Morris Beschloss 2015-07-03 02:12:51
Eliminating the oil embargo The federal government’s incomparable passion with universal climate control is throwing a roadblock into a major American breakthrough in world light-oil exports and a straight path to final energy independence. This administration’s refusal to lift such an antiquated (1974) embargo at a time of America’s proven opportunity to open the spigots of increased high-level employment and enhanced West Texas Intermediate export revenues is synonymous with the misplaced focus on Obamacare at the depth of the great financial recession. While climatological purity continues to remain an unscientific conclusion, the current administration is giving China and India a pass on effluence comeback, while overabundant WTI oil gluts keep building up in the Cushing, Okla., U.S. centralized inventories. The United States’ 140 refineries, well-equipped to process universal Brent crude from overseas, could greatly increase its derivative export shipments (gasoline, heating and air-conditioning blends, jet fuel and diesel) while exporting the surplus. This not only would greatly expand U.S. exports and increase employment, but it would free most of the developed and developing world from its decades-long dependence on Saudi Arabia and the unfriendly OPEC producers, such as Russia, Nigeria, Venezuela, Iraq, Iran and Libya. With the final veto decision controlled by the White House, the continued and inexplicable antagonism against the Trans- Canada XL oil pipeline combined with the continuance of the 1974 oil embargo only can be justified by the current administration’s economically negative resistance to guaranteed American export expansion and internal energy security. Opening the 140 U.S. refineries to their expanded capacity will produce more than enough “oil derivatives” for the U. S. automotive industries, while at the same time fulfilling the major influx of orders arriving from all parts of the world. These nations would prefer to deal more realistically with the U.S. rather than present or ex-OPEC members or even more with Russia. IS CHINA A KEY TO GLOBAL RECOVERY? It’s becoming increasingly apparent that a new chapter of Chinese growth is emerging from the unprecedented 25-year expansion that elevated the world’s most populous nation into a strong number two to the U.S., reaching an annual gross domestic product of more than $10 trillion. Although Chinese Communist Party Chairman Xi Jinping’s access to national leadership indicated concern of a fallback to the Mao-tse-Tung-type of dictatorship, the current trend seems to point to the emergence of an increasingly viable, socio-economic and global political power based on solid international status. There already are encouraging signs that the “New China” is headed to world power prominence on the basis of international respect rather than the saber-rattling and confrontation with Japan and others that seemed to concern China’s new leader’s intent. If these early signs merge into a permanent global economic leadership direction, the worldat- large will be the beneficiary. It’s no secret China’s cooling-off last year, after its long-term bombastic growth, had a severe negative price effect on key commodities such as oil, steel, aluminum and copper. A continuation of this economic diminution could have opened the gates to a new worldwide recession. But the following positive developments offer increasing encouragement: 1) The International Monetary Fund indicates China’s currency, the yuan, is on the verge of being fairly valued. This means China’s anticipated economic direction is one of rational balance between exports and internal development. 2) China is central to the development of the new Asian Infrastructure Investment Bank to rival the World Bank, partner of the United Nation’s/U.S.-created International Monetary Fund. 3) China is rushing plans to create a modern “Silk Road” to better connect its gargantuan economy with the rest of Asia, the Middle East, Africa and Europe. 4) While China’s undisputed world leadership of steel production is unassailable, its renewed purchasing of most other depressed commodities, such as copper, oil and iron ore is reversing the downward price trend so prevalent in the past year. 5) On the foreign policy front, China has met with Taiwan’s Kuomintang chairman, the inheritor of the mantle of Chiang-kai-Chek, the defeated leader of Nationalist China. This incidental, but unexpected meeting could lead to a political understanding between the previously bitter enemies. In the last few years, the economic interchange between the old and new China could indicate future mutual recognition. If these early positive developments merge into a positive flood of apparent Chinese consumer sector elevation, the second half of 2015 could well see the unexpected reversal of what had been predicted as a “global economic survival year” at best. U. S. GDP GROWTH IMPACTED The U.S. trade deficit, which had greatly improved in the wake of the great financial recession, has turned into reverse gear, capping off the first quarter of 2015 with a 43.15% deficit increase for this year over last year’s first three months. A continuing stronger dollar, export declines, delayed imports due to a West Coast ports strike and cheaper goods from abroad are impinging on previous multiyear export improvement with little deficit reversal in sight. This negative trade segment alone will depress current quarterly improvements in gross domestic product growth, which failed to reach a 1% growth in the initial months of 2015. This has led leading U.S. financial economists to lower their already weak U.S. economic performance estimates during the first half of 2015. With the U.S. greenback expected to retain its leading global strength especially in light of weakening world competitive monetary offerings, it’s expected that a surge of cheap goods of all types will flood the U.S. in the foreseeable future. One possible salutary benefit from the current currency distortion has been the global expansion of tourism and increased foreign investments in liquid, as well as tangible assets. While the strong dollar passes the cost of most commercial and industrial investments to its finished goods, America’s massive low-priced natural resources such as oil, coal and natural gas have brought such major manufacturing groups as chemical industries, which are major natural gas users, back to the U.S. from foreign manufacturing sites to which they had been transferred due to greater cost-effectiveness overseas. U.S. natural gas not only is readily available from inventory, but is much cheaper than anywhere else in the world. While the temporary disparity of a highvalue dollar and cheap foreign goods likely will depress a meaningful improvement of America’s lagging trade deficit, the emergence of America’s future natural resource export leadership in light oil, natural gas and such renewables as solar will turn the current trade gap increase back to an alltime low. MORRIS BESCHLOSS is a global economic analyst, award-winning long-term top business executive, and avid blogger for all aspects of worldwide financial, geo-political, and economic happenings.
Published by SupplyHouseTimes. View All Articles.
This page can be found at http://digital.bnpmedia.com/article/The+Beschloss+Perspective/2047951/264426/article.html.