By Mollie Hemingway October 14, 2014
As the Ebola situation in West Africa continues to deteriorate, some U.S. officials are claiming that they would have been able to better deal with the public health threat if only they had more money.
Dr. Francis Collins, who heads the National Institutes of Health (NIH), told The Huffington Post, “Frankly, if we had not gone through our 10-year slide in research support, we probably would have had a vaccine in time for this that would’ve gone through clinical trials and would have been ready.” Hillary Clinton also claimed that funding restrictions were to blame for inability to combat Ebola.
Conservative critics have pointed out that the federal government has spent billions upon billions of dollars on unnecessary programs promoting a political agenda rather than targeting those funds to the fight against health threats.
Other limited government types point to the Progressive utopian foolishness seen in opposing political factions, both sides of which seem to agree humanity could somehow escape calamity if only we had a properly functioning government. People who don’t want an all-powerful government shouldn’t blame it for not having competence when crisis strikes.
What’s particularly interesting about this discussion, then, is that nobody has even discussed the fact that the federal government not ten years ago created and funded a brand new office in the Health and Human Services Department specifically to coordinate preparation for and response to public health threats like Ebola. The woman who heads that office, and reports directly to the HHS secretary, has been mysteriously invisible from the public handling of this threat. And she’s still on the job even though three years ago she was embroiled in a huge scandal of funneling a major stream of funding to a company with ties to a Democratic donor—and away from a company that was developing a treatment now being used on Ebola patients.
Before the media swallow implausible claims of funding problems, perhaps they could be more skeptical of the idea that government is responsible for solving all of humanity’s problems. Barring that, perhaps the media could at least look at the roles that waste, fraud, mismanagement, and general incompetence play in the repeated failures to solve the problems the feds unrealistically claim they will address. In a world where a $12.5 billion slush fund at the Centers for Disease Control and Prevention is used to fight the privatization of liquor stores, perhaps we should complain more about mission creep and Progressive faith in the habitually unrealized magic of increased government funding.
Lay of the Land
Collins’ NIH is part of the Health and Human Services Department. Real spending at that agency has increased nine-fold since 1970 and now tops $900 billion. Oh, if we could all endure such “funding slides,” eh?
Whether or not Dr. Collins’ effort to get more funding for NIH will be successful—if the past is prologue, we’ll throw more money at him—the fact is that Congress passed legislation with billions of dollars in funding specifically to coordinate preparation for public health threats like Ebola not 10 years ago. And yet the results of such funding have been hard to evaluate.
See, in 2004, Congress passed The Project Bioshield Act. The text of that legislation authorized up to $5,593,000,000 in new spending by NIH for the purpose of purchasing vaccines that would be used in the event of a bioterrorist attack. A major part of the plan was to allow stockpiling and distribution of vaccines.
Just two years later, Congress passed the Pandemic and All-Hazards Preparedness Act, which created a new assistant secretary for preparedness and response to oversee medical efforts and called for a National Health Security Strategy. The Act established Biomedical Advanced Research and Development Authority as the focal point within HHS for medical efforts to protect the American civilian population against naturally occurring threats to public health. It specifically says this authority was established to give “an integrated, systematic approach to the development and purchase of the necessary vaccines, drugs, therapies, and diagnostic tools for public health medical emergencies.”
Last year, Congress passed the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 which keep the programs in effect for another five years.
If you look at any of the information about these pieces of legislation or the office and authorities that were created, this brand new expansion of the federal government was sold to us specifically as a means to fight public health threats like Ebola. That was the entire point of why the office and authorities were created.
In fact, when Sen. Bob Casey was asked if he agreed the U.S. needed an Ebola czar, which some legislators are demanding, he responded: “I don’t, because under the bill we have such a person in HHS already.”
The Invisible Dr. Lurie
So, we have an office for public health threat preparedness and response. And one of HHS’ eight assistant secretaries is the assistant secretary for preparedness and response, whose job it is to “lead the nation in preventing, responding to and recovering from the adverse health effects of public health emergencies and disasters, ranging from hurricanes to bioterrorism.”
In the video below, the woman who heads that office, Dr. Nicole Lurie, explains that the responsibilities of her office are “to help our country prepare for, respond to and recover from public health threats.” She says her major priority is to help the country prepare for emergencies and to “have the countermeasures—the medicines or vaccines that people might need to use in a public health emergency. So a large part of my office also is responsible for developing those countermeasures.”
Or, as National Journal rather glowingly puts it, “Lurie’s job is to plan for the unthinkable. A global flu pandemic? She has a plan. A bioterror attack? She’s on it. Massive earthquake? Yep. Her responsibilities as assistant secretary span public health, global health, and homeland security.” A profile of Lurie quoted her as saying, “I have responsibility for getting the nation prepared for public health emergencies—whether naturally occurring disasters or man-made, as well as for helping it respond and recover. It’s a pretty significant undertaking.” Still another refers to her as “the highest-ranking federal official in charge of preparing the nation to face such health crises as earthquakes, hurricanes, terrorist attacks, and pandemic influenza.”
Now, you might be wondering why the person in charge of all this is a name you’re not familiar with. Apart from a discussion of Casey’s comments on how we don’t need an Ebola czar because we already have one, a Google News search for Lurie’s name at the time of writing brings up nothing in the last hour, the last 24 hours, not even the last week! You have to get back to mid-September for a few brief mentions of her name in minor publications. Not a single one of those links is confidence building.
So why has the top official for public health threats been sidelined in the midst of the Ebola crisis? Only the not-known-for-transparency Obama administration knows for sure. But maybe taxpayers and voters should force Congress to do a better job with its oversight rather than get away with the far easier passing of legislation that grants additional funds before finding out what we got for all that money we allocated to this task over the last decade. And then maybe taxpayers should begin to puzzle out whether their really bad return on tax investment dollars is related to some sort of inherent problem with the administrative state.
The Ron Perelman Scandal
There are a few interesting things about the scandal Lurie was embroiled in years ago. You can—and should—read all about it in the Los Angeles Times‘ excellent front-page expose from November 2011, headlined: “Cost, need questioned in $433-million smallpox drug deal: A company controlled by a longtime political donor gets a no-bid contract to supply an experimental remedy for a threat that may not exist.” This Forbes piece is also interesting.
The donor is billionaire Ron Perelman, who was controlling shareholder of Siga. He’s a huge Democratic donor but he also gets Republicans to play for his team, of course. Siga was under scrutiny even back in October 2010 when The Huffington Post reported that it had named labor leader Andy Stern to its board and “compensated him with stock options that would become dramatically more valuable if the company managed to win the contract it sought with HHS—an agency where Stern has deep connections, having helped lead the year-plus fight for health care reform as then head of the Service Employees International Union.”
The award was controversial from almost every angle—including disputes about need, efficacy, and extremely high costs. There were also complaints about awarding a company of its size and structure a small business award as well as the negotiations involved in granting the award. It was so controversial that even Democrats in tight election races were calling for investigations.
Last month, Siga filed for bankruptcy after it was found liable for breaching a licensing contract. The drug it’s been trying to develop, which was projected to have limited utility, has not really panned out—yet the feds have continued to give valuable funds to the company even though the law would permit them to recoup some of their costs or to simply stop any further funding.
The Los Angeles Times revealed that, during the fight over the grant, Lurie wrote to Siga’s chief executive, Dr. Eric A. Rose, to tell him that someone new would be taking over the negotiations with the company. She wrote, “I trust this will be satisfactory to you.” Later she denied that she’d had any contact with Rose regarding the contract, saying such contact would have been inappropriate.
The company that most fought the peculiar sole-source contract award to Siga was Chimerix, which argued that its drug had far more promise than Siga’s. And, in fact, Chimerix’s Brincidofovir is an antiviral medication being developed for treatment of smallpox but also Ebola and adenovirus. In animal trials, it’s shown some success against adenoviruses, smallpox, and herpes—and preliminary tests show some promise against Ebola. On Oct. 6, the FDA authorized its use for some Ebola patients.
It was given to Ebola patient Thomas Eric Duncan, who died, and Ashoka Mukpo, who doctors said had improved. Mukpo even tweeted that he was on the road to recovery.
Back to that Budget
Consider again how The Huffington Post parroted Collins’ claims:
Money, or rather the lack of it, is a big part of the problem. NIH’s purchasing power is down 23 percent from what it was a decade ago, and its budget has remained almost static. In fiscal year 2004, the agency’s budget was $28.03 billion. In FY 2013, it was $29.31 billion—barely a change, even before adjusting for inflation.
Of course, between the fiscal years 2000 and 2004, NIH’s budget jumped a whopping 58 percent. HHS’s 70,000 workers will spend a total of $958 billion this year, or about $7,789 for every U.S. household. A 2012 report on federal spending including the following nuggets about how NIH spends its supposedly tight funds:
- a $702,558 grant for the study of the impact of televisions and gas generators on villages in Vietnam.
- $175,587 to the University of Kentucky to study the impact of cocaine on the sex drive of Japanese quail.
- $55,382 to study hookah smoking in Jordan.
- $592,527 to study why chimpanzees throw objects.
Last year there were news reports about a $509,840 grant from NIH to pay for a study that will send text messages in “gay lingo” to meth-heads. There are many other shake-your-head examples of misguided spending that are easy to find.
Indeed. The Progressive belief that a powerful government can stop all calamity is misguided. In the last 10 years we passed multiple pieces of legislation to create funding streams, offices, and management authorities precisely for this moment. That we have nothing to show for it is not good reason to put even more faith in government without learning anything from our repeated mistakes. Responding to the missing Ebola Czar and her office’s corruption by throwing still more money, more management changes, and more bureaucratic complexity in her general direction is madness.
October 12, 2014 By Jeff Foxworthy
If you can get arrested for hunting or fishing without a license, but not for entering and remaining in the country illegally — you might live in a nation that was founded by geniuses but is run by idiots.
If you have to get your parents’ permission to go on a field trip or to take an aspirin in school, but not to get an abortion — you might live in a nation that was founded by geniuses but is run by idiots.
If you MUST show your identification to board an airplane, cash a check, buy liquor, or check out a library book and rent a video, but not to vote for who runs the government — you might live in a nation that was founded by geniuses but is run by idiots.
If the government wants to prevent stable, law-abiding citizens from owning gun magazines that hold more than ten rounds, but gives twenty F-16 fighter jets to the crazy new leaders in Egypt — you might live in a nation that was founded by geniuses but is run by idiots.
If, in the nation’s largest city, you can buy two 16-ounce sodas, but not one 24-ounce soda, because 24-ounces of a sugary drink might make you fat — you might live in a nation that was founded by geniuses but is run by idiots.
If an 80-year-old woman or a three-year-old girl who is confined to a wheelchair can be strip-searched by the TSA at the airport, but a woman in a burka or a hijab is only subject to having her neck and head searched — you might live in a nation that was founded by geniuses but is run by idiots.
If your government believes that the best way to eradicate trillions of dollars of debt is to spend trillions more — you might live in a nation that was founded by geniuses but is run by idiots.
If a seven-year-old boy can be thrown out of school for saying his teacher is “cute,” but hosting a sexual exploration or diversity class in grade school is perfectly acceptable — you might live in a nation that was founded by geniuses but is run by idiots.
If hard work and success are met with higher taxes and more government regulation and intrusion, while not working is rewarded with Food Stamps, WIC checks, Medicaid benefits, subsidized housing, and free cell phones — you might live in a nation that was founded by geniuses but is run by idiots.
If the government’s plan for getting people back to work is to provide incentives for not working, by granting 99 weeks of unemployment checks, without any requirement to prove that gainful employment was diligently sought, but couldn’t be found — you might live in a nation that was founded by geniuses but is run by idiots.
If you pay your mortgage faithfully, denying yourself the newest big-screen TV, while your neighbor buys iPhones, time shares, a wall-sized do-it-all plasma screen TV and new cars, and the government forgives his debt when he defaults on his mortgage — you might live in a nation that was founded by geniuses but is run by idiots.
If being stripped of your Constitutional right to defend yourself makes you more “safe” according to the government — you might live in a nation that was founded by geniuses but is run by idiots.
What a country!
10/12/2014 17:02 by Tyler Durden
We first exposed the “secret” US-Saudi deal in September which led to the inevitable bombing of Syria. We then progressed to explain the quid pro quo of the deal in lower oil prices (benefiting US consumers into an election and crushing Russian revenues). In today’s Wall Street Journal we get the final piece of the puzzle as it is clear that what Saudi Arabia loses in ‘price’ it will make up in ‘volume’ as The Kingdon is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude. Simply put, “they are threatening [European] buyers” to discontinue sales if they don’t agree with the full fixed deliveries. The ‘oil weapon’ grows stronger…
Days after slashing prices in Asia, Saudi Arabia is now making an aggressive push in the European oil market, traders say.
The kingdom is taking the unusual step of asking buyers to commit to maximum shipments if they want to get its crude.
“The Saudi push is not just in Asia. It’s a global phenomenon,” one oil trader said. “They are using very aggressive tactics” in Europe too, the trader added.
This month, state-owned Saudi Aramco stunned the rest of the Organization of the Petroleum Exporting Countries by slashing its November prices to defend its market share in Asia’s growing market. The move, setting a price war in the oil-production group, was combined with a boost in the kingdom’s output in September.
But Riyadh is also moving to protect its sales to Europe, a declining market where it is facing rivalry from returning Libyan production.
After cutting its November prices there, Saudi Aramco is also asking refiners to commit to full, fixed deliveries in talks to renew contracts for next year, the traders say. They say the Saudi oil company had previously offered a formula allowing flexibility of more or less 10% of contracted volumes, the most commonly used in the industry.
“They are threatening buyers” to discontinue sales if they don’t agree with the fixed deliveries, another trader said.
* * *
Of course, the more pressure the US (prxied by Saudi Arabia) puts on Russia (and Iran) and implicitly Europe now (as they are forced to buy ‘more’ oil than needed, albeit at lower prices – but leaving their budgets bursting still further), the more the rest of the world is forced to consider alternatives to US hegemony and side with those that, for now, have not reached peak totalitarianism.
10/11/2014 by Tyler Durden
Two weeks ago, we revealed one part of the “Secret Deal” between the US and Saudi Arabia: namely what the US ‘brought to the table’ as part of its grand alliance strategy in the middle east, which proudly revealed Saudi Arabia to be “aligned” with the US against ISIS, when in reality John Kerry was merely doing Saudi Arabia’s will when the WSJ reported that “the process gave the Saudis leverage to extract a fresh U.S. commitment to beef up training for rebels fighting Mr. Assad, whose demise the Saudis still see as a top priority.”
What was not clear is what was the other part: what did the Saudis bring to the table, or said otherwise, how exactly it was that Saudi Arabia would compensate the US for bombing the Assad infrastructure until the hated Syrian leader was toppled, creating a power vacuum in his wake that would allow Syria, Qatar, Jordan and/or Turkey to divide the spoils of war as they saw fit.
A glimpse of the answer was provided earlier in the article “The Oil Weapon: A New Way To Wage War“, because at the end of the day it is always about oil, and leverage.
The full answer comes courtesy of Anadolu Agency, which explains not only the big picture involving Saudi Arabia and its biggest asset, oil, but also the latest fracturing of OPEC at the behest of Saudi Arabia…
… which however is merely using “the oil weapon” to target the old slash new Cold War foe #1: Vladimir Putin.
Saudi Arabia to pressure Russia, Iran with price of oil
Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.
Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.
To pressure Iran to limit its nuclear program, and to change Russia’s position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.
With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.
The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won’t be able to affect Saudi Arabia’s decision, Abanmy maintained.
The organization’s decisions are only recommendations and are not binding for the member oil producing countries, he explained.
Today’s Brent closing price: $90. Russia’s oil price budget for the period 2015-2017? $100. Which means much more “forced Brent liquidation” is in the cards in the coming weeks as America’s suddenly once again very strategic ally, Saudi Arabia, does everything in its power to break Putin.
Submitted by Michael Klare via OilPrice.com,
Washington Takes on ISIS, Iran, and Russia.
It was heinous. It was underhanded. It was beyond the bounds of international morality. It was an attack on the American way of life. It was what you might expect from unscrupulous Arabs. It was “the oil weapon” — and back in 1973, it was directed at the United States. Skip ahead four decades and it’s smart, it’s effective, and it’s the American way. The Obama administration has appropriated it as a major tool of foreign policy, a new way to go to war with nations it considers hostile without relying on planes, missiles, and troops. It is, of course, that very same oil weapon.
Until recently, the use of the term “the oil weapon” has largely been identified with the efforts of Arab producers to dissuade the United States from supporting Israel by cutting off the flow of petroleum. The most memorable example of its use was the embargo imposed by Arab members of the Organization of the Petroleum Exporting Countries (OPEC) on oil exports to the United States during the Arab-Israeli war of 1973, causing scarcity in the U.S., long lines at American filling stations, and a global economic recession.
After suffering enormously from that embargo, Washington took a number of steps to disarm the oil weapon and prevent its reuse. These included an increased emphasis on domestic oil production and the establishment of a mutual aid arrangement overseen by the International Energy Agency (IEA) that obliged participating nations to share their oil with any member state subjected to an embargo.
So consider it a surprising reversal that, having tested out the oil weapon against Saddam Hussein’s Iraq with devastating effect back in the 1990s, Washington is now the key country brandishing that same weapon, using trade sanctions and other means to curb the exports of energy-producing states it categorizes as hostile. The Obama administration has taken this aggressive path even at the risk of curtailing global energy supplies.
When first employed, the oil weapon was intended to exploit the industrial world’s heavy dependence on petroleum imports from the Middle East. Over time, however, those producing countries became ever more dependent on oil revenues to finance their governments and enrich their citizens. Washington now seeks to exploit this by selectively denying access to world oil markets, whether through sanctions or the use of force, and so depriving hostile producing powers of operating revenues.
The most dramatic instance of this came on September 23rd, when American aircraft bombed refineries and other oil installations in areas of Syria controlled by the Islamic State of Iraq and Syria (ISIS, also known as ISIL or IS). An extremist insurgent movement that has declared a new “caliphate,” ISIS is not, of course, a major oil producer, but it has taken control of oil fields and refineries that once were operated by the regime of Bashar al-Assad in eastern Syria. The revenue generated by these fields, reportedly $1 to $2 million daily, is being used by ISIS to generate a significant share of its operating expenses. This has given that movement the wherewithal to finance the further recruitment and support of thousands of foreign fighters, even as it sustains a high tempo of combat operations.
Black-market dealers in Iran, Iraq, Syria, and Turkey have evidently been assisting ISIS in this effort, purchasing the crude at a discount and selling at global market rates, now hovering at about $90 per barrel. Ironically, this clandestine export network was initially established in the 1990s by Saddam Hussein’s regime to evade U.S. sanctions on Iraq.
The Islamic State has proven adept indeed at exploiting the fields under its control, even selling the oil to agents of opposing forces, including the Assad regime. To stop this flow, Washington launched what is planned to be a long-term air campaign against those fields and their associated infrastructure. By bombing them, President Obama evidently hopes to curtail the movement’s export earnings and thereby diminish its combat capabilities. These strikes, he declared in announcing the bombing campaign, are intended to “take out terrorist targets” and “cut off ISIL’s financing.”
It is too early to assess the impact of the air strikes on ISIS’s capacity to pump and sell oil. However, since the movement has been producing only about 80,000 barrels per day (roughly 1/1,000th of worldwide oil consumption), the attacks, if successful, are not expected to have any significant impact on a global market already increasingly glutted, in part because of an explosion of drilling in that “new Saudi Arabia,” the United States.
As it happens, though, the Obama administration is also wielding the oil weapon against two of the world’s leading producers, Iran and Russia. These efforts, which include embargoes and trade sanctions, are likely to have a far greater impact on world output, reflecting White House confidence that, in the pursuit of U.S. strategic interests, anything goes.
Fighting the Iranians
In the case of Iran, Washington has moved aggressively to curtail Tehran’s ability to finance its extensive nuclear program both by blocking its access to Western oil-drilling technology and by curbing its export sales. Under the Iran Sanctions Act, foreign firms that invest in the Iranian oil industry are barred from access to U.S. financial markets and subject to other penalties. In addition, the Obama administration has put immense pressure on major oil-importing countries, including China, India, South Korea, and the European powers, to reduce or eliminate their purchases from Iran.
These measures, which involve tough restrictions on financial transactions related to Iranian oil exports, have had a significant impact on that country’s oil output. By some estimates, those exports have fallen by one million barrels per day, which also represents a significant contraction in global supplies. As a result, Iran’s income from oil exports is estimated to have fallen from $118 billion in 2011-2012 to $56 billion in 2013-2014, while pinching ordinary Iranians in a multitude of ways.
In earlier times, when global oil supplies were tight, a daily loss of one million barrels would have meant widespread scarcity and a possible global recession. The Obama administration, however, assumes that only Iran is likely to suffer in the present situation. Credit this mainly to the recent upsurge in North American energy production (largely achieved through the use of hydro-fracking to extract oil and natural gas from buried shale deposits) and the increased availability of crude from other non-OPEC sources. According to the most recent data from the Department of Energy (DoE), U.S. crude output rose from 5.7 million barrels per day in 2011 to 8.4 million barrels in the second quarter of 2014, a remarkable 47% gain. And this is to be no flash in the pan. The DoE predicts that domestic output will rise to some 9.6 million barrels per day in 2020, putting the U.S. back in the top league of global producers.
For the Obama administration, the results of this are clear. Not only will American reliance on imported oil be significantly reduced, but with the U.S. absorbing ever less of the non-domestic supply, import-dependent countries like India, Japan, China, and South Korea should be able to satisfy their needs even if Iranian energy production keeps falling. As a result, Washington has been able to secure greater cooperation from such countries in observing the Iranian sanctions — something they would no doubt have been reluctant to do if global supplies were less abundant.
There is another factor, no less crucial, in the aggressive use of the oil weapon as an essential element of foreign policy. The increase in domestic crude output has imbued American leaders with a new sense of energy omnipotence, allowing them to contemplate the decline in Iranian exports without trepidation. In an April 2013 speech at Columbia University, Tom Donilon, then Obama’s national security adviser, publicly expressed this outlook with particular force. “America’s new energy posture allows us to engage from a position of greater strength,” he avowed. “Increasing U.S. energy supplies acts as a cushion that helps reduce our vulnerability to global supply disruptions and price shocks. It also affords us a stronger hand in pursuing and implementing our international security goals.”
This “stronger hand,” he made clear, was reflected in U.S. dealings with Iran. To put pressure on Tehran, he noted, “The United States engaged in tireless diplomacy to persuade consuming nations to end or significantly reduce their consumption of Iranian oil.” At the same time, “the substantial increase in oil production in the United States and elsewhere meant that international sanctions and U.S. and allied efforts could remove over 1 million barrels per day of Iranian oil while minimizing the burdens on the rest of the world.” It was this happy circumstance, he suggested, that had forced Iran to the negotiating table.
Fighting Vladimir Putin
The same outlook apparently governs U.S. policy toward Russia.
Prior to Russia’s seizure of Crimea and its covert intervention in eastern Ukraine, major Western oil companies, including BP, Chevron, ExxonMobil, and Total of France, were pursuing elaborate plans to begin production in Russian-controlled sectors of the Black Sea and the Arctic Ocean, mainly in collaboration with state-owned or state-controlled firms like Gazprom and Rosneft. There were, for instance, a number of expansive joint ventures between Exxon and Rosneft to drill in those energy-rich waters.
“These agreements,” Rex Tillerson, the CEO of Exxon, said proudly in 2012 on inking the deal, “are important milestones in this strategic relationship… Our focus now will move to technical planning and execution of safe and environmentally responsible exploration activities with the goal of developing significant new energy supplies to meet growing global demand.” Seen as a boon for American energy corporations and the oil-dependent global economy, these and similar endeavors were largely welcomed by U.S. officials.
Such collaborations between U.S. companies and Russian state enterprises were then viewed as conferring significant benefits on both sides. Exxon and other Western companies were being given access to vast new reserves — a powerful lure at a time when many of their existing fields in other parts of the world were in decline. For the Russians, who were also facing significant declines in their existing fields, access to advanced Western drilling technology offered the promise of exploiting otherwise difficult-to-reach areas in the Arctic and “tough” drilling environments elsewhere.
Not surprisingly, key figures on both sides have sought to insulate these arrangements from the new sanctions being imposed on Russia in response to its incursions in Ukraine. Tillerson, in particular, has sought to persuade U.S. leaders to exempt its deals with Rosneft from any such measures. “Our views are being heard at the highest levels,” he indicated in June.
As a result of such pressures, Russian energy companies were not covered in the first round of U.S. sanctions imposed on various firms and individuals. After Russia intervened in eastern Ukraine, however, the White House moved on to tougher sanctions, including measures aimed at the energy sector. On September 12th, the Treasury Department announced that it was imposing strict constraints on the transfer of U.S. technology to Rosneft, Gazprom, and other Russian firms for the purpose of drilling in the Arctic. These measures, the department noted, “will impede Russia’s ability to develop so-called frontier or unconventional oil resources, areas in which Russian firms are heavily dependent on U.S. and western technology.”
The impact of these new measures cannot yet be assessed. Russian officials scoffed at them, insisting that their companies will proceed in the Arctic anyway. Nevertheless, Obama’s decision to target their drilling efforts represents a dramatic turn in U.S. policy, risking a future contraction in global oil supplies if Russian companies prove unable to offset declines at their existing fields.
The New Weapon of Choice
As these recent developments indicate, the Obama administration has come to view the oil weapon as a valuable tool of power and influence. It appears, in fact, that Washington may be in the process of replacing the threat of invasion or, as with the Soviet Union in the Cold War era, nuclear attack, as its favored response to what it views as overseas provocation. (Not surprisingly, the Russians look on the Ukrainian crisis, which is taking place on their border, in quite a different light.) Whereas full-scale U.S. military action — that is, anything beyond air strikes, drone attacks, and the sending in of special ops forces — seems unlikely in the current political environment, top officials in the Obama administration clearly believe that oil combat is an effective and acceptable means of coercion — so long, of course, as it remains in American hands.
That Washington is prepared to move in this direction reflects not only the recent surge in U.S. crude oil output, but also a sense that energy, in this time of globalization, constitutes a strategic asset of unparalleled importance. To control oil flows across the planet and deny market access to recalcitrant producers is increasingly a major objective of American foreign policy.
Yet, given Washington’s lack of success when using direct military force in these last years, it remains an open question whether the oil weapon will, in the end, prove any more satisfactory in offering strategic advantage to the United States. The Iranians, for instance, have indeed come to the negotiating table, but a favorable outcome on the nuclear talks there appears increasingly remote; with or without oil, ISIS continues to score battlefield victories; and Moscow displays no inclination to end its involvement in Ukraine. Nonetheless, in the absence of other credible options, President Obama and his key officials seem determined to wield the oil weapon.
As with any application of force, however, use of the oil weapon entails substantial risk. For one thing, despite the rise in domestic crude production, the U.S. will remain dependent on oil imports for the foreseeable future and so could still suffer if other countries were to deny it exports. More significant is the possibility that this new version of the oil wars Washington has been fighting since the 1990s could someday result in a genuine contraction in global supplies, driving prices skyward and so threatening the health of the U.S. economy. And who’s to say that, seeing Washington’s growing reliance on aggressive oil tactics to impose its sway, other countries won’t find their own innovative ways to wield the oil weapon to their advantage and to Washington’s ultimate detriment?
As with the introduction of drones, the United States now enjoys a temporary advantage in energy warfare. By unleashing such weapons on the world, however, it only ensures that others will seek to match our advantage and turn it against us.
Ezra Holdings Limited’s Subsea Services division, EMAS AMC, has finalised three contracts with Noble Energy valued collectively at over US$300 million.
The scope of work includes engineering, procurement, construction and installation of subsea tie-backs for the Big Bend, Dantzler and Gunflint field developments in the US Gulf of Mexico.
The project management, engineering and procurement are already well underway from EMAS AMC’s Houston office with fabrication of the 16 subsea structures, and stalking and spooling of over 160 miles (258 km) of line pipe, in progress at the recently upgraded EMAS Marine Spool Base facility in Ingleside, Texas.
Offshore execution is scheduled for 2015, utilizing five EMAS AMC offshore construction vessels including the new build, ultra-high tension, deepwater reel lay and heavy lift vessel, the Lewek Constellation.
“Following the successful completion of the Tamar project, I am particularly grateful for the continued trust and confidence that the Noble Energy team has shown in our people and our capabilities. It is a testament of our ability in delivering operational excellence and results,” said Mr Lionel Lee, Ezra’s Group CEO and Managing Director.
“With our flagship vessel Lewek Constellation, we are helming the future of the subsea industry, and with her in operation, we will continue to drive our growth as a premier global subsea tie-back contractor.”