Monday, June 04, 2007

Biodiesel or Death?

I just read an article by Chuck Cole, the "Biodiesel Doctor" in Farm and Ranch News which raised my blood-pressure and it should raise yours too.

I don't agree with Chucks view, I think to be frank he misses some crucial facts, however I do agree that the situation means that we should all be making biodiesel and we should be completely independant from the middle east.

Here's Chucks main pitch: " Because the worldwide demand for oil is increasing and the supply is decreasing, it is clear that the long-term price of oil will continue to rise. Considering that the United States is the largest oil consumer in the world, this continuing price escalation should cause us serious concern. But that’s not the scariest part. Iraq and Saudi Arabia combined are the largest single geographical source of oil in the world. We all know that Iraq is extremely unstable. If we pull our troops out, who knows what could happen to this supply of oil. What most people don’t know is that Saudi Arabia is likely to become extremely unstable also.

Saudi Arabia is a ticking time bomb. In the 1980s, Saudi was a very rich country with $120 billion in cash reserves. Today, the reserves are les than $20 billion. The middle class of the country has literally been wiped out financially supporting the royal family. In 1981, the average Saudi citizen had an income of over $28,000 per year. By 2001, that income was down to $6,800 and is still decreasing today.

The oil income is going to support a huge royal family. The average Saudi prince fathers from 40 to 70 children during his lifetime. Thus, the royal family is growing at an unbelievable rate at the expense of the average citizen. Is it any wonder that al-Qaeda is becoming popular with Saudi’s disintegrating middle class? Sooner or later, the house of Saudi will fall. What then?

Who knows, but we can easily imagine a very, very serious interruption in the supply of oil. What if the downfall of Saudi Arabia also takes out Iraq? Or the fall of Iraq takes out Saudi Arabia?"

What you need to bear in mind is the following:
- in the last 10 years the population of Saudi has doubled, 20% of that is made up of foreign nationals so given that they don't levy taxes of course the average salary has declined. However with no taxes and a fairly low cost of living $6800 goes a very long way.
- that $20 billion is cash, lets not forget that the USA and the UK economies are massively in debt by comparison
- Saudi is the heart of the Islamic faith which is part of what gives it its religious stability and makes it potentially volatile.

I don't think any of these things that get Chcuk so excited are really the problem, or at least the whole problem.

In the seventies the USA persuaded the arab states lead by the Saudis to agree to only sell crude in US dollars. To sweeten the deal the US government promised to defend the Saudi families right to rule with military force if required. Last year Iran bodly stated its intention to break from this and sell its oil in Euros as many of its clients are European and the Euro is increasingly strong against the falling dollar. It should suprose no-one reading this that US military threats aimed at Iran have little to do in reality with their nuclear power program.

So two stark and frightening scenarios potentially extend from this: (1) Iran could lead a consortium of arab states to move away from the US Dollar standard and sell in Euros. If this happens the USA will no longer be able to manage economic inflation because the worldwide demand for dollars will fall and they sdimpy won't be able to mop them up - the effect will be to send the dollar in a further downward spiral and the ceonomic consequences will be catastrophic.

(2) Chuck may be right, perhaps there is socio-political instability in Saudi Arabia, perhaps Iraq or the threats to another Muslim nation (Iran) will push fundamentalists over the edge and cause a revolt.

What frightens me - and it should frighten you - is that the answer in both cases is war. Either an invasion of Iran to prevent them using the Euro, neatly wrapped up in a "Nuclear Weapons", WMD, spin story. Or a counter insurgency operation in Saudi to defend the royal family as promised.

In either case more American and UK soldiers will die and their citizens and economies will have to carry a heavy tax burden long into the future.

If we make biodiesel, if we make ourselves fuel independant then this kind of action is both unneccessary and indefensible. My suggestion? Make biodiesel at home, campaign for more biofuels, bombard your goverment representatives with requests to support biomass fuels.

Only when we are producing our own bio-fuels will be free of this threat, and able to build a stable economic future for ourselves and our children.

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