The Roman Philosopher Lucius Anneaus Seneca (4 BCE-65 CE) was perhaps the first to note the universal trend that growth is slow but ruin is rapid. I call this tendency the "Seneca Effect."

Sunday, December 4, 2022

What is the Next Thing that Will hit us? Brace for it, Because it may be Huge

 

Despite having ancient seers (the "haruspices") as ancestors, I don't claim to be able to predict the future. But I think I can propose scenarios for the future. So, what could be the next big thing that will hit us? I suggest it will be the disruption of the oil market caused by the recent measure of a price cap on  Russian oil.


Do you remember how many things changed during the past 2-3 years, and changed so unbelievably fast? There was a pattern in these changes: one element was that we were told they were just temporary, another was that they were done for our sake. We were told that we needed "Two weeks to flatten the curve," and that "the sanctions will cause the Russian economy to collapse in two weeks," and many more things. Then, our problems will be solved and the world will return to normal. But that didn't happen. Instead, the result was a "new normal," not at all like the old one. 

Now, the obvious question is "what next?" More exactly, "what are they going to hit us with, next time?" There is this idea that there may be a new pandemic, a new virus, or the old one returning. But, no. They are smarter than that -- so far they have always been one step, maybe two, ahead of us. They are masters of propaganda, they know that propaganda is all based on memes and that memes have a finite lifetime. Old memes are like old newspapers, they are not interesting anymore. A particular bugaboo can't scare people for too long, and the idea of scaring us with a pandemic virus is past its usefulness stage. They may have probed us with the "monkeypox" pandemic, and they saw that it didn't work. It was obvious anyway. So, now what?

Let me suggest one possible new way to hit us. You may have heard of it but, so far, it was supposed to be something marginal, not designed to create another "new normal." But it may. It is huge, it is gigantic, it is arriving. It is the price cap on Russian oil. The idea is that a cartel of countries, mainly Western ones, will agree on prohibiting the import of Russian oil unless it is priced at less than $60 per barrel. It will also make it more difficult for Russia to export oil abroad, even to countries that do not subscribe to the agreement. 

This idea is, as usual, promoted as a way to help us. Not only it will harm the evil Putin, but it will reduce oil prices, so everyone in the West should be happy. But will it actually work? Unlikely, to say the least, and it is probable that the promoters know that very well. 

Think about that: it never happened during the past hundred years that a cartel of countries had intervened to force a certain oil price worldwide. Even during the "Oil Crisis" of the 1970s, the Organization of Petroleum Exporting Countries (OPEC) never did what it is often accused of having done, fixing a high oil price. OPEC can only set production quotas or sanction certain countries, but it has no power, and never had power, on prices, which are set by the international market. 

When governments meddle with prices, the results are always bad. Typically, prices of goods are set too low, and that has two effects: the rising of a black market and the disappearance of the goods from the official market. It was a typical feature of the Soviet economy, where prices were often set at low levels to give the impression that certain goods were affordable to everyone. But it wasn't so: theoretically, most Soviet citizens could afford caviar sold at government-established prices. In practice, this caviar almost never existed in shops. But, of course, it was possible to find it in the black market if one could pay exorbitant prices for it.

Today, intervening to set a price for Russian oil is equivalent to throwing a wrench into the gears of a huge machine. Nobody knows exactly how the global oil market is going to react. The only sure thing is that the Russians are refusing to sell their oil to countries subscribing to the agreement. The overall result of having removed a major producer from the market can only be one: increasing oil prices. Exactly the opposite of what the price cap is supposed to do. But this is the very minimum that can happen: the effects of the cap are unpredictable on a market that's already unstable and subject to wild price oscillations. Europe might lose access to oil completely, and go dark. Famines have been a staple event in European history, they could come again. Things like that -- not small changes, huge changes. 

Why did the Western countries engage in this apparently counterproductive idea? Well, there may be some method in this madness. I can think of a few possible explanations: 

1. Western Governments are in the hands of idiots who act according to the principle known as "I ran naked into a cactus. Why? Because it looked like a good idea." They put into practice ideas that look good ("harming Putin"), without worrying about the consequences (destroying the European economy). 

2. The price cap has the specific purpose of raising oil prices. It will force consumer countries to switch from the relatively cheap Russian oil to the more expensive American oil, which will become even more expensive in a near-monopoly regime. This will bring huge profits to American producers. Don't forget that the American elites are convinced that the US oil resources are infinite, or nearly so. 

3. The price cap is thought of as a way to save the US tight oil industry. So far, tight oil has been almost a miracle, bringing back the US to a position of dominance among oil producers. But it is now facing difficulties with oil prices declining in the world market. With higher oil prices, Europe will finance a new round of tight oil extraction in the US, while the profits will remain in the US. It sounds diabolical, and maybe it is. Let me add that there may be a reason why the tight oil industry was recently declared "dead" in the mainstream media. Call me a conspiracy theorist, but this article on "Oilprice.com" may have had the purpose of scaring the US producers and making them accept the risky measure of forbidding Russian oil from entering the Western market. 

4. There may exist a "hidden force," somewhere, that's acting with a plan at the global level. The plan involves a forced reduction of fossil fuel production and consumption to mitigate the damage generated by global warming or, perhaps more likely, to leave energy for the elites while taking it away from commoners. The recent events, the Covid crisis, and the Russian crisis, both have the effect of impoverishing some of the major consumers of fossil fuels, Western middle-class citizens, and so reducing overall consumption. The price cap on Russian oil may be just the first step of a new plan that will force Westerners to abandon for good their addiction to fossil fuels, whether they like it or not. This may not be a bad idea for several reason, but it is a kind of global medicine equivalent to lobotomy or radical mastectomy for single humans. Let's say, a bit heavy-handed. 

It may be that all four of these factors are at work. In any case, it is a powerful convergence of interests that is materializing, likely to be successful in pushing the cap on Russian oil to worldwide acceptance. Considering how easily European citizens have been led to believe the most absurd things during the past two years, it is unlikely that they will understand what's being done to them (and let me not use the appropriate words for the concept). Not that the American citizens will fare much better: the huge transfer of wealth from Europe to the US will go all into the pockets of the American oligarchs. As for the European governments, they are the structures that should oppose this giant wealth transfer, but they are staffed by traitors, idiots, or both; so they will enthusiastically adhere to the idea. 

Is this what the crystal ball shows? Not necessarily. Let's just say that there are reasons to think that what I just described is a likely scenario. Then, the best-laid schemes of mice and men gang aft agley. There is a limit to how hard you can push something before it goes to pieces or bites you back. Will European citizens continue forever to be happy to be economically raped by the US? The future is always full of surprises, but the crystal ball always shows the same thing: the world goes where the money is. 


 

25 comments:

  1. Once upon a time:

    Japan depended on the U.S. for oil, scrap metal and airplane fuel. 80% of Japan's oil came from the U.S. FDR restricted shipments because of the China invasion. Pearl Harbor Happened. History suggests dealing with Russia this way is a really bad idea.

    Oil and war mix too well.

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  2. "the huge transfer of wealth from Europe to the US will go all in the pockets of the American oligarchs...."

    The primary cornerstones of N. America's wealth has been the close proximity of wood, coal, crude oil, n. gas, water, iron ore and other mineral/agri reserves...

    Europe did illusion the US to deplete a great deal of those in WW I and WW II - Europe loved the Opium War very much, it turned it later into an Energy War - ha ha ha...

    Then, the US itself has depleted even more of that wealth on nonsense projects like interstate highways, moon landing, Vietnam war, nuclear age, 24/7 News Channels, thousands of passenger and military airplanes, hundreds of millions of trucks and automobiles, petrochemicals, industrialising China, social media, theatrical war after war against Afghanistan and Iraq...

    Today, the US has given the world a very effective unit-of-measurement, the US dollar - but the US itself has lost all controls over it - to remain no more than a dollar-printing press for others - and that has frozen the US economy, denying it any real dynamics...

    A statement like "the huge transfer of wealth from Europe to the US will go all in the pockets of the American oligarchs...." - is ambiguous, to say the least - Europe has no wealth left in it to transfer, if it wants to run a car, the fuel for it must largely come from overseas or Russia...

    Europe is now after decoupling the US from the old lady-continent - as no more oil, coal and N. gas are left in Russia, the Middle East and Africa to sustain both places...

    Europe is seriously after decoupling crude oil, n. gas and coal trades from any real unit-of-measurement, too - leaving them to the BBC, DW, Al Jazeera and alike to fabricate - with endless ridicules crises-actor and Alice's shenanigans - for children...

    ...hence the exact same above statement is now echoed very loudly all over the world in the News and what's called alternative media...

    Europe is not worrying about who are called oligarchs worldwide - but rather after undoing Christopher Columbus' age, and his legacy - the quickest possible...

    "Geography is more important than History" - historian Ian Morris of Sandford University.

    Thermodynamics is more important than both...


    "Energy, like time, flows from past to future"

    Wailing

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  3. It occurs that the US is economically raping Europe, one of their largest markets. Once that wealth gets into the industrially denuded States, who will there be to buy whatever productive use it is put to? Not Europe which will resemble the post Soviet Russia.
    I doubt Russia and China will care greatly about world oil markets, they can consume all Russian oil and gas. Any surplus will be kept within BRICS which will include the Middle East producers.
    If the US is playing a bigger game it is not obvious, seems to me that China and Russia have anticipated US intentions and defended very elaborately. I fear we in the West are going to have a very hard landing.

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  4. You are moving back into the hard hitting form of the early posts when I started reading you...Extermination Essays, if a bit more reserved in not naming names (or as you might avoid "conspiracy groups"). Good to see it. You have not dealt with the biggest possible/probable "big thing." No one wants to deal with it. Moon of Alabama commenters had a few things re this...the US is forcing the EU countries to ship all their weapons to the Ukraine so they will be defenseless...and one other comment re the US waiting for the Pearl Harbor moment...which is true, and will force Russia to come down hard, militarily (as Gilbert Doctorow said yesterday from Russia, the Russian public is being kept in the dark about the worst of the Ukrainian atrocities that are filling up Russian military hospitals, and when they learn of them, Putin will have to let the hawks loose)...What will happen then? no one wants to talk about Biden's Dark Winter allusions in his last debate with Trump in 2019...or the exercise itself in 2002 with its provision of nuclear first strike by the US...or the removal of the US legal prohibition on first strike for the US, or the attempt to pass a post nuclear governance provision...one wonders...nuclear winter, 5 billion dead of starvation, or will Russia stave this off somehow with an EMP or other? The problem for Russia is that if it really wants to denazify the world, it's got to either kill or put all the leaders of the NATO countries on trial or hang them. This is no mean job. They will be hiding...maybe in the underground bunkers a la Dr. Strangelove.
    C.

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    1. You have a good point: the European states are being forced to demilitarize and are becoming defenseless. Or so it seems. In reality, there are no publicly available data on the effective strength of the national armies. Some data seem to indicate that we are reduced to a level that's little more than that of banana republics. But it is knowledge well hidden in the belly of the beast.

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  5. As a European, I see our overpopulated, resource-depleted, increasingly ignorant lands stagnating into banana states, only good for tourism based on our rich histories which we learned nothing from. We will just be giant theme parks showcasing the historical past, because there is nothing going on in the present or worth doing in the future and the profits will go to our landlords in the US.

    The difference between most conspiracy theories and reality is simply a timeframe, look at brexit, the experts warned that doing it would be a disaster and a couple of years on, the pain is still ramping up, it hasn't even plateaued yet, but still it's not clear if the sheeple have realised they were scammed.

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  6. Ugo, this is purportedly a leaked document from Rand corp. The other ones on Weakening Russia, etc. are available in the public domain, but it certainly seems to correlate with your post: https://disk.yandex.com/d/jxD85BQemPfz1A?fbclid=IwAR1OEu2hmZOqYwAjFhVIJ6iExV8gXmyPM3eQhe6zeBUSz2chi-pkWzIM6zI

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    1. Might be real, maybe. But I don't think what people say is very important. The important thing is what people DO.

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  7. I saw this am that India says they will continue to buy crude from Russia. There ate likely other countries that will as well. Russia need the income to support the war. So the global supply might not change much. Steve Kurtz

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    1. Maybe. But, as I said, the reverberations on the global market will be huge.

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    2. Hello Ugo and all.
      "the reverberations on the world powers" will be huge.

      Not just the markets. Not just the supply lines . Food and medicine, heat and light, water and electricity are the targets in this horrible war. And the west is still acting like it's about money, while Winter is here. ArtDeco.



      will not .


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  8. Oh sagacious friend, may I warm my hands at your little fire for a moment? My purse is empty, and my cloak is all threadbare. The wasteland is dark and cold and baleful hereabouts.
    If one and one conspires against you neither worry nor despair.
    Let their curses be your consolation. Let their ends be your beginning. Let their madness be your light.
    Omnia Tactus (All Things Touch)

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  9. We must remember always, that energy underwrites money, 100%. In term of debt issued so far, globally, there isn't enough energy resource (let alone other physical resources) to repay at understood dollar/purchase ratios. In other words, money is going to buy a lot less, soon. These folk are essentially playing with IOUs which have no chance of being redeemed. What happens when that realisation dawns?

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    1. Massive inflation misery and death for most with private ownership keeping a cadre in silk. The days of Kubla Khan and his pleasure dome contrast with the dark and baleful hinterlands once again.

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  10. "There is this idea that there may be a new pandemic, a new virus, or the old one returning."

    Returning? It hasn't left. I'd be surprised if it isn't just "warming up" and will mutate into something with a fatality rate similar to SARS1 next year if not 2024. That's what I'll be bracing for.

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    1. Human-to-human spread of SARS was declared to have stopped in July 2003. During the outbreak period, from 1 November 2002 to 31 July 2003, 8,096 people were infected, 774 of whom died, according to the WHO.

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  11. Conservation of a depleting resource needs a cover story largely because our politicians are sociopathic invertebrates. Price caps imposed by a propaganda mechanism may be all the media tools need to create the universal cover story. Wouldn't it be better to just be honest? Destroying demand to save the planet is not sticking very well. LOL... there's all kinds of time for the food crises to "create" the famines and resulting plagues. By then the focus will not be on who or what created the food crises. Just wear your mask, CDC says it will keep you safe... and don't forget about that anti-social distancing!

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    1. "Wouldn't it be better to just be honest?"

      It would be if the only thing you cared about wasn't power. You only lie because you want to keep some unearned benefit. Why didn't they tell the truth in 2008? Same reason

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  12. I was in Europe for 6 weeks in 8 different countries. I found the europeans mostly busy with their daily life and not showing much of a concern about these very important geopolitical questions. Except most certainly in Moldova where they are more pro-russian than the western medias telle us. Baiscally the europeans are asleep and the young want to keep going with the party without thinking much about larger. considerations. The support for the ukrainian regime seems to still be there solidly. I guess in is this way beacause of cultural consideration regarding what the most western europeans consider to be an open society: gay right, multiculturalism and so on. Even if basically Ukriane in not on this side either..

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  13. Ugo, you seem to propose that there is some sort of cable of elites that the tells us things about the future in order to purposely mislead us. Russia, the pandemic etc, but the is no evidence of this. Some folks make stupid projections, some do not. As for the world relying on US oil, well the US is a net importer do about 5 million barrels of oil daily.
    Yes, a price cap is not a sensible way to move, but restricting volumes of oil from Russia is not going to be achievable, unlike restricting the gas it exports.
    Calling everyone in government an idiot reveals a certain mindset that destroys any other reasonable argument put forward.

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    1. You mean a "cabal," I believe :-). Apart from that, any action of such worldwide importance as putting a cap on Russian oil is by necessity pushed by someone. Call it "cabal" or "conspiracy," nothing happens if there is not someone pushing for it to make it happen. I mention the possibility that it is the result of sheer idiocy, but I don't think it is a likely explanation. There are strong economic and political interests that make some things happening. Apart from that, your data are obsolete. Today, the US is a net exporter of oil, not an importer. (https://www.eia.gov/tools/faqs/faq.php?id=727&t=6#:~:text=Crude%20oil%20imports%20of%20about,countries%20and%204%20U.S.%20territories.). Even though it is a small amount, in this situation, the US has interest in high global oil prices to sustain investments in domestic oil production. And I think this is at the basis of what's happening.

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    2. I think you also need to include an important point; the USA is not really building new refineries, and is in fact, retiring many old ones. This means that many US citizens cannot take advantage of the oil the US produces so that instead profits go to multinational corporations. Moreover, corporations want the price of oil to stay high so that governments do not have to subsidize tight oil production to keep the economy going. In short, governments will not really have to appease US commuters while still making non-oil oligarchs rich by enabling the transport of manufactured goods where the price of oil gets subsumed into the price of a finished product.

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    3. Exactly. We should always remember that governments are not there to help citizens. They are survival-oriented structures. In this case, the average US citizens are not going to benefit from the downfall of Europe.

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  14. Decline of The West, strictly as this century shifts to The Great Eurasian Union, of which Russia and China play the lead roles . . . https://les7eb.substack.com/

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