OPEC And Oil -The New Economic War
By Gabrielle Reilly

As Venezuela signed a large oil agreement with India this week, the anti-American, Venezuelan President, Hugo Chavez, became increasingly emboldened:

"Chavez, who is on a four-day state visit to India, held talks earlier Saturday with Prime Minister Manmohan Singh, during which the two countries agreed to cooperate in the energy, biotechnology, space and railroad sectors.

Chavez later flew to Calcutta, where he said he was considering increasing oil trade with countries like India and China to ensure their fast economic growth."

 

 

"Venezuela will now help the Southern Hemisphere countries with its oil more than it has helped the United States," he said. "America wants to keep all the good things in the world for itself. But we will not let them do it."

Relations between the United States and Venezuela have deteriorated steadily since Chavez took office in February 1999. He has repeatedly accused Washington of trying to destabilize his government. The State Department has rejected the allegation." AP News

Then onto Iran who sites a much more precise oil crisis threat:

"TEHRAN, March 5: Iran's top nuclear official on Saturday warned the United States and Europe of the danger of an oil crisis if Tehran is sent before the UN Security Council over its nuclear programme, but said that a deal with Europe could be near.

"The first to suffer will be Europe and the United States themselves, this would cause problems for the regional energy market, for the European economy and even more so for the United States," Hassan Rowhani, whose country is the second largest oil producer in OPEC, told reporters." The Dawn

So far the U.S. has not said too much in regard to the matter but the latest build up lead to the following comment:

"U.S. Treasury Secretary John Snow, in an interview Sunday with the ABC television show "This Week," described the high prices as "attacks on the economy."

While the American economy has ridden the wave of surging" AP News

This week has seen us moving into a new chapter of oil supply threats as these countries and organizations appear far more confident they can sustain verbalizing threats. For more information on the agreements and controls OPEC, Russia, China, India and terrorists have played over the past two years leading up to this point please read my previous article: "Why are you paying so much at the gas pump?

An energy crisis does not just relate to a lack of supply of fuel but also to high inflation, economic stagnation and high unemployment as it did in the 1974 energy crisis caused by the Arab Oil Embargo. So as a consumer what can you do to economically ride a potential energy crisis? Firstly, in these type of economic times, cash flow is the name of the game. The more cash flow you have the more likely you are to successfully ride the wave. Obviously, please consult your financial advisor, but here are some recommendations to consider as we move into the next two years when the impact would be more likely to be felt:

1. If you have an Adjustable Rate Mortgage now may be a very good time to lock in a long term interest rate while they are still low. Coming off an Adjustable Rate Mortgage in a time of high inflation could increase your mortgage payment by hundreds of dollars a month.
   
2. Try to keep all your loans to a minimum or have them paid off, so as the cost of living goes up your lifestyle is still affordable.
   
3. If you are planning on buying a car, choose an energy efficient model and keep loan payments low.
   
4. Before making any fiscal decisions consider the impact the decision would have on your cash flow over the next five years.
   
5. Build up a 3 month cash reserve in the event of loss of a job.
   

As a nation what can we do? Reduce reliance on foreign sources, increase supplies, reduce consumption and look for long term energy solutions.

1. Firstly, environmentalists will need to review Mother Earth with more of a big picture view. Grandma's still need to keep warm in winter, people have to drive to work to keep their jobs to feed their children and the oil has to come from somewhere. It is much better that it comes from our shores than have to rely on a foreign source which leads to more global tensions and war. A war would be much more detrimental for Mother Earth than well regulated drilling in Alaska.
   
2. Sound legislation for lowering fuel consumption needs to be reviewed.
   
3. Look at the nation in blocks of microclimates. Consider offering rebates and incentives for new home/business construction in warmer States for installing a solar panel on the roof with an electric booster. I grew up with a solar panel in my home and it worked very well for heating enough water for a family of six with the electric booster as a back up for cloudy days.
   
4. Keep filling our emergency reserves even as the oil prices go up. The reserves would do very little for lowering prices but should only be used in the event of a terrorist attack or massive shortage of supply. The reserve should be considered an insurance policy for catastrophe.
   
5. Explore and implement long term energy solutions.
   

Hopefully, these new threats are just idle, but as oil prices continue to go up we need to take them seriously and adapt rapidly. If the scenario over the next few years turns out better than expected, we can just be thankful we had a catalyst to make us review and change to more energy efficient consumption.

END

KNOWLEDGE

Man's mind stretched
to a new idea
never goes back
to its original dimensions.

- Oliver Wendell Holmes