Michel Chossudovsky: All Out War on Libya, Surge in the Price of Crude Oil
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All Out War on Libya, Surge in the Price of Crude Oil...
"Humanitarian Wars are Good for Business".... Speculators Applaud....
By Michel Chossudovsky
URL of this article: www.globalresearch.ca/index.php?context=va&aid=23741
Global Research, March 18, 2011
PART I
Insurrection and Military Intervention: The US-NATO Attempted Coup
d'Etat in Libya?
- by Prof Michel Chossudovsky - 2011-03-07 US and NATO military
advisers and special forces are already on the ground.
PART II
"Operation Libya" and the Battle for Oil: Redrawing the Map of
Africa - by Prof Michel Chossudovsky - 2011-03-09
PART III
The establishment of a no fly zone is on the drawing board of the
Pentagon. Saudi Arabia and the Gulf states, supported by the Arab
League and the Organization for African Unity (OUA) have labelled
Libya as "An Unfriendly Nation".
The scenario envisaged by Washington is to involve Saudi Arabia and
the Gulf states in aerial attacks directed against Libya.
They have also called on Saudi Arabia to supply opposition forces
with weapons.
Reports confirm that NATO special forces and military advisers to
the rebellion are on the ground in Eastern Libya.
The geopolitical and economic implications of a US-NATO led military
intervention directed against Libya are far-reaching.
Libya is among the World's largest oil economies with approximately
3.5% of global oil reserves, more than twice those of the US.
A war on Libya would have an immediate impact on the price of crude
oil. The latter has risen by 18 percent since the beginning of the
insurrection in Libya.
It currently stands at $104.42 a barrel for April delivery on the
New York Mercantile Exchange, its highest level since the financial
crash of September 2008. Since August 2010, the price of crude oil
has risen from 75.93 a barrel to 104.42 (March 2011), a hefty
increase of 37.5 percent. (See Table below) Crude Oil (petroleum)
- Monthly Price - Commodity Prices Month Value Aug-10 75.93
Sep-10 76.14 Oct-10 81.72 Nov-10 84.56 Dec-10 90.1 Jan-11 92.66
March 2011 Price for April Delivery 104. 42
Source indexmundi.com. Crude Oil (petroleum) - Monthly Price -
Commodity Prices
A war directed against Libya would push the price of crude oil up
to abysmally high levels, potentially triggering a global inflationary
spiral, which would result in the impoverishment of large sectors
of the World population.
A sizeable increase in the price of oil over a prolonged period
would wreak economic havoc: production and transportation costs
would increase dramatically. Hikes in the costs of fuel and energy
would trigger a renewed string of bankruptcies in major sectors of
economic activity. They would also contribute to a sizeable increase
in the external debt of developing countries.
These price hikes, which are already ongoing, would occur despite
the abysmally low costs of Middle East oil.
What this means is that powerful institutional speculators on Wall
Street with links to the US military and intelligence establishment
will cash in on billions of dollars in speculative gains not only
in the oil market but also in the commodity and foreign exchange
markets.
This money is appropriated from households which must now pay a
higher price for fuel.
A "humanitarian war" would be "good for business". It serves the
interests of the institutional speculators, it contributes to a
further process of appropriation of money wealth.
Financial institutions which had prior knowledge or intelligence
of events in Egypt and Libya have already made billions of dollars
in speculative gains in the futures and options markets for crude
oil.
These global financial and banking institutions, which "placed their
bets" several months ago, have "a vested interest in war". The
greater the turmoil and disruption of the crude oil market, the
greater the speculative gains. Short term speculative gains due to
market volatility are also part of this process. Foreknowledge of
the sequence of political or military events and how they affect
markets as well as control and/or manipulation of financial news
pertaining to these events are an essential part of the betting
process.
In this regard we are dealing the with workings of the World's
commodity exchanges, the most important of which is the powerful
CME Group created following the merger of the Chicago Mercantile
Exchange (CME), the Chicago Board of Trade (CBOT) and the New York
Mercantile Exchange (NYMEX).
[Click to watch Prof. Chossudovsky's statement on GRTV]
Political Rumors and Fake Information
The spreading of rumors and fake information is also a profitable
undertaking particularly in relation to short-term movements of
commodity markets:
...a rumor that Libya's long-time ruler Muammar Gaddafi had been shot tore across the commodities market, sending U.S. crude oil futures down more than two percent. Other rumors have had similar immediate and sweeping effects, even without real changes in actual oil production or reserves. The cause is oil speculators, such as hedge funds, who buy and sell commodities, profiting by betting on short-term price changes.
These traders are making money on quick movement, wagering on rumors
and market blips. They are buying and quickly re-selling commodities
they have no intention of actually holding or using. Their opportunism
is once again hitting working-class families across the country,
increasing the burden on small business owners and farmers,....
(Rep. Joe Courtney: Market Speculators and the Real Cost of Oil,
Huffington Post, March 16, 2011)
Read Chossudovsky's analysis on War and the Economic Crisis
Economic Sanctions
Economic sanctions have been imposed by the US on Libya thereby
creating havoc in the supply of Libyan oil to the European Union.
These sanctions are indirectly targeted at the European Union. They
contribute to weakening Italy and France, which are heavily dependent
on Libyan oil.
Libyan oil trade has virtually been paralysed as banks decline to
clear payments in dollars due to U.S. sanctions (Reuters, February
8, 2011) "The move follows a decision by major U.S. oil firms to
halt trade with Libya and makes it almost impossible for European
firms to buy Libyan oil and supply refineries in countries such as
France and Italy.
Banks have been instructed [by Wall Street and Washington] to freeze
financial transactions: "Banks don't want to finance the system in
Libya, so for the moment no one is getting money for oil. There are
big problems for payments," said a senior trader with a European
oil company.
"It's not a matter of choice, there is an embargo on U.S. dollars
coming in and out of Libya," said a trader with one of the firms,
referring to banks' resistance to clear payments in the U.S. currency.
"All U.S. dollar transactions are being blocked," the trader said,
adding it was not clear at this stage if payments were possible in
other currencies and whether any Swiss or European banks were willing
to conclude transactions. (Libyan oil trade paralysed, deals in
dollars blocked | Energy & Oil | Reuters, 8 February 2011)
Economic Impacts of a US-NATO Military Operation
If this military operation is carried out, oil prices will spiral,
contributing to further exacerbating the economic crisis with
devastating social consequences, particularly in the Europe Union,
which is heavily dependent on Libyan oil.
The hikes in oil prices contribute to increased poverty, they also
contribute to a concurrent increase in global food prices (which
are also the object of speculative activity on the commodity
exchanges) and more generally in the cost of living Worldwide. i.e
the consumer price index.
Wheat - Monthly Price - Commodity Prices Month Value Aug-10 246.25
Sep-10 271.69 Oct-10 270.29 Nov-10 274.37 Dec-10 306.99 Jan-11
326.54
US$ per metric ton Maize (corn) - Monthly Price - Commodity Prices
Month Value Aug-10 175.6 Sep-10 205.84 Oct-10 235.7 Nov-10
236.44 Dec-10 251.02 Jan-11 265.29
US$ per metric ton
Maize (corn), U.S. No. 2 Yellow, FOB Gulf of Mexico, U.S. price,
US$ per metric ton Wheat, No.1 Hard Red Winter, ordinary protein,
FOB Gulf of Mexico, US$ per metric ton
Maize (corn) - Monthly Price - Commodity Prices
Wheat - Monthly Price - Commodity Prices
Source indexmundi.com.
The fuel price hikes will in turn have a significant impact on the
costs of transportation, international freight and air travel. At
the height of a global economic crisis, it will further undermine
both domestic and international trade.
All this is known and understood by the major economic actors
including the politicians and the speculators. The politicians
follow the guidelines set by Wall Street, which largely call the
shots on government financial policy.
Regulation of the price of food staples or the retail price of
gasoline is considered to be an encroachment on the workings of the
"free market".
What we are dealing with is a corrupt economic system which feeds
on war and destruction.
The average price of gasoline at the pump in the US is of the order
of 3.80 a gallon, in excess of $4 a gallon in California.
The speculators applaud! The media casually blames the price hikes
on Gaddafi... "Households are cutting back on travel, cinema
visits and groceries in the UK, where prices jumped to 130.68 pence
a liter ($8.06 a gallon) on March 3, ... Prices set records in the
Netherlands and Italy. ( Record Gas Prices: $8 In Europe, $4 In
California; Trichet Could Raise Interest Rates To Halt Inflation |
Markets | Minyanville.com, March 4, 2011)
Average Gasoline Prices in the US (US$ per Gallon) State's Graph
Source Daily Fuel Gauge Report--national, state and local average
prices for gasoline, diesel and E-85. (American Automobile Association,
AAA )
States Map
Source AAA
Michel Chossudovsky is an award-winning author, Professor of Economics
(Emeritus) at the University of Ottawa and Director of the Centre
for Research on Globalization (CRG), Montreal. He is the author of
The Globalization of Poverty and The New World Order (2003) and
Americas War on Terrorism (2005). He is also a contributor to the
Encyclopaedia Britannica. His writings have been published in more
than twenty languages.
NEW BOOK:
The Global Economic Crisis
Michel Chossudovsky Andrew G. Marshall (editors)
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