Oil Qaeda

Why did the CEOs of Exxon-Mobil and Royal Dutch Shell both say, just last month, that US$70 oil is not supported by industry fundamnetals?

This was reported by Ng Weng Hoong, editor of www.energyasia.com, in The Straits Times, Friday October 19 2007, on why: "High oil prices are here to stay."

http://www.straitstimes.com/Free/Story/STIStory_168332.html

I'm going to assume that the two CEOs are well-informed on the oil industry's fundamentals, so today's US$88 oil prices must include a risk premium to cover uncertainties. To summarise, although the article is worth reading, Ng says that these uncertainties are

1. Supply/demand imbalances; especially predicting demand from China, India and Brazil.
   
2. Politics that prevents oil-producers from responding rapidly to higher prices.

The article does not expand on the second point and I'll take a stab at it here. American foreign policies, dominated by the "war on terror" makes it difficult for the American oil industry to participate in exploration and production-sharing opportunities arising from higher prices. This applies not just to purchasing concessions but the nitty-gritty engineering of exploration and production where American know-how and equipment is excellent.

The uncertainties are real but the premiums charged depend on perceptions of the power and influence of Al Qaeda, or, more accurately, Salafi Jihadists. Since power and influence are themselves perceptions, these premiums are perceptions of perceptions. No wonder I'm confused but at least I'm in good company.

Bottom line? Try to use less energy, especially when driving. It's boring but make lists of errends and shopping and try to combine them on each journey.

Who are the disadvantaged?

Affirmative action is well-intentioned; no one can easily argue against helping the disadvantaged. It's a plausible principle that just doesn't work out in practice. Here's what always happens:

The "disadvantaged" group is mobilised by leaders so as to gain legislative support for their aims. The argument is always a variation of the "historical forces" argument. Who will articulate this argument in a persuasive way? Who will organise the meetings and manage the media? In other words, who will lead? These will, almost always be well-educated and not "disadvantaged". Who will receive the bulk of the benefits once affirmative action is legalised? The leaders of course!

This has happened with African-Americans and, subsequently, with the Malays in Malaysia. At least in the USA, the affirmative action laws apply to a minority. Not so in Malaysia where the children of the aristocracy and civil servants have received premium scholarships and the inside track to business and political success, thus perpetuating the giant fraud on their own majority community which takes foolish pride in this national theft!

It is difficult but possible to define "disadvantage" in any society. The definition will not be the same in every society nor will it remain the same over time. Some of the more obvious criteria from moral philosophers and sociologists are:

1. Irregular income i.e. no permanent work.
2. Lack of education.
3. Physical or mental impairment.
4. No physical security e.g.violent family members, violent neighbourhoods and genocide.

There are others which aren't so obvious but can be revealed through better studies. My point? Correcting "historical disadvantage" is not about race. That was Adolph Hitler's thesis in "Mein Kampf." Malaysia NEP is more correctly understood as its Nazi Economic Policy and will have the same result.