Friday, January 28, 2011

Um, Middle East Governments are Not Stable

    The Village Elliot feels compelled to lecture again on a subject that no one wants to hear.  Namely, governments in the Middle East are not stable.  This is underscored by the current situation in Egypt, which has turned very, very ugly in Egypt, where aged despot Hosni Mubarak tries to cling to power while the people are tired of being oppressed by an idiotic government.  The thing that surprises me is that it didn't occur in one of the monarchies, like Saudi Arabia, where tens of thousands of royalty expect to be rich by living off the government.  
    But the average person in these countries lives in dire poverty, ruled by governments that think that new industries are impossible.  
    In the US, we have chosen to depend on countries like Egypt, Iran, Saudi Arabia and Kuwait, since we have decided to pin our energy hopes on guaranteed failures like corn ethanol, hydrogen, wind and solar energy (the American Gang of Four).  These fuels are too expensive to allow American industry to compete on the world market, so as a consequence we import 11 million barrels of oil per day while hoping for a miracle.   In the long run, the theory goes, one of the Gang of Four will suddenly become economical.  But we've been saying this since 1973, and darn if we aren't still importing more and more oil. 
    Part of the issue, I believe is that Americans have misleading information about the stability of governments of OPEC countries.  Why is this?  Well I think it is because when we send our oilmen over to do business with the sheiks, they get stuffed with delicious Middle Eastern cuisine, and they visit the harems with beautiful women and they get a distorted view of life over there.  Then the oilguys bring that view back to America, and report that the people revere their government and that they are basically Pro-American.  They need to spend some time with ordinary people or at least read Al-Jazeera to learn that the people are very upset with the lousy governments that they have.  Hatred of America is perhaps one of the great unifying forces that exist over there.
   I don't know if anyone is sure what kind of government will prevail once the Egyptians evict the 82 year old Mubarak.  No doubt the US will have a chance to participate and get involved in a war if it wants.  In Iraq and Afghanistan, we have been fighting to make sure that there is an appropriately pro-American government there, and some people feel that the policy is partially successful, at least until the next time the people get mad at the government (hint:  about two years).  
    Yet if these governments start to topple--and who knows whether they can contain the problems within Egypt or whether they might spread--this may well threaten the ability to pump oil, which could in turn destabilize oil prices.  Based on our policy of running the economy on debt and not producing our own energy or raw materials, it might be appropriate to start asking how our economy will survive rapid escalation in oil prices. 
    So our panicked State Department is asking what are we going to do to stabilize Egypt?  Will it spread to Saudi?   My question is:  are these really the best friends we have?  Why doesn't the government let us produce our own crude using coal and natural gas, rather than hanging the stability of our country on the willingness of OPEC nations to (1) sell us oil and (2) extend us credit to finance our national debt?

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