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Wednesday, May 03, 2006

High Oil Prices & Tyranny


Today's high oil prices have direct impact on how oil rich tyrannies like the Iranian regime is acting.

7 years ago, when the oil prices were about US $ 20 per barrel, the Iranian regime was talking about friendship and dialogue with the rest of the world and now that the oil is a bit over $72/barrel, the very same regime is speaking about wiping off another country and mounting its support for terrorism world wide and on top of that they are creating tensions all over the place.

The First Law of Petropolitics

The higher the oil prices go, the wilder "the oil-rich despotic countries" get!

Shut off their ability to export oil and they are gone in days!

Simple, huh? Not!

Also posted @ The Spirit Of Man

Posted by Winston on May 3, 2006 in International Affairs | Permalink


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I think US interest has more to do with the fact these oil tyrannies are accepting currencies other than the US dollar when they sell their oil...explains the tail spin the US Buck is n...and the rightful concen of the US this may start a trend where international commerce shifts from US dollars to Euros or other currency.

Posted by: Wlyonmackenzie | 2006-05-03 7:41:50 AM

Isn't it ironic that the oil producing countries include the ME terrorists states, Nigeria, Sudan, Mad Hugo the Red's Venezuela, Russia, China...

Aside from North Sea oil, US and Canada, most of the world's oil is in countries that you wouldn't even visit never mind want to live there.

Posted by: Warwick | 2006-05-03 9:26:06 AM

great post, a very true point.

Posted by: Joseph Salomonsen | 2006-05-03 9:47:36 AM

While we're still in hockey season ... I noticed quite a long time ago a direct relationship between the fortunes of the Montreal Canadiens and Quebec seperatism.

People scoffed, like they did at the Wright Brothers, but the theory continued to fly, withstanding the test of time.

Last night, the Habs were eliminated. I take that as a signal the inspiration that drives the courage of seperatism is once agaoin on the wane.

Watch to see how the BQ does and see if my theory holds.

Posted by: Set you free | 2006-05-03 10:40:38 AM

Finally! An explanation to Alberta's behavioural problems. Add Alberta to that little list of yours Warwick, who would visit, let alone live there?!

Posted by: Jarvis | 2006-05-03 8:10:36 PM

The reason oil prices are high is because some country invaded the Middle East.

But before that, they fought a brutal drug war in South America resulting in a bunch of anti-capitalist socialists being elected.

You reap what you sow...

Posted by: Robert Seymour | 2006-05-03 8:26:00 PM

Very true, and it's a vicious cirlce too. The more these autocratic dictators of oil-rich countries play games, the higher oil prices go, and the more money they have to spend on military exploits and other mischief.

Posted by: Patrick | 2006-05-03 8:38:17 PM


I'd go to live in Alberta any time!

Posted by: Winston | 2006-05-03 8:39:49 PM


What behavioral problems?

I've lived in Alberta all but three years of my life and I love the United Nations mix of people I've grown up with.

It's probably one of the best places anywhere to live right now, with an average income in the Edmonton-Calgary corridor No. 2 in the world to some part of Switzerland.

Winston: You're welcome any time.

Jarvis: If you want to keep whining, move to Toronto. You'll blend right in.

Posted by: Set you free | 2006-05-03 8:55:06 PM

Set you free, I am planning for a visit. What's the best time for a visit?

Today, I had a discussion with a colleague of mine about how high incomes are in Alberta and the fact that Albertan economy is booming big time, courtesy of successful Conservative governance!

Posted by: Winston | 2006-05-03 9:20:01 PM

WLM is right. The value of oil has not changed significantly in the last five years. It is the value of that which you trade for oil which has been significantly eroded.

Congressman Ron Paul has an excellent summary of how we got into this jam:


[After the failure of the Bretton Woods agreement in 1971] elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions. This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil. In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup. This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region. ... It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished ... The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year. Last year alone M3 increased over $700 billion.

The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can’t last.

Price inflation is raising its ugly head ... A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria. The only restraining force will be the world’s rejection of the dollar. It’s bound to come and create conditions worse than 1979–1980, which required 21% interest rates to correct.


I think that the tyrants in your own federal, provincial and local governments can do far more harm to you than the mullahs on the other side of the world.

Posted by: Justzumgai | 2006-05-03 10:29:21 PM

Lets not forget that Ron paul is a Dem and it was his party in 1979 which didnt back the Shah of Iran and lead us to this mess we are stuck in today!

Posted by: Winston | 2006-05-03 10:53:18 PM


The summer months (July-Aug) are sensational here.

Calgary has the Stampede to kick it off.

Edmonton is festival city during those two months: the largest Fringe festival in the world outside of Glasgow, folk fest, Heritage Days (food and entertainment from 97 nations) ... the party goes on all summer.

18 hours of sunshine a day, 43 golf courses, a beautiful river valley.

Now, off to business:

Keep your head about you while all others are losing theirs.

Will Shakespeare (?) said it and it holds true today.

The reality is, oil would have to hit $90 a barrel to equal the previous oil crisis.

Not much has changed since then. Wacky middle east dictators, ayatollahs are still here. The jihadists have reared their ugly heads.

The only certain thing about the price of oil is uncertainty.

Lately, it's been tracking down as W. has been hinting he's going to release some of the strategic reserve. Chances are, it'll come soon, to let the effects of it go through to the mid-term elections.

Still, the Greenback is in serious trouble as the world standard currency due to the high price of oil and the US's willingness to be the world's leading policeman in rooting out the jihadist fad.

In the last two weeks, there has been a $75 an ounce rise in the price of gold, while oil dropped something like $2.50 a barrel on Wednesday.

I've got rid of most of my oil positions and have been slowly building into gold for the last two years. My portfolio is up 10% in the last two weeks.

At the same time governements around the world have been divesting themselves of gold, it's being snapped up by private citizens.

Now, I'm not sure it's advisable to go back to the gold standard, but due to geopolitical and supply/demand issues, that's where the action is going to be for at least the next four months.

I'm betting heavy on it and if I'm right, I'll have enough cash to pay for the surging oil prices.

Are you a survivor or a victim?

Are you for process or results?

Will you be a poor whiner or a smart investor?

Each one of us has a choice. Good luck in your choices.

Posted by: Set you free | 2006-05-03 11:40:55 PM

Actually Winston,
Ron Paul is a Republican from Texas who rightly calls himself a libertarian because the Republicans, like the Democrats, are another party of big government.

Posted by: Robert Seymour | 2006-05-03 11:41:50 PM

There's one supply side bottleneck in the entire oil delivery system that's jacking up prices more than they need to be jacked up, according to pure market theory.

That's the serious shortage of refining capacity in North America.

In the US, much of that capacity is centred in Texas/Louisiana. Both the exploration and refining elements were seriously affected by last summer's hurricane season.

Much like California's electricity crisis, there's one solution ... build more infrastructure to deliver the energy.

The problem, of course, is that nobody wants to live near these wealth generators.

It's not that difficult to track down the cause of the price spikes.

Posted by: Set you free | 2006-05-03 11:57:19 PM



Posted by: Winston | 2006-05-04 2:25:35 PM

In keeping with the original topic, I notice tyranny has been in freefall this week.

What other conclusion can anybody draw from the fact the price of black gold has fallen 6 bucks a barrel since Winston's original post?

They're runnin' scared, I tell ya.

At the same time, the shiny gold went up 7 bucks an ounce today. Hmm. The trend continues.

Posted by: Set you free | 2006-05-04 5:15:29 PM

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