An oil saviour?

Iraq has the potential to supply much more oil

The growing concerns in the world energy market about the risks of a supply crunch have been a critical factor behind the recent surge in oil prices to a new record of US$135/barrel. Speculators are betting huge sums on the assumption that the oil market (and other primary energy markets) will remain tight for many years to come, owing to the inelasticity of demand and to the constraints on long-term supply. Saudi Arabia, the world's largest oil exporter, is doing its bit to allay these concerns, but has acknowledged that once its current crop of oilfield projects is complete in around 2013, there will be little scope for further capacity increases. Similar strains are evident in most of the other major oil-producing countries. One significant exception is Iraq, which holds (at least) 10% of the world's proven reserves, but accounts for only 2.5% of total production. Iraq has the potential to furnish a long-term solution to the oil market's long-term supply problem, but it will need to improve dramatically on its recent performance before buyers of oil futures will be convinced that it can deliver.

If history had been kinder, Iraq could now be producing at a comparable level to Saudi Arabia. Instead, three wars, 13 years of sanctions and five years of internal conflict have eroded Iraq's oil infrastructure and human capital. However, Iraq also has a history of recovery. Production peaked at over 3.5m barrels/day (b/d) in 1980 on the eve of the Iran-Iraq war, but then averaged less than half that level during the eight-year war. It had nearly recovered to 3.5m b/d in 1990, after which the invasion of Kuwait and the subsequent UN sanctions severely limited exports, and hence production. In the five years before the US-led invasion of 2003, the sanctions regime gradually permitted greater exports, and production was often above 2.5m b/d. However, it fluctuated considerably due to the impact of years of underinvestment, restrictions on the import of spare parts and isolation from the international oil industry. ...

Read More...

[Source: The Economist: News analysis

VA Opposes Much of Bill to Improve Care for Women Veterans

by Les Blumenthal McClatchy Newspapers 5-22-2008 Department of Veterans Affairs officials said Wednesday that they oppose much of a Senate bill to improve care for female veterans even as the number of women seeking VA medical services is expected to double within the next five years.A top VA official admitted during a Senate Veterans Affairs Committee hearing that [...]

Read More...

[Source: War On You

Australia's budget

Tax cuts in Labor's first budget

Australia's Labor government unveiled its first budget on May 13th. The new government's main goals in crafting the budget were to reward the electorate with tax cuts and to keep spending under control in order to curb inflation. A raft of tax breaks and benefits, especially for working-class households, will shift some of the tax burden to high-income earners while reducing taxes overall by A$46.7bn (US$43.5bn) over the next four years. At the same time, government spending is set to increase only by a modest 1.1%, resulting in a projected budget surplus of A$21.7bn. The government also plans to delay a significant portion of its spending until next year, when both economic growth and inflation are set to ease.

The 2008/09 budget represents the new Labor administration's first difficult policy test. Since taking office after winning the federal election in November, the prime minister, Kevin Rudd, has fulfilled several high-profile election pledges?including an official apology to Aborigines, ratification of the Kyoto protocol on greenhouse-gas emissions and a decision to reduce military involvement in Iraq. These measures demonstrated that the new government is more in touch with the electorate, but they were successes in part because they produced a "feel-good" effect without requiring immediate sacrifices. Crafting a budget that would fulfil campaign pledges to cut taxes while keeping inflation under control was a task of a different order, presenting genuine dilemmas as the government sought to balance the interests of various political constituencies and conflicting economic imperatives. ...

Read More...

[Source: The Economist: News analysis

Gloves off in Lebanon

New clashes between the government and Hizbullah

Lebanon has taken another lurch towards civil war, following the most serious conflict thus far between the government of Fouad Siniora, the Western-backed prime minister, and the opposition, which is led by Hizbullah, the Shia political and military movement backed by Iran and Syria. Developments in Lebanon could have significant regional implications, as any move by Hizbullah to extend its physical control over large parts of the country, notably including Beirut's international airport, would be likely to elicit a strong reaction from Israel and from pro-Western Arab states. Hizbullah's leader, Sayed Hassan Nasrallah, has reiterated his assurance that the group will not use its weapons against other Lebanese parties, but the scope for any political resolution of the conflict has perceptibly narrowed.

Hizbullah and its principal ally, the Free Patriotic Movement (FPM) of Michel Aoun, a Christian former army commander, started their campaign against the Siniora government at the end of 2006, with the ostensible aim of forcing a redistribution of executive power in favour of the parliamentary minority. Behind this argument about cabinet seats lay a number of bigger questions: the position of the Shia in the Lebanese political system; the role of Hizbullah's armed forces; Syria's interest in reasserting control over Lebanon and in subverting the operations of the tribunal on the assassination of Rafiq al-Hariri, a former prime minister; and Iran's ability to project its influence through regional allies. ...

Read More...

[Source: The Economist: News analysis

McCain promises billions in spending

Republican John McCain is making promises that would cost billions of taxpayer dollars, yet he is vague about how he would pay for them.

McCain is handing around a campaign grab bag of goodies. There are little treats like a summer...

Read More...

[Source: Ron Paul forum

On the brink

Venerable newspapers face extinction

THE New York Times once epitomised all that was great about American newspapers; now it symbolises its industry?s deep malaise. The Grey Lady?s circulation is tumbling, down another 3.9% in the latest data from America?s Audit Bureau of Circulations (ABC). Its advertising revenues are down, too (12.5% lower in March than a year earlier), as is the share price of its owner, the New York Times Company, up from its January low but still over 20% below what it was last July. On Tuesday April 29th Standard & Poor?s cut the firm?s debt rating to one notch above junk.

At the company?s annual meeting a week earlier, its embattled publisher, Arthur ?Pinch? Sulzberger, attempted to quash rumours that his family is preparing to jettison the firm it has owned since 1896. Carnage is expected soon as dozens of what were once the safest jobs in journalism are axed, since too few of the staff have accepted a generous offer of voluntary redundancy. ...

Read More...

[Source: The Economist: News analysis

Making the grade

Brazil gets recognition for improved economic management

Investment-grade status, which was awarded to Brazil?s foreign-currency-denominated debt on April 30th by Standard & Poor?s, one of the main US credit rating agencies, is an acknowledgment of the important progress achieved in macroeconomic management and of a substantial improvement in external solvency ratios. Indeed, with reserves close to US$200bn, Brazil has become a net external creditor. Nevertheless, weaknesses persist, as the government has confirmed its intention to keep increasing public spending as part of its state-led development policies.

The quest for investment grade was so long and fraught with difficulties that financial markets were taken somewhat by surprise when Standard & Poor?s (S&P) raised Brazil?s long-term foreign-currency credit rating from BB+ to BBB- on the eve of the May 1st Labour Day holiday. Even though some investors thought the upgrade had been long overdue, few expected it to materialise before the end of the year due to current global uncertainty. The Latin American giant is now on par with India, according to S&P?s ratings, but still two notches below the ratings given to Russia and Mexico, and far below that of China. ...

Read More...

[Source: The Economist: News analysis