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Steep Oil Prices, Food Shortages Will Likely Spark Deadly Riots This Year

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The Year of Living Dangerously: Rising Commodity Prices and Extreme Weather Events Threaten Global Stability

By Michael T. Klare

Get ready for a rocky year. From now on, rising prices, powerful storms, severe droughts and floods, and other unexpected events are likely to play havoc with the fabric of global society, producing chaos and political unrest. Start with a simple fact: the prices of basic food staples are already approaching or exceeding their 2008 peaks, that year when deadly riots erupted in dozens of countries around the world.

It's not surprising then that food and energy experts are beginning to warn that 2011 could be the year of living dangerously -- and so could 2012, 2013, and on into the future. Add to the soaring cost of the grains that keep so many impoverished people alive a comparable rise in oil prices -- again nearing levels not seen since the peak months of 2008 -- and you can already hear the first rumblings about the tenuous economic recovery being in danger of imminent collapse. Think of those rising energy prices as adding further fuel to global discontent.

Already, combined with staggering levels of youth unemployment and a deep mistrust of autocratic, repressive governments, food prices have sparked riots in Algeria and mass protests in Tunisia that, to the surprise of the world, ousted long-time dictator President Zine al-Abidine Ben Ali and his corrupt extended family. And many of the social stresses evident in those two countries are present across the Middle East and elsewhere. No one can predict where the next explosion will occur, but with food prices still climbing and other economic pressures mounting, more upheavals appear inevitable. These may be the first resource revolts to catch our attention, but they won't be the last.

Put simply, global consumption patterns are now beginning to challenge the planet's natural resource limits. Populations are still on the rise, and from Brazil to India, Turkey to China, new powers are rising as well. With them goes an urge for a more American-style life. Not surprisingly, the demand for basic commodities is significantly on the rise, even as supplies in many instances are shrinking. At the same time, climate change, itself a product of unbridled energy use, is adding to the pressure on supplies, and speculators are betting on a situation trending progressively worse. Add these together and the road ahead appears increasingly rocky.

Breadbaskets without Bread

Let's begin with food, the most important and volatile of these commodities. Food prices declined in October 2008 after the onset of the global financial crisis, but that seems to have been an anomaly. The December 2010 ndex of global food prices compiled by the U.N.'s Food and Agricultural Organization (FAO) hit a record 215, one point higher than in the spring of 2008. (In that index, based on a "bundle" of food staples, a baseline of 100 represents average prices in 2002-2004.) In fact, some food products, including sugar, cooking oils, and fats, are now trading substantially above their 2008 levels; others, including dairy products, grains, and meat, are inching perilously close to record levels.

As 2011 begins, food experts fear that, within months, prices for key staples will climb above the 2008 threshold and stay there, causing extreme hardship for poor people around the world. "We are at a very high level," said a worried Abdolreza Abbassian, an economist at the FAO. "These levels in the previous episode led to problems and riots across the world."

Of particular concern to Abbassian and his colleagues is the rising cost of corn, rice, and wheat, the staple crops of billions in many of the poorest countries. According to the FAO, by the end of 2010 international corn and wheat prices were already approaching their 2008 peak levels (about $260 and $340 per metric ton, respectively).

Analysts attribute the rise in grain prices to growing demand in both developed and developing nations, along with a number of cataclysmic weather-related events and speculation by investors. An extreme drought and fierce fires last summer destroyed a large percentage of the wheat crop in Russia and Ukraine, while heavy flooding in India and the inundation of 20% of Pakistan damaged significant parts of the grain output of those countries. At the same time, unusually hot and dry weather suppressed production in a number of other key farming areas.

What makes the picture look so worrisome today are indications that the severity and frequency of extreme weather events appear to be on the rise. In the past few weeks alone, several such events point the way to serious supply problems ahead. Most significant has been the unprecedented rainfall and flooding in Australia that put an area more than twice the size of California largely underwater, significantly disrupting wheat cultivation there. Australia is one of the world's leading wheat producers. Unusually dry conditions in the American Midwest and Argentina have also hinted at future problems in grain and corn output. It's still too early to predict the size of this year's grain and corn harvests, but many analysts are warning of a shortfall in supplies, along with sky-high prices.

Mainstream analysts and government officials are loathe to attribute this traffic jam of extreme weather events to global warming. Huge variations in rainfall can be normal, especially in places like Australia that are susceptible to El Niño/La Niña ocean-temperature oscillations, and politicians are fearful of assuming responsibility for a problem as massive as climate change. But climate change theory has long suggested that the warming trend -- 2010 tied 2005 for the warmest year on record and nine of the 10 warmest years have come in the last decade -- will be accompanied by an increase in the frequency and severity of storms. It's hard to escape the conclusion that recent events, including those Australian floods, are tied to rising global temperatures.

The Energy Crisis Returns

Soaring food prices are being driven as well by speculative investments and the rising price of oil. Partly in response to the diminishing value of the dollar, some investors are sinking their money into food futures (along with gold and silver) as a speculative hedge. At the same time, the price of oil is edging toward the $100 mark, making it increasingly profitable for farmers to switch from growing corn for human consumption to growing it for the manufacture of ethanol, which in turn reduces the amount of farm acreage devoted to staples. Oil would have to fall below $50 per barrel to make the cultivation of corn as a food product competitive with ethanol production -- and that's not likely to happen. So even if more corn is produced this year, less will be available for food purposes and the price of what remains is bound to rise.

The precipitous rise in oil prices has startled the experts. Not so long ago, the U.S. Department of Energy (DoE) was projecting a price range of $70-$80 per barrel in 2011, but as the year began oil was already trading above $90 a barrel and some analysts predict that it will reach $100 before the year is out. A few are even talking about the $150 barrel and gas prices at the pump of $4 or more. If prices climb above $100, global consumer spending could take another nosedive.

"Oil prices are entering a dangerous zone for the global economy," says Fatih Birol, the chief economist for the International Energy Agency (IEA). "The oil import bills are becoming a threat to the economic recovery."

As with food, the rising cost of oil is a product of growing demand, insufficient supplies, and speculative investments. According to the most recent projections from the IEA, daily global oil consumption in 2011 will average 87.4 million barrels, an increase of about two million barrels from the first quarter of 2010. Much of the extra demand is coming from China, where a newly-minted middle class is buying automobiles at a record clip, as well as from the United States, where previously cautious consumers are slowly returning to pre-2008 driving habits.

At a time when the oil industry is experiencing declining rates of output at many existing oil fields and finding it ever more difficult to add production, even two million extra barrels per day can be a daunting challenge (and greater demand is expected in the coming years). In the United States, for example, much hope was placed in oil exploration in the deep waters of the Gulf of Mexico and offshore Alaska, but in the wake of the BP disaster, this seems like a forlorn prospect. Production in Mexico and the North Sea, two bright spots of recent years, is facing a sharp decline, while other key producers, including those in the Middle East, are struggling to maintain current output levels at existing fields.

Many energy analysts believe that the world is at (or will soon reach) peak oil -- the moment when global petroleum output achieves a maximum sustainable daily rate and begins a long-term, irreversible decline. Others contend that higher levels of output are still possible. Whatever the truth of the matter, at this moment the oil industry is finding it increasingly difficult, and ever more costly, to boost output above current levels. This, combined with insatiable demand, is driving prices skyward.

Under these circumstances, speculators are again being drawn into the oil market as a rare sure bet. Such speculators helped push oil prices to a record $147 per barrel back in 2008, but fled the market when prices crashed as the American economy headed to a meltdown. Now, they're coming back. "Hedge funds and private investors are buying up financial instruments tied to the price of crude, and thereby helping push up oil prices," the Wall Street Journal reported in late December.

Most analysts are expecting a price surge this spring or summer when American motorists hit the road. "We will have a spring rally that will take us to between $3.10 and $3.50 a gallon for gasoline at service stations in the United States," predicted Tom Kloza, chief oil analyst at the Oil Price Information Service.

The rising price of gas will, in turn, hurt consumers just as they show signs of opening their wallets again. No less worrisome, oil-importing countries like the United States, Japan, and many in Europe will face soaring bills for fuel imports, further enfeebling economies already suffering from profound weakness.

According to some calculations, oil prices added another $72 billion to America's mammoth balance-of-payments deficit last year. Europe had to cough up an additional $70 billion for imported oil and Japan $27 billion. "It is a very telling story," says the IEA's Fatih Birol of recent oil-price data. "2010 rang the first alarm bells and 2011 price levels could bring us to the same financial crisis times that we saw in 2008."

Rising food prices leading to riots, protests, and revolts, mounting oil prices, mammoth worldwide unemployment, and a collapsed recovery -- it looks like the perfect set of preconditions for a global tsunami of instability and turmoil. Events in Algeria and Tunisia give us just an inkling of what this maelstrom might look like, but where and how it will next erupt, and in what form, is anyone's guess. A single guarantee: we haven't seen the last of resource revolts which, in the coming years, could reach an intensity we scarcely imagine today.

Michael T. Klare is a professor of peace and world security studies at Hampshire College in Amherst, Mass., and the author of Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency.

http://www.alternet....iots_this_year/

Edited by 8TBVBN

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Oh Joy, there is nothing more foolish than wasting energy to produce ethanol. Oooooh lets dump one unit of energy into it and get 1.34 out...brilliant.....not.

Yep. We could be quickly shifting our country's energy needs to sustainable methods if there wasn't such a stubborn opposition to it.

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Yep. We could be quickly shifting our country's energy needs to sustainable methods if there wasn't such a stubborn opposition to it.

If only Jonathan Swift was a scientist instead of a writter. I'm sure he could have come up with something :innocent:

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total_cost_of_federal_incentives_for_energy_development_through_2003-3cats.png

total_cost_of_federal_incentives_for_energy_development_through_2003-1.png

As you can see from these two graphs, the U.S. government's investment in non-fossil fuel sources has been proportionally quite low during the last 50 years. While the graphs don't represent any progress that's been made since, the general trend they illustrate is a disturbing one. (Read some more analysis here.)

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VENEZUELA #1 -- Claims 297 Billion Barrels of Proven Oil Reserves

CARACAS – Venezuela holds 297 billion barrels of proven oil reserves, Energy and Petroleum Minister Rafael Ramirez said.

“At the end of 2010, we had a level of 217 billion barrels of oil, and now, at the start of this year, we are in a position to certify 297 billion barrels,” he told reporters Wednesday from his office in Caracas.

The minister recalled that in 1998, when President Hugo Chavez was elected for his first term, the country had 75 billion barrels of oil reserves, “35 billion of them wrongly classified as bitumen from the Orinoco Belt” in eastern Venezuela.

Of the current total of 297 billion barrels, 220 billion are located in the Orinoco Belt, “which gives us a solid footing for our entire expansion plan in the oil production area,” Ramirez said.

The minister said Venezuela’s natural gas reserves totaled 195 trillion cubic feet thanks to offshore drilling campaigns in the giant Perla field.

Ramirez said he was pleased that Venezuela will complete 100 years of oil production, but he added that, “unlike many countries that have exhausted their base of reserves,” the South American nation’s reserves continue to grow.

http://www.laht.com/article.asp?ArticleId=384650&CategoryId=13280

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Brazil Oil Fields May Hold More Than Twice Estimates

Brazilian oil deposits below a layer of salt in the Atlantic Ocean hold at least 123 billion barrels of reserves, more than double government estimates, according to a university study by a former Petroleo Brasileiro SA geologist.

The research, which set out to show government figures were too optimistic, found they underestimated the area’s potential, said Hernani Chaves, a professor at the Rio de Janeiro State University who worked at Petrobras for 35 years. The forecast, which the study puts at a 90 percent probability, compares with the Brazilian oil regulator’s 50 billion-barrel estimate.

“We started with a skeptical view and finished with bigger numbers,” Chaves said in an interview at the university in the city of Rio. “When we got the first results I said: ‘Something is wrong, it’s too big.’”

Petrobras, which currently has 16 billion barrels of proven reserves, is investing more than $200 billion in five years as it taps the so-called pre-salt fields lying two miles below the ocean surface and another two to four miles beneath the seabed. The deposits include the Americas’ two largest oil discoveries since Mexico’s Cantarell in 1976. Royal Dutch Shell Plc, Repsol YPF SA and Exxon Mobil Corp. also operate blocks in the area. BG Group Plc and Galp Energia SGPS SA hold minority stakes.

http://www.bloomberg.com/news/2011-01-19/brazil-oil-fields-may-hold-more-than-twice-estimated-reserves.html

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VENEZUELA #1 -- Claims 297 Billion Barrels of Proven Oil Reserves

CARACAS – Venezuela holds 297 billion barrels of proven oil reserves, Energy and Petroleum Minister Rafael Ramirez said.

“At the end of 2010, we had a level of 217 billion barrels of oil, and now, at the start of this year, we are in a position to certify 297 billion barrels,” he told reporters Wednesday from his office in Caracas.

The minister recalled that in 1998, when President Hugo Chavez was elected for his first term, the country had 75 billion barrels of oil reserves, “35 billion of them wrongly classified as bitumen from the Orinoco Belt” in eastern Venezuela.

Of the current total of 297 billion barrels, 220 billion are located in the Orinoco Belt, “which gives us a solid footing for our entire expansion plan in the oil production area,” Ramirez said.

The minister said Venezuela’s natural gas reserves totaled 195 trillion cubic feet thanks to offshore drilling campaigns in the giant Perla field.

Ramirez said he was pleased that Venezuela will complete 100 years of oil production, but he added that, “unlike many countries that have exhausted their base of reserves,” the South American nation’s reserves continue to grow.

http://www.laht.com/article.asp?ArticleId=384650&CategoryId=13280

Now Bill, do you really place any stock in the word of one of Chavez's cronies? Considering his best efforts to cover up their shortfalls for the last year or so, I really don't think anything Chavez says without verification holds any water.

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Now Bill, do you really place any stock in the word of one of Chavez's cronies? Considering his best efforts to cover up their shortfalls for the last year or so, I really don't think anything Chavez says without verification holds any water.

Hugo is the new Saddam, the new Fidel, and the new Manuel, all combined into one. When he gets nukes, watch out!

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Hugo is the new Saddam, the new Fidel, and the new Manuel, all combined into one. When he gets nukes, watch out!

Maybe this is the real reason south florida real estate is in free fall................................

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Hugo is the new Saddam, the new Fidel, and the new Manuel, all combined into one. When he gets nukes, watch out!

He has a very tenuous grasp of power in that country. He has alienated anyone and everyone who is not one of his devout followers. To make matters worse, Venezuela made long term plans based on $140 per barrel oil prices. Now he is nationalizing everything and raiding their general fund to buy AK's and helicopters.

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He has a very tenuous grasp of power in that country. He has alienated anyone and everyone who is not one of his devout followers. To make matters worse, Venezuela made long term plans based on $140 per barrel oil prices. Now he is nationalizing everything and raiding their general fund to buy AK's and helicopters.

Imagine what Marcos could have done, if only the Philippines had lots more oil.

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http://www.slsa.sa.gov.au/murray/content/dwindlingRiver/floodsDroughtsIntro.htm

Drought often carries with it negative connotations, with images of dying sheep and cattle. However, we must recognise that drought events are a natural part of many ecosystems and may play an important role in the functioning of these ecosystems. A Symposium on the Role of Drought in Aquatic Ecosystems was held in Albury, Australia in February 2001. View the synopsis of the Symposium here. {http://enterprise.canberra.edu.au/WWW/www-directreps.nsf/0/002effbc275fcc05ca256cd2001f32fc/$FILE/Drought+symposium+synopsis+-+Feb+2001.pdf}

Prior to the 1860s droughts were scarcely noticed as most settlers were living in areas with reliable rainfall. It was the drought of 1864-65 which led to the drawing of Goyder’s ‘line of rainfall’ indicating the limit of the rainfall which separated lands suitable for agriculture from those fit for pastoral use only. It marked areas of reliable and unreliable annual rainfall, and was pivotal in raising awareness for South Australian settlers of the limits for successful agriculture.

The current drought which is affecting the Murray-Darling system is said to be equal to the worst droughts of the last century, and is shaping up to be worse than the last experienced in 1983.

Over the last 100 years since accurate records have been kept, South Australia has experienced several severe droughts which affected the River Murray in South Australia in the following years:

1884-86

1895-98

1901-03

1911-15

1927-29

1943-46

1959

1961

1967

1976-77

1982-83

The early push for irrigation followed some very serious droughts, with many contemporaries of the time concluding that the only way to secure water for development was to dam the rivers.

In its natural state, the River Murray was quite different from the present day regulated river. During severe droughts it was sometimes reduced to a chain of waterholes which made the river too unreliable to enable intense settlement in South Australia.

As part of any natural river feature, droughts and floods are part of an ancient, natural cycle. However, where the Murray would naturally experience drought flows once every 20 years, it now experiences artificially induced drought conditions in six of every 10 years.

Unlike the early pastoralists, hydrologists today are aware that the frequent droughts which occurred in the 19th century, and the above-average rainfall in the second part of the twentieth century, are a feature of the highly variable climate in Australia.

Floods

Generally speaking, flooding in the River Murray is caused by climatic events beyond South Australia, such as abnormal snow melt in the Snowy Mountains in New South Wales and Victoria.

Apart from periods of major flood, the River Murray now runs low in winter, spring and early summer, when it previously flooded regularly, and runs high in late summer and the early autumn, when previously it often ran low. This impact is reduced further downstream due to the flow coming from rivers such as the Loddon, which do not have major storages to capture winter rain (the Loddon system comprises storages, weirs and connecting channels which integrate the supply of water from the Campaspe and Loddon River catchments. These have been built gradually over decades beginning in the late 1880s, the early 1940s and through to the mid 1950s and 1960s. To find out more about some water storage systems up the Murray go to:

Effects of the barrages, locks, weirs and dams

Goulburn Murray Water http://www.g-mwater.com.au

Since accurate records have been kept, floods have occurred in the Murray-Darling system in:

1867 Disastrous flood on the Murrumbidgee River. For the Murray, a 1 in 90 year flood, with the 4th highest level ever recorded at Albury (NSW) and 2nd highest at Echuca (Vic)

1870 First officially recorded flood. Peaked 11M at Morgan. It washed away homesteads at Craignook [117ml] and Murbko [177ml]

1890 Darling flood peaked 8.25M at Morgan.

1917 Flood reached 9.7M at Morgan.

1931 Flood peaked 9.8M at Morgan and breached some levees.

1952 Flood peaked 8.6M at Morgan.

1955 Flood peaked 8.3M at Morgan and pre-empted the 1956 flood.

1956 Flood peaked 12.3M at Morgan, breached all levees and was the highest flood recorded since white settlement. Traditionalists argue that it was only the 'locks' that made it higher than the 1870 flood.

1974 Flood peaked 8.5M at Morgan (old annual floods peaked about 5-7M, but by 1974 the Snowy Mountains Water Management Scheme, designed to 'even out' the Murray's fluctuations, was fully operational.)

In South Australia, a River Murray flood is considered exceptional when the water level is more than 5 metres above pool level. In South Australian recorded history this has occurred in 1931, 1956, 1973 and 1974. {http://www.atlas.sa.gov.au/atlas1986/2ENVIRONMENT_RESOURCES/10NATURAL_HAZARDS.cfm}

The 1956 River Murray flood is considered to be the greatest natural catastrophe in South Australia’s history and is the largest flood ever recorded in the state. It occurred as a result of excessive and late rains in the western districts of Queensland, and heavy rains commencing three months earlier than usual in the Murray catchment areas. The Darling and the Murray were both in high flood at the same time. During floods the waters in the River Murray system spread out below Tocumwal in NSW and engulf the Edward and Wakool rivers, forming one huge lake which helps to control flooding further downsteam by acting as a natural reservoir. In 1956 the usual spread of waters below Tocumwal could not hold the quantity of water and the swollen river raced on its way though South Australia (Mortimer, p 7, 1985) causing widespread damage to agricultural properties and townships. This flood resulted in the construction of the Menindee Lakes storage areas to store high Darling River flows.

Looks like droughts and floods have been going on for a long time in history.


If more citizens were armed, criminals would think twice about attacking them, Detroit Police Chief James Craig

Florida currently has more concealed-carry permit holders than any other state, with 1,269,021 issued as of May 14, 2014

The liberal elite ... know that the people simply cannot be trusted; that they are incapable of just and fair self-government; that left to their own devices, their society will be racist, sexist, homophobic, and inequitable -- and the liberal elite know how to fix things. They are going to help us live the good and just life, even if they have to lie to us and force us to do it. And they detest those who stand in their way."
- A Nation Of Cowards, by Jeffrey R. Snyder

Tavis Smiley: 'Black People Will Have Lost Ground in Every Single Economic Indicator' Under Obama

white-privilege.jpg?resize=318%2C318

Democrats>Socialists>Communists - Same goals, different speeds.

#DeplorableLivesMatter

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