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 Tsvi Bisk

Destroying the power of petroleum as an international commodity has benefited everyone, but especially the Jewish people. It seriously undermined the financing of international Islamic terror, reducing it to a minor tactical annoyance rather than the major strategic threat it had become. It also rendered impotent the petroleum funded nuclear weapons programs of rogue states such as Iran. These were the two biggest external threats to the existence of the Jewish People.  Nuclear weapons were a direct threat. Terror was an indirect threat as it caused policy analysts to conclude that the very existence of Israel supported by the Jewish lobby was the problem. This view was one of the components of the new anti-Semitism, poorly disguised as anti-Zionism, which had raised its head in Europe and was spreading to certain segments of American academia.

The end of oil dependence has also been beneficial for the world economy. The U.S. trade deficit has been reduced by 40%, and hundreds of thousands of well paying domestic jobs have been created.  This was in line with the 2003 National Defense Council Foundation report, which examined the price of imported oil in terms of the security costs associated with safeguarding supply. The report showed that the actual cost of oil was much higher than the price consumers saw at the pump and included such expenses as:

• Almost $49.1 billion in annual defense outlays to maintain the ability to defend the flow of Persian Gulf oil—the equivalent of adding $1.17 to the price of a gallon of gasoline. This did not include the cost of the second Iraq war. In other words, policing the Persian Gulf had cost U.S. taxpayers half a trillion dollars between the two Iraq wars.
• The loss of 828,400 jobs in the U.S. economy
• The loss of $159.9 billion in GNP annually.
• The loss of $13.4 billion in federal and state revenues annually.
• Total annual economic penalties of $297.2 — $304.9 billion.
• Periodic oil shocks over the course of the three decades from 1973 had cost the American economy $2 – 2.5 trillion (unpredictability is expensive).
• The twin towers atrocity. Osama Bin Laden has publicly indicated that the World Trade Center attacks were a response to the U.S. “occupation” of Saudi Arabia. The American military presence in Saudi Arabia existed to defend the house of Saud, an undemocratic regime that guarantees the United States access to Saudi Arabian oil. The September 11 attacks resulted in more than $200 billion dollars in direct and indirect economic losses.

  Tsvi Bisk interviewed on i24

In 2006, the price of a barrel of oil was triple that of 2003. If all these hidden costs had been included in the real cost of oil (and not indirectly subsidized by the American taxpayer), a gallon of gasoline refined from Persian Gulf oil would have cost over $10.00. When these facts were laid before the American people and driven home in an unrelenting daily PR campaign by grassroots lobbyists, the ground swell of public opinion against oil dependence became implacable. Jewish activism in this campaign was not primary and we Jews should not even pretend to take credit for the results.  A vigorous and growing coalition of social forces was already in existence. But when the full force of the Jewish lobby joined the general social alliance for energy independence it was a vital “tipping point” in the battle to free the West from hostile and unstable energy sources.

The industrial might of the United States was mobilized in a manner not seen since World War II. By 2010, a new coal-liquefaction plant (a coal-fired power plant that uses a carbon-neutral process to convert coal into a liquid fuel) producing 30,000 barrels of fuel a day (at $40 a barrel) was being installed every month in the United States.  This was adding 360,000 barrels of daily production every year.  Thermal and catalytic depolymerization units that produced the equivalent of a thousand barrels of fuel from sewage and garbage were being installed daily.  This was adding 365,000 barrels of daily production a year.  Plug in hybrids, flex fuel engines (engines capable of using ethanol or methanol mixed with conventional gasoline), household energy conservation and increased use of wind, solar and geothermal energy were conserving an additional 300,000 barrels of daily consumption of oil every year.  Ethanol production from agricultural waste and bio-diesel from the food processing industry was adding the equivalent of 100,000 barrels of daily production of fuel a year. By 2010 more than 1,100,000 barrels of daily production of oil was being taken off the international market each year by the lower 48 States alone.

Given its greater dependence on imported oil, the European Union has benefited even more from this new energy reality.  But the developing world, especially Africa, has benefited the most. Oil price fluctuations – caused by the OPEC oil boycotts of the 1970’s and subsequent instability in the Middle East in the 90’s and early 21^st century –had a devastating effect on the African economy and played a major role in turning Africa into an economic basket case.

Once energy had been identified as the keystone of international development strategy North America, the European Union and Japan began devoting 50% of their foreign aid to making “third world” countries energy independent and thus immune to the world energy price fluctuations. As a consequence sub-Saharan African, Southeast Asian and Latin American countries have all become energy independent. Moreover some of these countries have become major energy players themselves by developing huge exports in ethanol and butanol. Equatorial countries have a tremendous advantage in growing sugar cane which produces 8 units of energy for every one unit invested as opposed to corn – the major feedstock for ethanol in the United States – which produces 1.3 units of energy for every unit invested.

In the United States the African American and Hispanic communities supported by the Jewish and environmental lobbies joined forces to pressure for an end of all import taxes on ethanol and butanol.  As late as 2007 the American import tax on ethanol from relatively friendly countries was 54 cents a gallon while the tax on imported oil from hostile countries was zero!  This new ethanol/butanol policy was multi-dimensional. It helped liberate the United States and much of Europe from OPEC intimidation and radically decreased the funds available for terror and anti-western propaganda. It also generated a huge export industry in the poorest countries in the world (and has been a major factor in the African economic renaissance) and it was better for the environment. Today over 50% of the vehicles in the United States, the European Union and Japan have flex fuel engines that run on E85 (a mixture of 85% ethanol and 15% gasoline). By 2030 this will grow to 90%.  In the newly industrialized countries of China and India it is already 90%.  And since India can grow sugar cane and make gasoline from liquefied coal as well as exploit its huge potential for solar power it has also achieved energy independence.

The removal of the American import tax on ethanol took effect in 2009 after the 2008 Presidential elections.  American agri-business – with tremendous interests in corn based ethanol – mounted a massive campaign against the elimination of the tax.  But politicians know how to count and when the lobby for elimination of the tax represented almost 100 million Americans (Hispanics, Blacks, Jews and environmentalists) both Presidential candidates, and all congressional and Senate candidates outdid themselves in promising to do away with the tax.  It was eliminated in the first 100 days of the new presidential term of office.

The United States became completely energy independent this past year (2020) through a combination of conservation, alternative energy (solar, wind and geothermal), gasification and liquefaction of coal, and various technologies that turn carbon-based waste (sewage, manure, garbage, plastic, rubber, agricultural, etc.) into usable diesel and gas. The United States had already become relatively energy independent by 2015 – its sole oil imports being from fellow NAFTA members Canada and Mexico. As early as 2009, the projected end of US energy dependence had enabled greater geo-political flexibility as well as greater adherence to democratic values. The era of pretending to be friends with thugs or of being intimidated by them because they sat on vast reserves of oil was finally over.

China, with its vast coal deposits, immense amount of rice and wheat straw (as ethanol feed stocks) and human waste also employed similar technologies and policies to achieve energy independence. With the United States and China becoming energy independent, large supplies of oil have been diverted to Japan, Korea and Taiwan (which had also drastically reduced oil consumption by conservation and use of bio-diesel technologies). These countries presently receive all their remaining energy imports from Russia, Canada and Mexico and not OPEC.  The European Union’s remaining oil and gas imports also come from non-OPEC countries such as Russia, Mexico and Brazil as well as West Africa.

The residual resentment against OPEC for its past boycotts and cartel behavior enabled the EU and Japan to procure oil from other suppliers when it became possible. OPEC had been banking on emerging markets such as China and India but, as noted, these countries are no longer in need of OPEC oil.  This has so weakened the resented organization that Nigeria and post-Chavez Venezuela left it in order to guarantee their markets. OPEC has become another weak Moslem organization similar to the Arab Boycott in effectiveness. From pumping 35% of the world’s daily oil supply in 2006 it now pumps less than 10%.  From threatening markets it now begs for markets.

Practical Consequences

These developments enabled the West to stop ignoring the central role that Saudi Arabia had been playing in terror. In 2009, after the formation of OPCC (Organization of Petroleum Consuming Countries) a subtle reverse oil boycott was put into operation.  The West began to slowly lessen its oil purchases from Saudi Arabia, quickly dethroning it as the biggest oil exporter in the world.  By 2012 it was no longer the chief indirect financier of international Islamic terror and direct financier of anti-Western and anti-Semitic propaganda. Today exports from the Gulf (Saudi Arabia, Iran, Iraq, and Kuwait) are less than 6 million barrels a day and declining.

Ironically, the drastic downgrading of oil as an international commodity cleared the way for healthy economic, political and social developments in most of the Middle East as well as elsewhere.  Petroleum producing countries were no longer capable of ignoring global developments and international standards of governance and behavior.

In 2008, the US, EU and Japan – relying on 4 billion barrels of oil in the strategic oil reserve of the International Energy Agency (IEA) www.iea.org instituted a reverse oil boycott on Iran. Within a year, Iran’s oil exports were cut by half and by the beginning of 2009 were less than a million barrels a day (down from two and a half million barrels). The IEA was capable of releasing over two million barrels a day for over three years. This action quickly deprived Iran of the means to continue its nuclear development program. It also helped tame North Korea, which had been greatly dependent on Iranian purchases of their missile and weapons technology for the little foreign currency they had.  Iranian financing of Hezbollah (never popular amongst the mass of young educated Iranians) also dried up. This had a great stabilizing effect on the Israeli-Arab conflict and was a key factor in the comprehensive peace agreement between Israel and Syria/Lebanon in 2009. This in turn defanged Hamas and generated a more pragmatic attitude amongst the Palestinian population which, along with other developments, generated a “modus vivendi” that continues to this day.

In 2009, its economy in collapse and its impoverished population furious, Iran underwent a second revolution. The army, intellectuals and business community became infatuated with the Turkish model of modernization and governance. The catchphrase of this second revolution was “where is the Iranian Ataturk”? Iran has since become a constitutional republic. The mullahs were relegated to their pulpits and deprived of secular power. Iran established close ties with the United States and Europe and adopted an international policy aimed at integrating into the global economy and contributing to global political stability. In 2010 it cut off all ties with terrorist organizations and in 2013 it re-established relations with Israel.

The War on Terror and international Jihadism was not won by the direct strategy of armed intervention, but rather by the indirect strategy of destroying oil as the major international commodity. Today it is a commodity on a par with coffee, sugar and tea in terms of its impact on geopolitics, and as we know, the price of tea has never held the world hostage!

Somewhat paradoxically, the standard of living of most of the people in the former oil powers is now higher than it was at the peak of OPEC’s power. Juan Enriquez, the author of As the Future Catches You (Crown Publishing Group, 2000) would have predicted this outcome without difficulty. In his book he shows that countries that depend on commodities are guaranteed a future of poverty, for several reasons:

Increased productivity and professional management had reduced the real value of commodities and natural resources in 2000 to one fifth of what they were 150 years previously. Petroleum was a minor exception. However, the $80 a barrel oil of 2006 was still not equivalent, in real terms, to the $48 a barrel oil of 1979.

When you have natural resources, you invest in them. When you lack them you invest in your human resources.  When 70% of gross world product is the knowledge economy, investment in human resources gives a much greater return. Countries rich in natural resources are more likely to be ruled by corrupt and incompetent thugs or religious fanatics. Dependence on human creativity and ability requires freedom and constitutional protections.  In the global knowledge economy, democracy is no longer just an ideal, it is an economic necessity. The economic situation of Saudi Arabia had already proved Enriquez’s thesis. Its per capita income was $18,000 in 1982 and $9,000 in 2006.

Being deprived of the economic power of their natural resource, former oil producing powers have had to reform in order to be accepted into the new global order or sink into poverty. This deprived political bullies of the ability to disturb the global order. Russia also had to reverse the authoritarian trends of Putin, made possible by the post 9/11 windfall oil income. Chavez of Venezuela was marginalized and lost power as the Venezuelan middle and professional classes – the only real source of development – re-asserted themselves. This finally ended Peronian populism in Latin America. All Gulf oil powers have had an attack of reform, except Saudi Arabia – still dominated by Wahabi fanaticism – which, while turning its back on the world, no longer has the power to affect it negatively.

 

Go to this LINK for the rest of Chapter 12

Tsvi Bisk

 

 tsvi bisk author, consultant and all around good guy.