Wednesday, August 06, 2008


Thanks for the info. New nuclear power constructed now in the USA is coming in at 5.5 to 7 cents per kilowatt, the thermal equivalent of something like $60 oil. Our cost of imported goods has been shrinking every time China has enough energy to expand production. It is China that understands the principles of free enterprise. Not that there is economic and political freedom in China but that energy supply is being expanded rapidly to bring down inflation and to create new jobs. China wants to bring in another 100 million people from "off the farm" in the next 10 years. Those who complain about jobs going to China while refusing to allow drilling in America are trying to "save the planet" by sending the pollution, jobs and profits to China. If they are successful, that gives them all the more support from union members and environmentalist who will then bash China and free trade all the more. One cannot have his cake and eat it too, but if you create a big enough problem, you need to take huge steps to fix it.

Pelosi made a big public splash about energy to take the heat off Obama and Blue Dog Democrats who are in close elections. The idea is to give a wink to the crowd to let them know that democrats will speak about drilling before the election but toe the party line afterward. Pelosi even sent notices to Blue Dogs to blame the absence of a vote on energy on her. Of course voting for a Blue Dog "conservative" is still a vote for Pelosi to be speaker.

I'm glad you mentioned the South Africa embargo, it had slipped my mind so I read up on Wiki. Embargoes always have holes and they always give the government being punished someone to blame for all the problems. The sale of weapons embargo was put on South Africa in 1963, during the Kennedy administration. The sanctions were tightened by Jimmy Carter. Regan was criticized for "helping" South Africa become militarily independent. It was not true but the critics claimed that by preventing South Africa from buying US arms, South Africa had been forced to learn how to make comparable arms. They made some arms but not comparable arms. South Africa did learn to make transportation fuel from coal which they still do. Apartheid began to unravel during George Bush Sr.'s administration but it took until 1998, 35 years from the start for the embargo to end.

Cuba is a great example of an embargo that has helped keep a dictator in power. Cuba has been embargoed by the US since 1962. The economic loses have been huge, but just as great to the USA as they have been to Cuba. What really angered other countries was the secondary embargo that was enacted. The congress has punished businesses from Canada and elsewhere by refusing to buy goods from companies that trade with Cuba.

The embargo of Iran started during the Carter administration, as I recall, in 1978 or 79. It has had a lot of holes too but many of those were plugged in 2003, just as Iraq was invaded. No one seems willing to say it but the war in Iraq was, from the start, a plan to stop state supported terrorism by Iran and all other countries. Saudi Arabia and many other nations saw the hand writing on the wall; they stopped supporting terrorist and have given huge financial support to ending it. The Bush policy has included the concept that you are for us or against us and if you harbor terrorist you are against us. Many a country has decided that being a friend to the US and the rest of the world or to terrorist sponsors is an easy choice. The war is being won on many fronts.

The embargo of Iran has now reached a serious level. Everyday, people in Iran are protesting the lack of gasoline, food, pay, public beatings, public hangings and more. To keep airplanes flying and cars and machinery running, repair parts are having to be hand made. A people of abundant natural resources are suffering from cold in the winter and heat in the summer because they make only about 20% of the fuel they normally use.

My favorite example of "getting around the sanctions" is the sale of Coke and Pepsi food products for humanitarian reasons. Still, the next round will bite hard, if we get that far. The next UN meeting will be held in September. By dragging out the imposition, the Iranians are suffering the torture of speculation about how bad it is going to get. At the same time, there dozens of multi-billion dollar commercial deals pending. In my opinion, the basic agreement has already been decided. Iran wants the ink dry on as many commercial deals as possible before they "agree to negotiate". Among the "goodies offered" by the UN/USA is inclusion into the WTO, something that Russia has wanted for years. The application from Russia is still pending. Russia will be admitted just before Iran!

The ultimate value of the "deal with Iran" will be measured in the trillions of dollars over the next 30 years. Russia alone will benefit in the trillions of dollars.

On 8/6/08, Lamar wrote:

Interesting that Nancy Pelosi is concerned where the oil will go. Does she really believe that? Does she understand that it probably does not matter.

Oil is fungible. Any increase in supply will tend to reduce the price. Amazing that every year I get reminded of the US embargo on South African gold during apartheid. What did an enterprising man do?
Buy the SA gold, ship to Canada resmelt it into Canadian ingots and resale into the US.

BTW A friend of mine works at Progress Energy. They are finalizing the paperwork process on a Nuke in Florida. Here are the costs and time lines as he described

4 Years for Planning and Approvals- $4 Billion
4 Years to construct-
Labor $4 Billion
Hardware $7Billion
Finance and interest costs $3 billion