Pessimist or a Realist? Our Present Situation – Part 3, by The Lone Canadian

(Continued from Part 2.)

On the other side of the world….kind of….depending on how you look at it, China continues to make aggressive moves toward Taiwan. Much like Russia with the Donbas region, their claim is repatriation, not invasion. President Biden has stated on more than one occasion that we will put troops on the ground to help the people of Taiwan, although every time he says it, the white house tries to walk it back after the fact. You’d almost think that they are confused over what their course of action would be. But that might just be their plan to confuse the enemy. I mean heck, if they don’t even know what they’re doing, there’s absolutely no way that China could figure out what their plan is.

All kidding aside, this is potentially one of the gravest threats that we face. China is a true world power, and has made inroads with a great number of countries, especially in south America and Africa. They are a financial powerhouse, although I am seeing more reports lately of some possible financial weakness. Whether that is actually true, or just the wishful thinking of western media sources, I can’t say. What I do know is that Covid-19, and their response to it have hit the country hard. It has impacted their manufacturing ability, and their exports. But that has also affected the rest of the world as well, with their dependence on cheaply manufactured goods from China as a part of their economies.

Whether they are suffering from some internal financial instability or not, China remains a major force to be reckoned with. As mentioned earlier, there are huge American investments in Chinese stocks. By simply denying access to this money, they could cause a crisis in America. They could bankrupt many companies and pension funds. They may even be able to crash the stock market, or the banks. They don’t necessarily need to even fight a conventional war if they can exert control through financial means, or by denying us access to their manufactured goods. Between Taiwan and China they produce about 50% of the world’s microchips, depending on what chart you look at. Some show Taiwan producing as much as 60% by themselves. (And as much as 90% of the world’s super advanced chips.)

Without Taiwan-produced microchips, America slowly grinds to a halt, and the idea of going to war over that supply is very real. However, fighting a war without having a constant supply doesn’t work in this day and age. Jets don’t fly, and missiles don’t work without microchips. So once again we see the tangled web that we find ourselves in. We are in many ways financially dependent on a country that we are threatening to go to war with. We need their manufactured goods to be able to go to war with them.

Another facet of this world-wide drama concerns China and the energy crisis. As China once more gets back to work their demand for energy (oil and gas especially) will increase. They have already made agreements with Russia to purchase oil and gas from them. We, that is NATO countries, have put sanctions on Russian oil and gas, and have somehow decided that we can put a price cap on Russian oil and gas sales. Given that we are, at present, in a proxy war with Russia, I’m really not sure how we figure we get to dictate to them what price they can charge. What are we going to do if they defy us – put sanctions on them? And even if they do go along with the price cap, what happens when they won’t accept petro-dollars in exchange. What if they demand gold? Then the petro-dollar collapses and the price of gold skyrockets? Just the deal with China alone pretty much negates the sanctions, but all the countries that have signed on to BRICS will be able to access Russian oil and gas as well.

BRICS is an acronym for five leading emerging economies: Brazil, Russia, India, China, and South Africa. And there are more countries that have expressed interest in joining. Those five countries represent over 40% of the world’s population, and if united present a formidable challenge to continued western hegemony.
Forgive me if I seem to be jumping around, from war to finances, to the energy crisis, but it’s hard to look at one area without seeing all the interconnects with other areas.

Back to wars and rumors of wars. North Korea has been aggressively pursuing a nuclear program for years, and there is little doubt in the global community that they do in fact have nuclear capability. They have recently been testing delivery systems. They have been shooting missiles very close to their border with South Korea, and even one that came close to Japan. This has prompted South Korea to increase its military readiness, and for them to participate in a massive war game with the United States for the first time in several years. It has also prompted President Biden to increase our naval presence in the area. For many years North Korea wouldn’t make any moves on the world stage without at least the tacit approval of China. That may still be the case, but with the new regime in Pyongyang one can no longer be certain.
Israel and Iran – no surprise there. They’ve either been at war or on the brink of war for as long as I can remember.

The latest developments in this decades long conflict seem to be edging them once more toward open hostilities. The biggest news seems to be that Iran has now enriched uranium to a 60% level. It’s my understanding that they need 90% for a nuclear weapon.  Benjamin Netanyahu is once more the prime minister of Israel, and he has sworn that they will never allow Iran to possess a nuclear weapon. To make things even more interesting Russia and Iran have entered into an alliance of some sort. Russia has been providing “unprecedented military support” to Iran in exchange for drones, which they have been using against the Ukraine. Does “unprecedented military support” mean they are helping Iran with their nuclear program? Does it mean that Iran is now under the protective nuclear umbrella of Russia? I haven’t seen any real clarification on this, and exactly what it means, but I’m willing to bet that it’s not good news.

Another side note relating to this: If hostilities were to break out in the area, Iran has the ability to close off the Strait of Hormuz. The strait is the only shipping channel in and out of the Persian Gulf, and by closing it off the Iranians could effectively shut off the supply of oil from the middle east. The result of that would put the energy crisis that we are seeing now into overdrive.

The Energy Crisis

This has so many sides, and nuances that it’s just plain confusing in its complexity, and in some cases it’s outright stupidity. Much of the current energy crisis is being blamed on Vladimir Putin and the war in Ukraine, and there is no doubt that it has had an effect, but it can’t be blamed for all of it. The energy crisis has been building for a long time, and the root cause seems to be a new religion called “Climate Change”. This new religion has been taking hold over the past decade or so, and its adherents seem to be almost fanatical in their pursuit of a carbon neutral world. I’ll talk more about the new religion later on, but for now, lets stick with the energy crisis.

Some of the energy crisis is real, some is manufactured, and some is self-inflicted. The latest word is that we reached “Peak Oil” in 2015. Now, peak oil in this sense means peak oil production, not peak oil demand. And this is where it starts to get complicated. Did we actually reach peak production, or did we simply stop looking for new fields and better ways to extract it because we had a surplus at that time? Did governments make it onerous financially to produce more because they had started to embrace the new religion? A good example of this is the United States.

Under President Trump the U.S. was energy independent, and a net exporter of oil and gas. Two short years later, under President Biden, that independence has evaporated, and we are begging other counties for oil. New policies have created a self-inflicted crisis. We see the same thing in Europe, especially with Germany. They have embraced the green energy policy, and as a result have shut down all of their coal generation, and all but one of their nuclear power plants, making the choice to depend on cheap Russian oil and natural gas. Now, with sanctions against Russia they are looking at possible blackouts, and a lack of heating for their population. Again, self-inflicted.

Some of the crisis is manufactured. Some oil exporting nations are hostile to the U.S. Some countries that used to be our friends, are now, at best, ambivalent acquaintances due to the changes in political climate. They will not go out of their way to help the U.S. and have put their own interests first. President Biden approached Saudi Arabia earlier this year to ask them to increase production. They told him, pretty bluntly, that it was not possible. Now was this because they have in fact reached peak production? Was it because our friendship with the Saudi’s had cooled since President Biden took office? Was it because increasing oil exports would drive the price down, and make it less profitable for them? Or was it because Russia is a member of OPEC+, and NATO, led by the United States has imposed sanction against them? It could be any one of those, or a combination. The end result was that OPEC wasn’t going to increase oil production/exports. Manufactured shortage.

The other side of the manufactured shortage has to do with the Green Energy movement. Over the last couple decades, the energy sector (fossil fuels) seems to have become the pariah of the western world. They went from being a leading industry that nations were proud of to undesirables out to destroy the planet. And it only seemed to inflame the international community even more because they were dependent on those fossil fuels. As a result, governments and international bodies have done their best to make it more difficult for energy companies to operate. Through taxation, and legislation, and regulation they have continued to make it less and less profitable – blatantly ignoring the fact that the green energy agenda that they were pushing was decades away from being able to replace fossil fuels.

This has created a situation where energy companies have stopped exploration and development. They have not built new pipelines or refineries. We have continued to do “upgrades” to operating refineries, but we haven’t really built a new one in over a decade, and some were originally built in the 70’s and 80’s. They are running at full capacity. It’s very hard for oil companies to invest huge amounts of money in building a new refinery when the universal chant seems to be, “We are going to put you out of business!” Even if they wanted to take the chance it is doubtful they would be able to get the needed permission due to regulations and legislation in the present political climate. By continuing to make it more and more difficult for the energy industry we have manufactured a crisis.

(To be continued tomorrow, in Part 4.)