Black Gold, Texas Tea

Oil is one of our most prized resources. It has brought us everything from the invention of plastic, the development of drugs and the freedom to drive anywhere we choose.

Oil as a commodity has brought war, political corruption and corporate expediency to the world. On Tuesday, Lukoil, the largest Russian Oil company, opened its first office in Beijing, China. This event, which won’t make the headlines over here, sets the political and economic agenda of the next few decades. China is the second largest oil consumer after the United States and they’re doing something about it at home and abroad.

For example, China expressed interest in buying up Unicol’s share of Exxon Mobil, but that deal was squashed just before close. China has a deal with Nigeria, signed in July, that consists of 30,000 barrels a day in exports from the African nation. Lukoil’s deal includes the shipment of oil from Kazakhstan to the China Sea by pipeline. They hope to be operational by the end of the year. China also signed a deal with the province of Alberta for a piece of the action in tar sands development in western Canada.

Meanwhile, in North America, gasoline prices rise, refineries close and the Gulf platform drillers try to recover from two of the worst hurricanes ever. It can only mean that an energy crisis is coming and it’s going to be worse than the one we had in the mid-70s. Since we depend on oil to drive the economy, as it were, the economic bubble is about to burst, especially in the United States. Just ask Alan Greenspan, the king of understatement, who recently admitted that the Federal deficit is too high and certain borrowers and lenders could be exposed to significant losses. He should have told us to stop living beyond our means, pay off the credit cards and sell the SUV.

But to understand the oil business is to understand our world politically and economically, but it’s not easy. There’s a lot of manufactured confusion out there.

George Bush, Condoleezza Rice and Dick Cheney all come from big oil. Ironically, they probably understand the coming crisis better than most people. Even Bush asked his fellow Americans to start conserving gasoline the other day. [That was remarkable]

So, if the gang in Washington, DC is quivering in their boots, the rest of us may be shivering in our beds this winter.

That’s just my opinion. I could be wrong.