would be in war against Russia now ~ this also is not overlooked by the Russian bear. The fact that the Georgian Defense Minister is a 'former' Israeli and many current and retired Israeli generals are deeply involved in Georgia is also not overlooked by the Russian bear.
thefitzman.blogspot.co...
Period. Military gamesmanship to steal oil will simply not be effective in the long run. The US is going bankrupt, and the amount of oil we are importing is simply too large. The only way the US remains a sovereign, democratic, capitalistic nation is to solve the "oil problem". But we are not doing so, and we are approaching a fascist government very reminiscient to pre WW2 Germany. the government is taking over the mortgage, banking, and financial industries while over-reaching militarily. the press pours out propaganda, and wealth is being concentrated very rapidly into the hands of a very few industrialists while the middle class is shrinking just as rapidly. right wing propagandists like rush limbaugh and larry kudlow pry on the minds on the uneducated and unaware to grease the skids of this move to fascism. striking iran will simply cause more economic dislocation in a world economy which is already reeling from the results of US "policy". these economic dislocations will cause yet more weakness to the middle class which will make it even easier for the fascists in control of the US governent to continue their agenda. it's ironic that US/Israeli "policy" in the middle east serve the nwo-fascists when it was the Jews who suffered most from German fascism. what a world.
I stand by my assessment that the US has a secret deal to give Russia, Georgia in exchange for Russia not supporting Iran. I think the 5 Carrier US fleet out front of Iran's shore's today backs my opinion. Time will tell.
You can't tell me that the US wasn't fully aware of all those tanks poised on the Russian side a couple of days earlier. They just forgot to tell the Georgians thats all. and so the trap was set.
In 1938, Adolph Hitler opined, “Today I’ll be a prophet again. If international Jewry in Europe and abroad should succeed once more into plunging the people into a world war, then the consequence will not be the Bolshevization of the world and therewith a victory of Jewry, but on the contrary the annihilation of the Jewish race in Europe.
I don’t mean to imply anything; just a historical parallel.
the failures of US/Israeli policy, in my mind, are the same failures which the State Department warned President Truman about prior to his (i.e. US) support for establishing the State of Israel (which is why Truman labored so over the issue):
1) Establishment of an Isreali state without establishment of a Palestinian state is not a recipe for a "secure Israel" and insures continuing conflict with Arab oil producing countries. Look at all the middle eastern wars, including the recent one in which, for the first time ever, Israel did not come out the clear victor.
2) Lack of a comprehensive, long-term, strategic energy policy is simply *strengthening* the Arab countries which we are supposedly protecting Israel from: Saudi, Iraq, etc. etc.
3) The US is going broke as it gives money to its 51st state (Israel) while at the same time sending $700 billion US dollars out of the country for oil to fund the "other side" (the oil producing countries). We are, in effect, funding both sides of the dispute and almost insuring conflict and war expense (not to mention human lives....)
so, what is the endgame here? are our leaders *trying* to fulfill biblical predictions? think about it - in a world in which arms, GPS systems, laser guided missles, and much technical information on rockets and guidance systems are all easily obtainable on the internet and elsewhere, etc. etc. how can these policies be making Israel more secure? how can insuring you have enemies that want to destroy you be the way forward (the same applies to the US). a constant state of warfare, denial of Palestinian rights, and a financial addiction to Arab oil is simply a failure of US/Israeli strategic thinking and policy. Yitzhak Rabin knew it, so the right wing assassinated him. the only way is economic justice, political justice, and an energy policy that devalues Arab oil, instead of putting a premium on it (and perhaps a touch of humility). so, the US is doing the exact opposite of what it should be doing. and, Israel is not safer and more secure. My opinion is that I believe the opposite is true. Now, if you were comparing me to Hitler (I am not sure was your intention), of course I will debate that issue with you. I have been to Israel, I have worked with Israeli engineers and consider them my friends. I am concerned for their welfare and their country's. I don't want to see Israel's destruction! At the same time, I can definitely understand the Palestinian point of view, and I believe they deserve their own country using the same rationale that Israelis used when stating a case for their country. I also believe that the economic conditions in the Arab areas around Israel are so bad, it will breed "terrorism" in the same why that economic conditions and oppression in Ireland created the breeding grounds for the IRA. If you are a man, and you cannot provide food, water, education, and just as important, dignity, for your wife and children, you will probably not take it sitting down for long. That is the case for many men and families in that area. Were the IRA "terrorists", or, were they simply patriotic Irishmen tired of being oppressed by non-Irishmen (the British)?
Wizard: please don't assume my comments mean i don't favor US support for Israel - I must certainly do! that said, in return for our support, we should be demanding certain actions from Israel in order to be on the receiving end of our cash and military hardware. part of those requirements should have been (kind of late now, but better late than never....) a cessation of the economic and social persecutions of Arab peoples on the west bank and gaza strip. a halt to new settlements, and the support for a Palestinian state for the same exact reasons we supported Israel's desire for statehood. those demands should have been the minimum starting point for aid and support. the reason that some Arab (and Persian....) peoples want to see Israel "dissapear" as you put it is because of Israeli and US policies over the past number of decades has brought them nothing but pain, suffering, poverty, and death. if the Israelis and US don't change their current policy, how are they going to keep the enemies of Israel from achieving their objectives when our oil dollars are filling their pockets and they can buy anything weapon they want? when rocket delivery technology is more and more available and a known quantity? diplomacy along with economic and political justice is the only way to achieve a lasting peace. even northern Ireland figured that much out.
however, what the Israeli's haven't figured out, is that the US is actually using their nation as an excuse to cause conflict in order to:
1) put our troops on top of Arab oil
2) enrich the US military industrial complex
i support Israel by bringing a political and economic perspective that will make Israel more secure, not less secure. of course Israel should be able to defend itself against any enemy...but, like a kid in grammar school, the best security is to have alot of friends.
also, please note my response to peter sterling: i did NOT agree with his theory that russia and the US had a deal to trade georgia for iran. please, read my response to him on that point as your comments would have been more accurately addressed to him.
www.taphilo.com/histor...
I do know many Israeli and Palestinians folks and the vast majority do want peace. I would place blame more on Palestinian side than the Israeli side for the lack of peace in the Middle East
I agree with you that Israel does NOT need US assistance. The Jewish people have suffered much adversity in the last 5700 years and have managed to do fairly well for themselves without outside help. They have been playing the “We are surrounded by 30 Arabs for every Jew” card for the last 60 years to gain US assistance. But in all fairness, the US has been providing similar assistance to other countries in the region like Egypt and Turkey.
The problem is with the Palestinian leadership. As long as there is conflict in the region, the corrupt Palestinian leaderhsip is able to get billions of dollars in guilt money from countries like Saudi Arabia et al. How many billions did Arafat have hidden in Swiss bank accounts before he died? I am pretty sure the current Hamas administration is playing the same game with its Arab neighbours.
Yes, Bin Laden and an overwhelming number of Saudis and other Muslims viewed the American military presence in close proximity of their holiest shrine as an outrageous and blasphemous provocation-- on the equivalent of a large, well-equipped Al-Qaeda training camp based in northern Virginia.
The Saudis did in fact welcome the American military in 1991, as did other the Arab countries. Saddam Hussein had made a career out of killing his fellow Muslims, and the Americans were certainly seen as the lesser of two evils at that time. The problems arose when we stayed long after the war had ended.
I certainly don’t mean to portray Al Qaeda as “noble guardians” of Islam. They are radical extremists who twist moral and religious principles to suit their own narrow vision of a new world order. Nor do I think that the American military presence in Arabian Peninsula was remotely sufficient to justify the attack on the World Trade Center.
For a brief time after 9/11, world opinion was largely in the American court. Even the Muslim world was horrified by the hatefulness of these attacks. But in the seven years since, the United States has squandered the opportunity to win hearts and minds, attacking first Afghanistan, then Iraq. The result has been untold suffering and uncounted thousands of deaths in these two unfortunate countries--in addition to another four thousand Americans lives lost.
All for what?
In regards to your Saddam Hussein remark, I think Mahatma Gandhi had the best explanation for this situation when describing the British colonization of India: "We would rather have our own bad government, than someone else's good government"
In regards to Afghanistan, no civilized person in the world objected to the American invasion and the expulsion of oppressive Taliban regime. In fact many nations (EU countries, Canada, etc) sent troops to support the American effort. It was OIL (Operation Iraqi Liberation) in March 2003 that squandered the worldwide support and sympathy for the USA after 9/11.
In regards to the Saudis. they are playing on both sides of the coin.
We want US presence in the Arabian penisula to keep their kingdom propped up, but they don't want to look too pro-American in fear of a revolt of extremist factions within who could topple them.
But thinking longer term - where goes oil? Ultimately, equilibrium is where demand meets supply. In a perfect market, price would strike at the marginal cost of a barrel; which is near $50. That, or somewhat below is where I see the bottom for oil in the next cyclical oil bear within a great secular bull.
I would go long oil once it starts consolidating & go short rate sensitives & financials.