Busting Conspiracy Theories (#1) - Blood for Oil Part 3: Haliburton - Dealing with the Devil or The Devil is in the Details

As in the last 3 postings, I have tried to show that conspiracies can be generally discounted through actual information, data and details. My own personal experience shows that people get most of their information from the "headline" section of the newspapers and other media resources. They apparently cannot take the time to read the entire story or look up other information or even strain their memories for historical activities that relate to the subject.

More so, even though we have "transparent" government, most people don't have a clue about government contracting, spending, defense programs, etc. I remember the 90's and the big push to eliminate "paper" in government and streamline practices to reduce costs (Clinton Administration). Today, nobody outside of government employees who had to "implement" the program, has any real idea how it worked or what it effected.

In this case, "Blood for Oil", nobody (including journalists) apparently cared enough to go find out how much oil and revenue was actually possible from Iraq. No one bothered to review the details of the contracts, where the money came from, how it was spent, who got it, why... I could go on. If it weren't for the fact that these folks are spreading "information" taken as "the truth" by the general population, I would feel some sympathy for them. Particularly as I have just pored over hundreds of pages of documents, news articles, etc. There were several nights I fell asleep reading it. It was definitely not the most exciting information to read and it takes some time to read through reams of information and legal jargon to get to the bottom line.

Having said that, I must, at this time, express my outrage, for lack of a better word, at what I see as a tremendous failure in journalistic integrity/ethics/investigative abilities. Not just about the missing information, but from the sheer laziness and apathy in this group which is apparent when you read 42 news articles on the same subject. In this case, the Halliburton defense contract.

After you read these articles, it becomes apparent that none, NONE of these people actually went out and investigated the story for additional information. Instead, they all read the same AP or UPI story and just kept parroting it over and over with, maybe, one or two additions of interviews with people like Sen. Waxman (D-California) who was re-enforcing the story with his own partisan diatribe.

I will be supplying a list of a good number of these news articles at the bottom of this entry, but I will summarize appx 6 months worth here:

• Dick Cheney is the ex-CEO of Halliburton in the 1990's
  Actually, most of the stories started their first line with "Dick Cheney's company Halliburton" or "Dick Cheney's old company Halliburton", etc. Implying, over and over, that Dick Cheney still has a direct business link to, still operating, or owns Halliburton.
  
• Dick Cheney still receives payments from Halliburton
  
• Dick Cheney still owns stock in Halliburton
  
• Halliburton was awarded a $7bn contract from Pentagon for Iraq reconstruction
  
• Contract was awarded with no bidding
  
• Halliburton Audited by GAO
  
• Senate oversight committee demands investigation
  
• Sen. Henry Waxman (D-California) says there's something sinister going on

That about sums it up. 41 of 42 articles said this, over and over again. 41 articles all fed us the same tripe, as if we were idiots and couldn't understand, without providing any background information on the allegations. NONE but one. Byron York, from National Review Online (admittedly right of center publication), was one of the few that actually investigated how contracts were awarded, where the estimated value came from, where Halliburton's relationship with the government came from, etc. I recommend reading his article before continuing on through the details I have supplied here.

The Conspiracy Theories: Blood for Oil

"Blood for Oil" as you can see by my postings, is a rather simplified chant taken up by the anti-war folks. Underneath that title is a whole host of sub-conspiracies which is why this particular "Busting Conspiracies" section is broken into so many parts. Once you get through one "conspiracy", the CTs add on the "but, ..." And go down a side road. Let's recapture the general theories we've heard to date:

• The US went to war with Iraq to get it's oil
  
  • We cleared that. The US was already getting oil from Iraq under the "UN Food for Oil" program.
    
  • The US bought it at fair market value
    
  • The Iraqi oil production is negligible (2.5mil bbl/day)compared to other countries, total world production and US demands.
    
  • Even with additional drilling, the increase in production (4mil bbls/day by 2010) is negligible comparatively speaking
    
  • The US didn't need that oil. Could have offset any loss with increased production in the US
    
  • The US is not the sole beneficiary of this oil. Iraqi oil is now being sold to any number of countries, including the US
  
  
  
• The US went to war with Iraq to get the revenue from oil
  
  • Cost of Iraqi oil compared to cost of war would equal no profit to US
    
  • Would have been cheaper to lift sanctions and deal with Saddam like France and Germany
    
  • All money made by sale of oil is going into the Iraqi Central Bank for spending by Iraq for reconstruction
    
  • US is actually paying the companies involved out of tax payer money, not Iraqi money
    
  • The US actually lost money on this deal
  
  
  
• The military industrial/oil (Halliburton) complex convinced the President to go to war so they could get the Iraqi oil and make money
  
• And/Or, after the war planning was underway, Halliburton was given a favorable deal to manage the oil wells, etc because of their past connection with Vice President Cheney in order to make Dick Cheney and friends rich.

The last two issues we are dealing with here.

Vice President Dick Cheney and Halliburton

In the cut and paste world of journalists and CTs (conspiracy theorists), this is the primary source of The Conspiracy. When I read the articles, it was interesting how none of the articles actually put the dates that Dick Cheney was CEO of Halliburton. They all put out some ambiguous "1990's". As if he was the CEO for at least 10 years and over saw all of Halliburton's deals with the US government and it was through his contacts with the Republican party that allowed Halliburton to obtain these contracts.

Fact: Dick Cheney Secretary of Defense under George H. W. Bush from 1988 to 1992
Fact: Dick Cheney was CEO of Halliburton from 1995 to 2000
Fact: Dick Cheney left Halliburton in 2000 to accept the office of Vice President under George W. Bush
Fact: Dick Cheney sold Halliburton shares ($6 million)when he left the company
Fact: Dick Cheney assigned all profit from his stock options to charity ($8 million)
Fact: Dick Cheney has received a yearly deferred pay out from Halliburton since he left (golden parachute)

147k in 2001; 162k in 2002; 2003-2004 unknown
Pay out is to amount to appx $1 mil total

Fact: Dick Cheney will receive yearly deferred pay outs for the next 3 years based on his agreement when he left Halliburton.

• Payments or payment amounts are not contingent on any revenue or share or stock value from the company. Payments and payment amount is based on a percentage of actual available cash.
  
• For those unfamiliar with executive management and golden parachutes, this is neither unusual nor illegal. This is part of the "compensation" package that many CEOs get when taking the job. Part of their salary. For comparison, check out Lee Iacocca and Ford, GE, Coca-Cola, etc or read Forbes and Fortune 500 magazines.
  
• Pay out based on percentage of cash flow over a period of years is not abnormal either. This is actually to protect the company that is doing the pay outs. They need to pay their bills first so they can stay in business. Pay outs to non-employees are way down on the list of things the company will spend money on when it has a business to run.

Fact: Dick Cheney took out an insurance policy for this deferred payment. IE, if Halliburton goes under, bankrupt, runs out of cash, he will get paid no matter what. His payments are not contingent on the success or failure of Halliburton.

• For any confused, this was done specifically to insure that there could be no conflict of interest between his Vice Presidency and a government contracted entity

If you don't have the picture yet, Vice President Cheney has no viable connection to Halliburton besides his past job. He has no vested interest in it's performance. He will get his cash when they have their cash and he will get paid even if the company goes under.

Ergo, he would have no good reason to interfere or promote Halliburton contracts within the government unless he just wanted to risk impeachment and embarrass the Presidency by making his friends rich. Of course, everyone leaves out the hundreds of thousands of shares held in mutual funds for average stock investors like you and me. I am more than positive that my 401k mutual fund plan has a chunk of Halliburton stock and is performing nicely, thank you, and I have no relationship to either Dick Cheney or Halliburton.

Halliburton History of Government Contracts

This may come as a shock to everyone, but Halliburton and it's subsidiaries have been doing business with the government since 1942 (Gasp!). That's right, they did not suddenly appear on the scene after President Bush and VP Cheney came into office. They just appeared on our radar because somebody decided that VP Cheney's relationship would make some good news/conspiracy fodder.

Here is another shocker: Halliburton is a for profit company. (Gasp!) Yes, they are in the business to make money. It would be disingenuous of me not point out that Halliburton, under Cheney's control, increased it's contracts with the US government during his time as CEO. What would be stupid is to assign any sinister intent to this activity. He was not in government at the time and it was his job as the CEO to increase revenues and insure dividends to the stock holders. That is the CEO's job.

Fact: Halliburton grew revenue related to government contracts from $1.5bn to $2.3bn between 1995 and 2000
Fact: Halliburton is a $15bn per year enterprise
Fact: Government contracts amount to 16% of Halliburton Revenues
Confused? This means Halliburton does not rely on government contracts to make or break the company. It has other, non-government contracts which make up the bulk of it's business.

Let's look at the timeline to see Halliburton's history and connections:

• 1919: Haliburton is founded
  
• 1942: Root & Brown builds the Corpus Christi, Texas Naval Air Station
  
  • Root & Brown not yet part of Halliburton
  
  
• 1962: Halliburton purchases Root & Brown (UK company)
  
  • Augment civil engineering projects.
    
  • For a taste of journalism investigative technique, one article indicated Root & Brown was purchased during the 1970's. A little off, don't you think?
  
  
• 1968: Halliburton contracts with NASA
  
  I'm only listing a few of the really historical contracts so you can get a feel for the long term relationship between this company and the government.
  
  
• 1985: LOGCAP - Logistical Civilian Augmentation Program adopted by Pentagon
  
  This is a not a Halliburton project. This is a defense contracting program that has significant importance later
  
  
• 1991: Halliburton contracts with Department of Defense to put out the oil well fires (320) in Kuwait after Desert Storm/Gulf War I
  
• 1991: Root & Brown separate contract to rebuild infrastructure/public buildings, etc
  
  History lesson here. Saddam Hussein invades Kuwait. When attacked, he withdraws, adopting a "scorched earth" policy. Sets 320 oil wells on fire. Iraqi troops loot and destroy public and private property. Kill Kuwaiti prisoners, commit general rape and pillage.
  
  
• 1992: Root & Brown wins LOGCAP bid for logistical support of troops
  
  • Somalia, Bosnia, Croatia, Hungary
  
  
• 1995: Dick Cheney becomes CEO
  
• 1995: Root & Brown gets $31.5mil to dismantle ICBM (inter-continental ballistic missile) silos in Kazakstan
  
• 1996: Vice President Al Gore lauds LOGCAP program and Halliburton for performance in the field and reduction of government spending
  
• 1997: DynaCorp wins LOGCAP bid. President Clinton's pentagon dismisses results and re-signs Halliburton as sole-purpose contractor
  
  • Sites Halliburton performance, knowledge of countries/areas/resources and cost (time and money)of changing providers in mid stream
  
  
• 1998: Halliburton merges with Dresser Grp (Europe)
  
  • Subsidiary of Dresser, Wallace M. Kellog. Engineering and project management
  
  
• 2000: Dick Cheney leaves Halliburton to become Vice President
  
  • Sales his stock and assigns profit from shares to charity
  
  
• 2001: Halliburton wins LOGCAP bid
  
  • Logistic support to Saudi Arabia, Kuwait and Qatar
  
  
• 2001, September 11
  
• 2001, Oct: War on Taliban in Afghanistan
  
• 2002: Halliburton spins off subsidiaries Kellog and Root & Brown to form separate engineering company and allow Halliburton to concentrate on oil business 2002
  
• 2002, Sept 12: President addresses UN on Iraq's failure to comply with UN resolutions
  
• 2002, Sept: Halliburton asked to create oil well fire contingency plan under LOGCAP agreement for Iraq
  
• 2003, Mar: Final details of contingency plan for oil well fires completed and memo forwarded to White House. All systems go for invasion.
  
  • Halliburton receives $7bn ID/IQ (indefinite demand/indefinite quantity) contract under LOGCAP agreement
    
  • Army Corp of Engineers sites existing LOGCAP contract and necessity for speed as reason separate bidding not necessary nor undertaken
  
  
• 2003, June: Allegations that Halliburton is over charging for gas and oil purchased from Kuwait
  
  • Halliburton discovered problem and began internal investigation
  
  
• 2003,July: Two Halliburton employees fired and charged with taking $6mil in kickbacks from Kuwaiti oil company
  
• 2003, Aug: GAO (General Accounting Office)launches review of charges and payments
  
  • Discovers they were paying 2.57/gallon for gas from Kuwait compared to 1.18/gallon from Turkey reported in Dec 2003.
    
  • over charge $61 million dollars. Halliburton refunds money
  
  
• 2003, Oct: Sen. Waxman (D-California) begins questioning Halliburton contracting and connections to White House.
  
  • Demands investigation into Halliburton contract and method of awarding contract
    To understand his possible motivation, Bechtel, one of the potential contractors in this situation, is a California based company. While it did not personally raise an objection to the contracting process, hoping to get subcontracts (which it did), it would not be politically incorrect to say that Sen. Waxman was looking out for his own constituency; trying to insure that some of the federal money made it's way into Californian's (and thus California's) pockets.
  
  
• 2003, Oct: DoD pulls gas acquisition contract from Halliburton and opens it for bidding
  
• 2004, Mar: Army Corp of Engineers assigns oil and fuel contracts to new providers
  
• 2004, April: GAO clears "No Bid" contracting as legal

LOGCAP: Logistical Civilian Augmentation Program

Before we continue with any summations, a little education on Department of Defense contracting is required. Otherwise, the "No Bid" aspect of this conspiracy, does not go away. First, since the first flapping of fledgling wings of freedom in this country, civilian contractors have supported the US military. During the Revolution, the Continental Army requisitioned food, boats, shelter, animals, etc from civilians. This has continued through all the wars the United States has fought. Another good example would be World War II. The private sector was highly mobilized in order to provide material and logistic (merchant marines) support.

As threats to the US security changed, the size and scope of the military has changed as well. Starting in 1985, the government recognized that it was not effective to have our troops tied up in "support and logistics" missions instead of actual combat missions. Also, with the emerging threats and available weapons, it was necessary to insure that these support abilities were in place and ready to go at a moments notice. Under this guidance, the Pentagon developed the LOGCAP contract program.

LOGCAP contracts are almost open ended contracts with companies to supply any number of services under the general guidelines of the agreement. These include: building bases, supplying food, laundry services, basic commodities, electricity, transportation, etc, etc, etc. Honestly, the list of things that can be purchased through a LOGCAP contract is huge. Generally, the needs of the military are based on projections of possible hostilities from multiple theaters of action. For instance, there is an existing plan in place for peacekeeping forces in Uganda, based on a usual deployment and number of troops, these specific items will be required, in this estimated quantity per troop, per day.

LOGCAP contractors are signed and their contracts state: if we need you, you will supply these services, whenever or where ever that might be. LOGCAP bidding actually takes place every four years, coinciding with administration changes in the Pentagon. LOGCAP assignments are used during times of peace as well, whenever support to troops within or without the US is necessary. These contracts are not "conflict" driven.

Whenever an emergent situation arises, such as actual warfare, and quick roll out of logistic support, where every detail cannot be vetted for cost analysis, as required under the LOGCAP program, an ID/IQ (indefinite demand/indefinite quantity) agreement is developed and signed with the LOGCAP contractor. A new contractor is not looked for, nor open bidding demanded, unless the LOGCAP contractor cannot meet the demands of the project.

The dollar cap for this ID/IQ is $7bn. Every time this type of agreement is enacted, for every company that participates, the cap amount is the same: $7bn. This does not mean that the contractor automatically receives $7bn. It means, they can receive up to $7bn in task orders without additional approval. Most ID/IQ contracts do not result in $7bn in expenditures. Pre-Iraq war ID/IQ to Haliburton resulted in $270mil in expenditures. Last ID/IQ to Halliburton for Iraq activities is estimated at $3.5bn value.

Recap

• LOGCAP contracts are normal Department of Defense activities
  
• LOGCAP agreements do have open bidding processes
  
• LOGCAP's are awarded every 4 years at the same time the administration changes by election
  
• One contractor wins bid for major operations
  
• ID/IQ agreements are normal Department of Defense activities
  
• ID/IQ agreements are open specification agreements awarded under LOGCAP contracts
  
• ID/IQ agreements do not require open bidding
  
• ID/IQ agreements ALL have a cap spending value of $7bn
  
• $7bn cap is the highest dollar value that can be paid to the contractor without additional analysis or contract language/details
  
• $7bn cap does not mean the contractor receives $7bn dollars

Halliburton and LOGCAP

Fact: Halliburton was awarded a LOGCAP contract at the beginning of 2001
Fact: Halliburton's contract does not expire until January 2005
Fact: Halliburton presented the "Iraqi Oil Well Fire" contingency plan under their LOCGAP agreement
Fact: The Army Corp of Engineers did not seek out additional inquiries or bids because they did not believe it was necessary under the LOGCAP agreement
Fact: Halliburton was awarded an ID/IQ agreement with a $7bn cap for putting out potential Iraqi oil well fires and getting the oil infrastructure in Iraq back on line
Fact: Neither Halliburton nor Pentagon expects that the cost will be $7bn
Fact: Kellog, Root and Brown received an ID/IQ agreement with a cap of $7bn for rebuilding public buildings and other infrastructure as well as building bases, field hospitals, etc for the military
Fact: Neither KRB nor Pentagon expects that the cost will be $7bn
Fact: Halliburton discovered their own over charge and reported it to the government (internal self audits are required by the government in order to maintain federal provider status)
Fact: Halliburton fired employees it discovered was cheating the government
Fact: Halliburton repaid the overpayment without being taken to court, because it is required in order to maintain federal provider status
Fact: Pentagon reviewed contract for delivery of fuel in Iraq and determined that it could be had cheaper through another contract. Fuel delivery ID/IQ awarded to separate contractor
Fact: LOGCAP contracts with Halliburton and agreement award process was deemed "legal" by the GAO
Fact: Halliburton and KRB continue to do business with the government under their LOGCAP and ID/IQ agreements

Net Revenue, Profit Margins and Profiteering of the Military Industrial/Oil Complex

Well now, we must get down to the nitty gritty of The Conspiracy. According to the CTs, the military industrial/oil complex is so strong and powerful that it no longer serves the government, but the government serves the industry. This is not a new argument. During the days of the Civil War, there was a small group that insisted that the Union's battle against the Secessionist states was illegal. That they had the right to separate from the US. That the northern, more industrialized states were only fostering this war because they wanted total access to the raw materials that the south provided.

During Vietnam, these same arguments returned, insisting that Dow industries, the maker of Nepalm, Boeing, Lockheed and any number of other companies had tricked the US into going to war in Vietnam so they could test their "new toys" and make money off of the US by legally selling it weapons during a time of war. Those were the years that the term "military industrial complex" arose.

Looking over the information provided, it is simple to see that the US military has always needed, and will always need, support from the civilian sector. The joint operations of civilian and military groups help insure the ability for the military to deploy and be supported without delay or failure.

In terms of profit, the jury is still out. The estimates for profit under these contracts have been between $300mil and $400mil. No actual figures have been released by Halliburton or KRB regarding the specifics of these operations. However, first quarter reports $5.5bn total revenues (including all services provided, not just government contracts) with a $76mil profit (appx 13%). Halliburton has indicated that the profit figures could change (more or less) depending on additional "task orders" and the mission on the ground. Halliburton's stock has not suffered and will certainly be a boon for it's stock holders. However, the jury is still out on that as well, as continuing problems with projects and government contracts erode buyers confidence in the stock.

If their current profit assumption holds true, they will have made appx a 10-14% profit off of $3.5bn in revenue. Respectable profit, but hardly "profiteering".

Then there are the issues of over billing or other contract abuse. Certainly, Halliburton has issues that need to be addressed. The recent incident in Iraq with the $6 mil kickbacks resulting in the firing of 2 managers and the $7mil in kickbacks from Nigerian politicians that also resulted in terminating 2 managers, needs to be highly scrutinized by Halliburton. Obviously, it has been a little too busy making money and not paying enough attention to it's corporate culture and ethics.

Looking at the contracts that Halliburton has had and the potential for future contracts, it is not in Halliburton's best interest to routinely try to defraud the government of money. The GAO is very careful about routinely reviewing contracts, claims and dollars spent (I know, my company provides Medical services for Medicare patients). They will come after you and the money. You will not be able to do business with the US government again. There is far too much money to be made through legal means to risk purposeful fraud.

Having said that, in every organization, there are those that will take advantage of a situation for their own sake. All companies must guard against this and take quick, severe action where ever it is found. All the way to the top, if necessary.

What is probably the driving force for the Halliburton/Iraq Oil issue, is not what Halliburton is making from the US government now, but what it could make at the fore front of contractors for Iraqi oil when the hand over has occurred. These are years and years of potential contracts and money. Something that is not widely known is the fact that companies holding contracts on oil fields prior to the invasion, have had their contracts "held" for review by the Iraqi Interim Government, however, these same companies still operate in Iraq under their pre-invasion contracts (how do you think oil is leaving Iraq now?) actually pumping and distributing the oil. These countries and companies include Russia, France, Japan, etc.

Halliburton did not take over any of these operations, but instead focused on rebuilding infrastructure (like pipelines, terminals, etc). While Halliburton might have a foot in the door above other companies by dent of their current proximity to the situation, it does not mean that Iraq has to, or will, remain with Halliburton to continue these reconstruction efforts when paid by Iraqi money. They are free to obtain bids from any company, from any country and decide, based on capability and economy, who is the best to assist them in their endeavors.

There is a serious misconception about Halliburton's roll in the Iraq oil program. The proof of which is readily ignored by the press for sensationalist titles about corporate ties to the White House, no bid contracts and conflicts of interest to name a few. They would rather perpetrate the myth of the "military industrial complex" than to actually do some investigative reporting, show the facts and let the people decide. It is blatantly obvious that "tabloid TV" has bled over into our news and we should be ashamed.

The Next Four Years: Pentagon Contracting

The next four years will be no different than the last 20 in regards to government contracting. LOGCAP will stay in place and civilian industry will continue to augment the military capabilities. The ability to project power, both military and diplomatic, will continue to be the onus of the United States. It is that ability which continues to insure our enemies, both real and perceived, understand that we are ready and able to respond to any situation at a moments notice.

Contractors, including Halliburton, Bechtel, Sysco Foods, etc will continue as the back bone of support. This is not a "neo-con" creation. It is the extension of a doctrine, adopted by both Democrats and Republicans, which states that the private sector is more capable of providing these services on a short term or world wide basis, than the government to retain and maintain military personnel for the same activity. It is also the doctrine that states that this ability by the private sector is less expensive, less costly than operations solely held and operated by the government.

Stay tuned for out next installment of "Busting Conspiracy Theories - Blood for Oil" where we will discuss the relationship of oil, economy and terrorism and it's world wide effects. We will try to have a brief section on the Vice President's Energy Task Force and how it is playing a role in the conspiracy, particularly, not making the information public and why the Supreme Court ruled that it did not have to be released under the Freedom of Information Act.

Iraq sovereignty Declared 2 Days Ahead of Schedule

I had to put this in right now. I was up working on my pet project when I heard the news. 2:02 AM Central Standard Time....

Happy Birthday Free Iraq!

The CPA is dissolved. No more occupation. We are now there under the auspices and invitation of the Iraqi government.

The so called "resistance" doesn't have a damn thing to "resist" anymore. At least not ideologically. The other Iraqi bloggers I have become so fond, of are reporting that the Iraqi people are getting pissed off! They want these guys and they want them bad.

WANTED: DEAD OR ALIVE

No wonder I like that Allawi character. They called Bush a cowboy for making those kind of statements. Allawi has just become my favorite "cowboy" of the middle east.

I think Sarmad wants to join the posse.

Saddle up boys, we've got a job to do!

Update: 3:33 AM CST USA

Paul Bremer has left the building. Thank ya...thank ya very much!

Conspiracy Theory Intermission

I have been busily looking for information about Haliburton, KRB, Cheney, Energy Task Force, etc as well as doing my real job (torturing the San Diego branch with my presence again this week) and haven't had time to put together my next episode of "Blood for Oil". However, during a recent jog through the blogosphere, I ran into "Lu", who appears to have some background on this subject. I decided to copy our conversation here as it seemed rather pertinent to this section of the blog.

These comments are largely un-edited. I say "largely" not because I cut and pasted only parts of "Lu's" posts, but because I cut out our side conversations about other subjects. For instance, an impassioned plea from our oppressed friend in Canada who begged us to invade them and liberate the cows. We declined as we have plenty of cows here. I didn't post it here because I didn't want some crazy conspiracy theory to start up (ie, John Candy?) abut invading Canada. LOL

So, without further adieu, Kat and Lu discuss oil and energy policy:

Kat,
I went to your blog to see what was going on there and can give you some information that might interest you because I have worked as an energy economist. Europe and Japan are much more dependent on Middle Eastern oil than we are--but the Saudis often produce the incremental barrel so can set the world price. Third, the tar sands in Alberta Canada contain more crude reserves than all the estimated reserves in Iraq. (Watch out,Louise, we could invade you) Economic ways of extracting the crude from the tar sands are being used and that is what masks, in my opinion, the peaking of world production from conventional wells.
Lu | Email | Homepage | 06.24.04 - 10:07 pm | #

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Lu...you are the best! I've been searching and reading so much data on the oil thing that it was making me go cross eyed.

I was reading some information about the "peaking" of conventional oil wells, when and where it will happen first. Also, saw a graph on the untapped oil reserves around the world.

Apparently, Korea has some possible off shore abilities that need to be explored, but are difficult due to political issues(?)

I hope we don't have to invade Canada! I have so many friends their! LOL

I actually have part 3 and 4 of my "conspiracy busting" going at the same time. In 4, I am planning to discuss oil and the over all stability of the middle east, effect on economy, history of changing basis of economy, need for other technologies, why peaking reserves demand this (how long we have, per se), and what might be the future of the ME if said technologies become advanced enough to leave their economies behind.

Wow...is that a lot to cover? Hey...When you said the US was buying Iraq's oil at fair market value...Did you mean we were buying it ALL? No one else got any?

I just want to know if I have to change my outcomes. Where would I find that info, do you know?
Kat-Missouri/USA | Email | Homepage | 06.24.04 - 10:25 pm | #

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Kat,
A lot questions so I'll do my best.

Peaking of conventional wells---
I believe it has happened. Some believe that it will happen in 10 years and some think 20. The top energy economist in the world--I do not exaggerate!--the state of Alaska and the Saudis have hired him in the past and hang on his every word--agrees with me on that --we are good friends.
We used to laugh and say that when the US peaked, we would import from Canada--but they've probably peaked too--definitely have with natural gas! This is not an exact science. Most reserves in OPEC countries have been overestimated--if you look at the numbers available they are not accurate--the reason is that their allowable production within OPEC is based on their reserves so all the oil companies who need to work with them overestimated reserves as a courtsey so each country could produce more and get more oil revenues!
We will have to be nice to Canada about their lumber experts since that is a real sore spot.
I hate to say this among republicans, but Kerry's plan to wean us from ME oil is excellent and the current Bush plan is full of give-aways to the companies and tries to preserve an unrealistic status quo. We need to start now!
Solar, wind--the technologies here are dominated by the oil companies and are not yet economically competitive. We should be mass producing cheap photovoltaic panels right now! We did import just about all of Iraq's production--there was some going to Jordan and there was domestic use but almost all of their official production came here if you match our imports with their official production and export statistics. I wish I could give you sources but I put these things together from so many different sources that I just can't think of them all and it would take me hours to dig them all out again so I will just try to guide you in the right direction. The economic repercussions will as usual be full of the unexpected. The peaking means that oil prices and other fuels like NG and coal will rise steadily--with ups and downs of course, but the direction is up for sure. The growing demand from China and India will aggravate this--maybe the economic slowdown expected in China will slow demand. Demand is a function of overall economic activity and the price is a world price--no one country can grab an unfair share--they all just pay the price and if they can't afford it they buy less. For many years the primary risk to supply has been the instability of the Saud government--the terrorist attacks are not the real revolution going on there, the people want more freedom so it is ripe for trouble at some point. They need trained foreigners there to produce the oil. The effects on world economies of rising oil prices are very serious--if you think of it there is no economic activity that does not have the cost of oil built into it! Just try to name one and you will understand. Inflation big time. Recessions and limited growth. If we started co
Lu | Email | Homepage | 06.25.04 - 12:09 am | #

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ooops! I typed right over the limit--the economic effects are not happy. If you need more let me know.
Lu | Email | Homepage | 06.25.04 - 12:18 am | #

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got it..The economy based on oil was pretty evident to me as well as the "unrest in middle east" possibly pushing us to 1978 gas lines and depression. That's why I can't figure the whole "no blood for oil" thing from some people. That always seems so hypocritical to even start chanting that when they should stop driving their SUVs and start walking if they want to change it. But, truth be told, we are some selfish folks sometimes and we don't like to change our ways any more than Faiza does although we sure like to talk about it. I am of the opinion that we probably won't have much choice sometime soon.

If I understand both parties energy policies, it would seem to me that we actually need a little of both. Viable technologies that will help push diesels and trains around are a necessity for delivering goods. If we can't at least figure out how to do this en masse, we are going to be screwed one way or the other.

Therefore, I think we need to insure that the oil resources stay available while we figure out how to move the new technologies forward. We need both policies. Any other candidate on the horizon running with this?

Not that I want to add to the conspiracy theories, but, ever since I read the info on "peak production" I have been wondering if that is what is in the secret "Cheney Energy Committee" minutes. Maybe a realistic outlook on our energy needs and future? And, nobody wants it to be wide spread in case it causes panic. You know..Your average American doesn't pay much attention except for the price of gas.
Kat-Missouri/USA | Email | Homepage | 06.25.04 - 12:39 am | #

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PS...thanks again Lu, I'll start looking for some different resources.
Kat-Missouri/USA | Email | Homepage | 06.25.04 - 12:40 am | #

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Kat,
You might try one of the international oil companies--but the numbers just are not accurate! The real ones are not public.
The problem is we have done nothing about this problem!
One of the documents that came out about Cheney's meetings was a map of Iraq marking possible new reserves for development--and we all know there was no plan to develop that oil while Saddam was still there.
I think one of the reasons we attacked them was to make the country a stable democracy and transform the ME thus insuring the uninterrupted flow of oil to the world. Again, my feeling is that was the wrong approach because it has intensified the hatred for the US through out the ME and governments willing to work with us will not always be in power--the people in power will be the ones who hate us. About half a million people were killed or wounded this morning in Iraq and it's just starting to heat up. With Iraqis not understanding the nature of al Qaida and actually working with them and allowing them to coordinate their attacks because they believe that they are fighting for Iraq's freedom is heartbreaking. Our intensions at this point are not believable. I've traveled quite a bit in the ME and these are proud people who will only accept one of their own as a leader-now anyone associated with us or the UN is suspect. This could spread into a real revolution through out the country. We may have a legitimate case that the war could benefit Iraq in the long run but it doesn't seem to be in our national interest. I'm falling asleep!
Lu | Email | Homepage | 06.25.04 - 1:01 am | #

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Sorryl..Only 10 pm here. You must be on the east coast. I'm in CA today.

Lu..I kind of have the impression we were damned if we do and damned if we don't. The AQs were going to keep after us. KSA is going to go revolutionary one day sooner or later and Iran was going to go nuclear.

Seems to me that we were already the "bastards" of the world and we could either wait for the changes to happen and re-act or take some action now. After 30 years of reaction, I was ready for some action.

My grandfather always said if you were going to be hung for stealing a lamb, you might as well steal the whole herd!
Kat-Missouri/USA | Email | Homepage | 06.25.04 - 1:26 am | #

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Lu...I was just on another site that was talking about only buying gas from certain companies because they only buy from Texas or North Sea. You think this is feasible, truth or helpful in the whole situation?
Kat-Missouri/USA | Email | Homepage | 06.25.04 - 1:33 am | #

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Kat,
That's down to earth but in this situation I don't understand why we couldn't at least have done it the way we always have. Saddam was loosing his grasp spending his time writing romantic novels--the sons did not have the command that Saddam had so surly there would have been upheaval at his death or even sooner. We could have gotten surrogates within Iraq to start a revolution and then supported them. There was no immediacy. There is a very plausible theory that Saddam himself believed that he had WMD and funds were going to his scientists, etc. For that purpose but they were pocketing it. That indicates his control had slipped The weapons inspector who came back and said we were all wrong about WMD--Kay wasn't it?--also said that the problem was worse than we imagined because of the disarray of the government. With that type of weakness we could have done something more indirect--not launch an all our military attack when we don't have enough troops to stabilize the country if this violence doesn't subside very soon. I just read the new polls and now a clear majority of the American public believes that this war was a big mistake and in the end the American public is very wise.
Lu | Email | Homepage | 06.25.04 - 1:46 am | #

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Kat,
To answer your question above, I think maybe that filling station might have some small advantage for awhile--the real problem would be the price, not shortages as we had during the embargo--assuming the oil is still flowing--with adjustments according to the qualities of the crude, world prices will rise. As long as you can pay more than someone else, you would be able to buy it. When prices rise, people want to buy less and conserve and look for substitutes. It's not a shortage. People in cold climates will have a problem with heating for example and may move south. The buying habits will change with higher prices as different goods reflect the price of oil--could you think on any product or service that would not be affected?.
Lu | Email | Homepage | 06.25.04 - 2:01 am | #

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Basically, people will just be poorer until the substitutes come on line and are cheaper.
Lu | Email | Homepage | 06.25.04 - 2:07 am | #

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Very interesting (and a little scary) information you provided Lu.

could you think on any product or service that would not be affected?.

I worked in the high tech industry and we 'shipped' some software products online. Of course, the price was not any cheaper than the version on the store shelves, but there was no transit cost in the calculation. The music industry is moving in that direction also.

Your information makes a good argument for telecommuniting also.
Kris, Seattle | Email | Homepage | 06.25.04 - 2:48 am | #

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hmmm...I think the war was much more than oil from Iraq. I'm not sure we could have waited (like Castro) for him to fall. Last time we did the insurgency thing it turned into the Iraqi "Bay of pigs".

I think that we must revert to the "war on terror" here. From my way of thinking, looks like KSA is going to be flash point soon. Whether it is Al-Qaida or other Revolution because of lack of significant reforms, it will happen and it won't be good. IMO, Islamist control of KSA oil doesn't sound like a good thing to me considering their stated agenda for the new Muslim world order.

Seems Iraq as a friendly nation next door might give us the ability to help stabilize KSA or fight the Islamists as necessary.

Again, IMO, we didn't have time to wait. I think we are running against the clock now and we have just sped it up so it didn't give the Islamists time to coordinate anymore than they already have. Sometimes, that's the purpose of doing something now rather than waiting. You pick the time and place, not the enemy.

Wellington marched his troops all day and all night to get to Waterloo ahead of the French. He had been there as a child and new the lay of the land. He new he could hide his troops amongst the rolling hills and provoke Napoleon into attacking what he thought was a smaller, exhausted troop. He did not allow for proper preparation of the battlefield, but threw his best troops onto the field, thinking he could win a quick victory. Please note what happened to Boney at waterloo.
Kat-Missouri/USA | Email | Homepage | 06.25.04 - 4:45 am | #

I want to add a small disclaimer here. I have not had time to look up the information that Lu suggested to me. All of Lu's information does seem to make sense, but this is only conversation between she and I, that I have not supported with research materials. Not because they don't exist, but because I haven't had the time. So...If you think anything debunks my debunking, think again. Lu makes a very valid point, early on in the posting: The US purchased almost all of Iraq's oil production at fair market values and this continued right up to the outbreak of the war. So, I would conclude that we did not attack Iraq to get their oil. Second, most of our petroleum imports come from Canada and next from Venezuela--.

In this case, I will let you draw your own conclusions.

Source:
Iraqi Bloggers Central

Busting Conspiracy Theories (#1) - Blood for Oil Part2: Value of Iraqi Oil vs. Cost of War

In the first installment of "Busting Conspiracy Theories", I reviewed the actual oil production of the US compared to the oil production of Iraq and the amount of oil actually being purchased by the US from Iraq. Let's recap some of the facts:

• The US produces 9% (8.9 mil barrels/day) of total world oil production(102 mil barrels/day)
  
• The US needs 20% (20.04 mil barrels/day) of total world oil production
  
  
• Iraq Produces only 2.3% (2.5 mil barrels/day) of the total world oil production
  
• The US purchases appx 3% (642k barrels/day) of it's total oil needs from Iraq.
  The other 1.9 mil barrels are purchased by France, Germany, China, Korea, etc. See Blood for Oil: Part1
  
  
• The OPEC/ME produces 38% (30.54 mil barrels/day) of the total world oil production
  
• The US purchases appx 21% (4.6 mil barrels/day) of it's total oil needs from the OPEC/ME.
  
• Or, 15% (4.6 mil/30.54 mil) of the total OPEC/ME oil productions
  
• Other countries purchase 85% (25.94 mil barrels/day) of the total OPEC/ME oil production
  Other Countries include: Europe (France, Germany, Britain, Spain, etc), Korea, China, Australia, Japan, etc. Table 2.1 World Oil Balance, 1999-2003

What assumptions can we make from these numbers?

1) Total Iraqi oil production does not match US oil needs
2) Amount of oil currently purchased by US from Iraq does not make a significant impact on US daily needs.
3) Loss of Iraqi oil for US could be absorbed from increasing internal production which was as high as 9.52 mil barrels a day in 2002(capable of offsetting loss of Iraqi oil)
4) There is no significant oil production to be gained from invading Iraq

Cracking Open the Nut of Conspiracy: Who Is Getting the Money
Now that we've cracked the nut shell, so to speak, we need to deal with the second part of the conspiracy theory: It's not the amount of oil, it's the value (money) and who gets it!

Not so fast! Let's answer the first question: who is controlling the ministry of oil?

Minister of Oil Ibrahim Mohamed Bahr al-Uloum Appointed Sept 2003
A Shia Muslim, al-Ulloum is the son of Shia cleric Mohammad Bahr al-Ulloum. al-Ulloum was educated in the United States, earning a Ph.D. in petroleum engineering from the University of New Mexico; he later worked for the Kuwaiti oil ministry, for the Petroleum Recovery Research Center in New Mexico, and as an independent consultant in London (from 1992 to 2003). He avoided an assassination attempt in Iraq on 12 October 2003

Well...That doesn't prove anything. He's an Iraqi ex-patriate. He's either a CIA or MI6 dupe. Of course, his degree in Petroleum engineering and the years working in the oil industry does seem to make him imminently qualified. Technically, the oil ministry is already under the auspices of the interim government. This will be confirmed on June 30. Problems arising from terrorist activities, continue to make the reconstruction and turnover difficult. However, Mr. al Ulloum is managing the ministry quite well and complete turnover is expected to be smooth.

Who is getting the money you might ask? According to multiple sources, the money, 6.9 billion in 2004 with a total of 10.79 billion, including 2003 oil proceeds are in the Central Bank of Iraq. Much of these proceeds are earmarked by the Iraqi Interim Government for reconstruction efforts along with 8.1 billion remaining from the recently released Food for Oil funds administered by the UN and transferred to the coalition on Nov. 21, 2003.

Of course, the CTs got heated up over the transfer and began calling it the black hole, insisting that 4 billion in oil for food money was missing based on their estimations. Little did they know that they were probably right on target with missing money, but it wasn't the coalition that took it.

The Value of Iraq's Oil vs. Cost of War and Reconstruction

In this section, we will now explore the approximate value of Iraq's oil based on current and projected output in 5 years based on current projections of US forces remaining as "guardians" until Iraq has a fully trained military, air force, police, etc and all ministries are firing on all cylinders. This is the optimistic projection. I will try to explore the same value in 10 years (pessimistic projections) and compare them side by side.

• Current oil production 2004: 2.5 mil barrels/day or 75 mil barrels/mo
  
• Projected oil production by 2010: 4.0 mil barrels/day or 120 mil barrels/mo
  
• Month over month oil production increase: .69 mil bbls/mo
  Projection is an average linear increase over 74 mos
  
• Total Iraq output through May 2009: 7.491 Bil bbls
  
  
• Current average price per barrel of oil: 36.80
  Projections indicate price could drop down to appx $28-$32/barrel but oil futures are indicating a high as much as $48/barrel (that's right. If the current gas prices don't make you shudder, wait until 2010; better buy hybrid). For the sake of this analysis I use a linear average increase from current pricing by .32/barrel for the next 74 mos.
  
  
• Total Iraq net revenue (before production costs) through May 2009: $319.5 Bil
  
• Total Iraq profit (after production costs; 32%) through May 2009: $105.9 bil
  This will be what is left for disbursements and rebuilding costs.
  
  
• Cost to prosecute "major combat" mission in Iraq (April 2003): $79 bil
  
• Cost to prosecute "pacification" mission in Iraq: $60 bil (avg $5 bil/mo to date)
  
• Cost to prosecute "pacification" mission in Iraq: $60 bil (avg $5 bil/mo thru May 2005) Including materials, personnel, building bases, etc based on current costs
  
• Cost to prosecute "stability" mission in Iraq: $41 bil (linear decrease Jun 2005 thru May 2009)
  Linear decrease to 1 mil/mo per DOD estimates for maintenance of bases, equip, personnel, etc)
  
• Initial seed money to Iraq for reconstruction (Nov 2003): $87 bil
  
• Iraqi debt to US forgiven: $5.2 bil
  
  
• Total US cost to prosecute Iraqi war and reconstruction: $332.2 bil

Ok...do I have to paint the picture again? The value of oil in Iraq for 6 years, starting from the war in March 2003 thru stability mission in 2009, cannot cover the cost of the actual war. Now, if you are a conspiracy theorist, you probably wouldn't stop there. The point would be made that Iraq has more than 6 years worth of oil. The issue here is that, Iraq has control of their money, completely and without reservations, on June 30, 2004. A separate auditing firm will be responsible for insuring that all monies are spent correctly and in Iraq. Further, as revealed by production and demand models, the US buys little of it's oil from Iraq.

Dammit! There he goes again! The President not only invades a country who's oil production couldn't support our daily oil demands circa 1925, but we can't even break even on the project! I'm calling my congressman!

Stay tuned for Part 3 of Blood for Oil: Haliburton's Deal with the Devil, where we will explore the potential profit and loss of this operation, cash flow and contract bidding/award process. (I decided I had to make a separate one to cover Haliburton, just to cover the gamut of issues brought up by the CT's about the "military/oil industrial complex")

Disclaimer: All figures were calculated by me. Oil production and value figures came directly form the Energy International Agency and the CPA. Prosecution of war, occupation and pacification mission costs are based on the Congressional Budget Office (CBO) estimates (with slight adjusted inflation of cost in last 6 mos considering on going violence and increase in troops on the ground) and known appropriation bills previously passed. A spread sheet with a 74 mo analysis of oil and military costs is available for review upon request. Any inferences that this is actual costs configured by the Department of Defense is completely accidental. No such actual costs have been released for public consumption.

Sources
Report from the CBO to the Congressional Chairman of the Committee on the Budget
House Budget Committee, Democratic Caucus
US Cost of an Iraq War
OPEC Brief
EIA Oil Production Projections
EIA Statistics on Iraq Oil
Coalition Provisional Authority

Busting Conspiracy Theories (#1) - Blood for Oil Part 1: Supply and Demand

Steve wrote...

I chased you down from ITM to respond to you're War for Oil post.

If Bush was asked to make a list of reasons he chose Iraq for the first Democratic Domino in the Middle East, Oil would be on the list. Way down at the bottom, but it would be there.

Near the top would the fact that the US has been technically at war with Iraq since 1990. The end of the war was a cease fire, not a truce. Also near the top would be Saddam's insistence in making the world believe he had WMDs and his human rights record.

I decided Steve's comment would make a good jumping off point for my next series of rants called "Busting the Conspiracy Theories". First things first. All conspiracy theories are based on at least a modicum of truth. Yes. Even the CTs (conspiracy theorists) have part of the story right. The problem is that the rest of the story is usually 75% wrong or left out of their conspiracy theories. Of course, they will tell you if you don't believe their story, you are delusional or naive or brainwashed, etc., not them.

The problem with the giant government conspiracy theories is that, really, the secrecy would be too hard to keep. For instance, do you know how many people would have to be in on a "government" conspiracy? Think about it. Governments are full of bureaucracy. Purchasing a light bulb has to go through 10 people before the actual request for purchasing can go through. How in the world would you keep a giant conspiracy to let's say, take over the worlds supply of oil, secret?

Most conspiracy theories can be "busted" by simply looking up the available information. My favorite method of busting conspiracy theories is the use of factual numbers. You see, numbers don't lie. They can't be inferred. They are real. This is why numbers are the basis for all scientific study. My real job as an analyst requires me to daily find and relate numbers to a specific situation. For my first conspiracy busting project, I will define the "Blood for Oil" myth, prove it's falsehoods and the part that is true.

Yes. Part of the CTs assertion that this war is for oil is true. Steve's comments are true. However, if the statement is left as it is, without significant explanation, the CTs latch on to and say, "see, we are right". However, OIL is not the reason for the war, but it does have it's own significance in terms of world economics and how the stability of the Middle East is important to the continuing stability of all countries (not just the US). I will explore this in part 3 of "Blood for Oil" and why it is in every countries interest to insure this stability and how Iraq actually fits into this problem.

To start this out right, let's get things clear: The war in Iraq is not for Iraq's Oil


Supply and Demand of Oil: USA Production, Consumption and Purchasing Rates

I was reading some statistics about oil consumption and costs of production, etc. The US gets about 20% of it's oil from that region, but other countries get upwards of 50%. Any interdiction in the pumping or distribution of oil from the region would mean these economies collapse. If the these economies collapse, the economy of the US collapses. If the US economy collapses, you guessed it, the whole world goes into an economic depression. That's why statbility in the Middle East is important. No one can afford to have the ME go up in a ball of flames.

I can't really say it any better than the Belmont Club. He has already put together a serious compendium of oil utilization per country, from what regions of the world, prices per barrel, etc. He has used information gathered from the Energy International Agency

But, let me make this very simple for those who are confused:

• The United States supplies: 8.9 mil barrels/day
  
• The United States demands: 20.4 mil barrels/day
  
• The United States oil balance: -11.5 mil barrels/day from other sources
  
  This is not to say that the US keeps all 8.9 mil barrels it produces. This is actually more representative of a trade deficit than actual supply and use in the US. However, all countries fall under this same oil utilization structure, so this is an accurate method to determine how much oil from any country the US actually needs.
  
  
  
• US Oil from ME Region = 21% of total demand: 4.28 mil barrels/day
  I know this probably shocks you, but it's correct. The US buys less oil from the ME region than we actually produce ourselves. We buy less oil from the ME than Korea (82%), Europe (28%), Japan (76%), and China (100%).
  
  
• US Oil demand from Iraq = 15% of ME Region demand: 642k barrels/day
  
• Oil production in Iraq: 2.5 mil barrels/day
  
• % of Iraqi oil purchased by US: 24%
  
• % of Iraqi oil purchased by other countries: 76%
  
• % of Iraqi oil purchased by US compared to US demand: 3%
  
  Now for the important fact:
  
  
• Pre war % of total Iraqi oil production compared to US demand: 12%

Are you getting the picture yet? The US is barely purchasing any of it's oil requirement from Iraq. The total Iraqi output of oil just barely tops 12% of our total needs. So if the US was going to war for oil, how come we invaded a country that can't supply more than 12% of our total needs? Why is Iraq selling their oil to any other country besides the US? Why aren't we keeping 100% of the oil production for ourselves? Why are we only purchasing 3% of their oil?

That's it! I'm calling the President! What kind of boob would go to war for oil and not keep the oil for himself...er...I mean, our country?

Stay tuned for the next "Busting Conspiracy Theories part 2 of Blood for Oil: Value of Iraqi Oil vs. Cost of War" where we will explore how much money is made from Iraqi oil, who gets it and, why, if the war was just for oil, it would have been cheaper to lift the sanctions against Iraq and cut a deal with Saddam (like the rest of the world did). I will even include a section on how much money Haliburton is really making (or not making).

Sources
DOD: Working Papers/Status of Iraq
Table 2.1 Oil Demand, Energy International Agency/excel spread sheet

Identifying the Enemy

One of the biggest problems today in the war on terror is "identifying the enemy". Not in the sense of individuals found or known to be members of "terrorist" organizations. We're talking about the big picture here.

The enemy is not simply "identified" groups like Al-Qaida or Hezbollah. The enemy today is a faceless and nameless group. Commonly referred to as "Islamic Fundamentalists" or "Islamafascists" or simply "terrorists". Maybe "jihadis" or "mujihadeen". They do have a belief system based on Islam. They believe in it stringently and interpret the text of the Qu'ran literally.

Particularly the areas that refer to putting the "infidels" to the sword. "Submit or die".

The problem is that we have used far too general terms to identify this enemy of free societies. Unlike the "Nazis" or the "Communists", this enemy does not have a country you can point to and say "there is the enemy". The government does not have a campaign, like in WWII that simply told you who the enemy was and what their plan was in terms of the world. No such information program exists today. We are far too worried about offending certain elements of the population by just coming out and saying it.

I have heard more and more about how we must separate these "fundamentalist" from the "mainstream" followers of the Islamic faith. The problem is, this is just like the Saudi's trying to point us off to Afghanistan as the "home" of the terrorists and separate themselves from these men by claiming they don't support them, they only support Freedom fighters and Muslim charities. They don't specifically support these groups. While in the same breath, they are supporting mosques and universities that teach these "fundamentalist" beliefs. The same places where most of these good "terrorists" are educated and created.

Frankly, Islam is Islam. Whoever practices it. Wherever they are. That includes in the United States. The more I read the more I realize that "moderate" or "mainstream" Muslims are really "non-practicing" Muslims. These folks don't attend mosque regularly. They don't read the Qu'ran faithfully. They don't follow the rules of Islam faithfully either. Can we really refer to them as "Muslims" at all? Like calling somebody a catholic who hasn't been to church since they were confirmed, believes in abortion and thinks the Pope is a nice old guy who doesn't really have anything to say that relates to modern life.

So...While we go out of our away to insure that we don't insult our "Muslim" population and don't turn this into a war on "religion", we have equally failed to identify the enemy in any form that the American Public can relate to. This has caused what I consider an apathy in our populace. We are losing the battle of hearts and minds right here in the US. This is the danger to our future. We are still "sleeping". It is too comfortable here because we don't have direct contact with the enemy on our shores. The war on terror, or in Afghanistan or Iraq has not caused us to "feel" the impact of these wars. We still go on as we always have. Many people just want to "forget" and return to the time before 9/11 when the biggest problems were the economy and immigration and taxes and spending.

If you ask the common man or woman on the street today to name our enemy, the odds are you will get blank looks. If you ask them more pointedly who our enemy is in the war on terror, you will get "terrorists". Do you know who the "terrorists" are? Do you know where they live? Do you know why they are "terrorists"? Why do they want to kill us?

Most of these questions will result in a blank look. Maybe some comment about Al-Qaida and Afghanistan. Most don't even know why Al-Qaida attacked us. Except when the last question is asked. The media and apologists have done their jobs thoroughly in implanting the self flagellation of reasons why these people want to "kill us". Most people will get a half glazed look on their face and say something like, "because our foreign policies?" (saying this of course without knowing at all what those "foreign policies" are that might relate to this subject); "because we invaded Iraq?" (forgetting we have been bombed both domestically and in foreign lands well before the war in Iraq); "because of Abu Ghraib?" (now that one I really get a kick out of).

You will notice that I put question marks after every response. Largely because, when I talk about these subjects and ask questions, the answerees are unsure of their answer. This is the scary part. Very few in the "outside" world have taken the time to learn anything outside of what they have seen or heard on the news. Little sound bites that really don't tell you anything beyond the statistic of the day: 1 bomb in Iraq - 4 killed; 20 injured.

The arrests of terrorists over seas or in the US is barely a blip on our screen. Most people see that little sound bite and feel some self satisfaction that we are "catching" the bad guys and soon, all will be well.

Well...The enemy is not so invisible and does have a specific agenda outside of "killing us". You may legitimately ask why the government has not done more than point out some people and say "terrorist". Largely for the original reason I state, if the manifesto of these "terrorists" was widely publicized, it would cause a serious hue and cry against our law abiding Muslim citizens. Probably more so than the few "vigilante" or hate crimes committed directly after 9/11. The government states plainly that the manifesto of the enemy is a "perversion" of Islam.

I think the perversion here is really the attempt to separate the "fundamentalists" from "normal" Islam. "Fundamental" Islam is practiced in ALL of the major Muslim countries around the world AND in the US, Britain, France, Germany, etc by the majority of "practicing" Muslims. The Sharia Laws adhered to by Saudi Arabia, Bahrain, Qatar, Oman, United Emirates of Arabia, Jordan, Pakistan, and Yemen, just to name a few, are "fundamentalist" Islam. The tenets of which are very basic:

1) There is no other God but Allah
2) All those who do not worship Allah are non believers and will burn in hell
(think I've heard similar tenets in the Christian churches)
3) Those who do not follow the prophet are "infidels", pigs that are below contempt and can be treated in any manner, including torture, slaughter and mutilation because, after all, they are subhumans (I think I've heard this before...NAZIS anybody?)
4) Women are corrupt creatures and must be controlled by their male masters. Should be covered head to toe lest the very site of them causes a good Muslim man to lose his control and commit crimes against Allah (in which case, it is the woman's fault for causing such lust and violence and she will be punished!).
5) Women are second class citizens and have no rights
6) Women may be abused or otherwise subjugated. Murdered in the name of honor. Decided on of course by a man.
7) Islam must be spread by whatever means, either preaching or violence. Whatever is expedient at the time.
8) It is the duty of all Muslims to commit to "jihad" or the struggle to bring Islam to all heretics. Again, through ministry or violence, whichever is most expedient.
9) If you kill a non-believer you are absolved of guilt (they are subhumans)
10) If you die during "jihad" you are guaranteed entry into heaven
11) If you convert away from Islam you are an apostate (heretic) and must die
12) Islam is the greatest culture and must re-establish itself as a world power, either through conversion of non-believers or violence whichever is most expedient. (this is from reading the Qu'ran and listening to "sermons" given in the mosques and translated for us subhumans to read)

In the US, Britain, etc, there are whole sub cultures of people practicing Islam and enforcing it on it's followers (particularly women) regardless of the laws of the land giving freedom to the same. If you go to a predominantly "Muslim" neighborhood, you will find veiled and sometimes "burqa" wearing women, closed behind their homes, only going out with men, never driving, not allowed to vote, not allowed to enter the mosques or practice their religion publicly. Many don't go to school past primary (1-6) grades and the boys are sent to "madrassas" right here in the US to be taught all these lovely ideas that are mostly contrary to the laws of the US.

Our belief in freedom of religion gives these folks the perfect cover. My favorites are the Mosques where citizens and "visitors" of our country can go and listen to an imam preach against the evil United States or the horrid "Zionists" in Israel and publicly (or privately) convince these men and boys that they must commit Jihad and become martyrs for Allah. I am not kidding you. It happens right here in our back yard.

Do you know how many "Palestinian refugees" have come to America and then returned to Palestine to commit acts of terrorism? Last year, 2 of the suicide bombers were from the US.

Now...I am NOT advocating that everyone of an Arabic or Islamic heritage are "terrorists". What I am advocating is that people start educating themselves about the religion and why it hasn't so much been "hi-jacked" as the "true" believers have finally found a voice and are using it very loudly.

The enemy has one plan: to re-create the Caliphate or great Ottoman Empire that spread from China to France from 700 AD to 1569 AD and actually continued in some form to the 20th century. It had slowly lost territories over the millennia until it collapsed back upon itself through petty wars as well as being over run by imperialist European countries.

Under this plan to re-create the great Caliphate, they are planning to slowly take over those countries that, while practicing some form of "fundamental" Islam, do not meet their high standards and are in essence, corrupt. Not "corrupt" necessarily as you and I would see it (financial and legal) but corrupt against Islam. Most of these countries of course, deal with the US and many other Western AND Eastern countries that are not Islamic. This has led to the infiltration of ideas that are not "Islamic" and are therefore, a threat to the continuation of "pure" Islam. These countries are also very rich in oil or are strategically placed.

The US and the world have a reason not to want these "jihadist" to come to power. Not the least of which that these would be the most repressive regimes ever known to mankind (probably considered worse than the Nazis). Worse, is the prospect of these new "regimes" coming to power over countries that have large reserves of oil. This would give the Islamists power over the world economies and an undiluted source of income as the world would have to continue to buy some oil from these countries because we have not yet figured out how to survive without it.

With an undiluted source of income and the power to screw with the economies of "non-believer" nations, these new regimes would be able to black mail these countries or worse yet, use the income to obtain WMD.

Why would that be any scarier than the current situation of "Islamic" regimes in that region you might ask? For the original reason I stated and that is the goal of recreating the Greater Ottoman Empire that would not stop at the Oceans, but would attempt to cross them.

The US as a target is not about our "foreign policies" as the detente group would like us to believe. But, simply we are the greatest power in the world today. We are the strongest. In order for the plan of the Greater Ottoman Empire to succeed, the enemy would have to knock us off or bring us so low that we would not be able stop them.

Some may be reading this and thinking I am a "right wing" conspiracy nut. These stated goals are not really unfamiliar goals of any organization we have dealt with in the past. This is not an "unwarranted alarmist" view. If you can remember anything about Nazis, you must remember their goal was to re-create the German Reich and proceeded to invade countries it thought should return to the "German Fold" or would just be nice additions like France. These guys also knew that the only way they could create this glorious Reich was to knock of France, UK and US or make them so weak they could not interfere with the plans.

For those who don't think history repeats itself, it does. Just not always in the same location. So...It is not crazy to read these people's manifestos and believe in their intent, however foolish an endeavor on their part you might believe it to be.

Please read yourselves:

Al-Qaida Manual

And we are not just talking about one little(?) group of terrorists here. We are talking about a whole mass hypnosis of young, disenfranchised Muslims who see the establishment of the New Caliphate as their destination:

The Gospel According to Bin Laden

The Encyclopedia of Afghan Jihad
Declaration of War against the Americans

Some more anti-American gibberish:
Nida 'ul Islam printed in Australia by the way.

Real discussions by real Muslims (and non-Muslims) about the establishment of a new caliphate, when and how that might happen:

Pakistan News Message Board

Or, some college studies:
The Caliphate: Coming Soon to a Country Near You?

Let's get back to the terrorists and their plans:
Fast Facts about Al-Qaida

Words from OBL's own mouth:
Jihad against Jews and Christians

Ok...That is enough for now. I think the important part here, is that people need to educated about the enemy and start figuring out how we are going to tell them apart from all of the other "moderate" Muslims (whoever that is). Particularly, as this "silent majority" has allowed the "terrorists" to begin to run free in Saudi Arabia, killing any kafir they want and escaping with ease. Seriously smacks of duplicity on the part of the Saudi "police".

I think we are seeing the beginnings of the "Islamic" revolution in Saudi. Eventually, any "moderate" Muslim is going to have to decide what they believe in and who they will support. If the "moderates" do not stop being the lazy "silent majority" that "silently" thinks about the reform they would like to have, they will find out what it is like to be the persecuted "silenced" majority in a world that is 10 X worse than they live in, now. I will find myself hard pressed in feeling sorry for these folks as they will have gotten exactly what they deserve.

Worse...For the rest of the world, this will be the beginning of the establishment of the New Caliphate and will definitely see us at war more intense than any we are currently undertaking. With the military weakness of our allies in Europe, I can see a possible alliance with Russia and China as the only countries able to stand with us. Talk about a repeat of history. Can you see a new "Yalta" meeting between US, Russia and China to meet the new "fascist" threat?

I hope...I really do, that I am just ranting here and that everything I say does not come to pass. I would not wish this on my grandchildren.

One Week Later

I haven't posted for about a week partly because I was in San Diego on business and partly because I was too busy with family things when I came back. It's just been a busy week.

In San Diego, they are without a branch manager. The last one was "terminated". Largely because she couldn't get with the program from the corporate side. She spent a little too much time telling "the boss" what she thought we should be doing and not doing what he asked. I would say that has been going on for about a year. Personally, I like her as a friend. She had many interesting, if not "good" ideas. The problem sometimes with "good ideas" in business is that first you must do some of the basic things like controlling your costs, keeping turnover down, improving your sales, etc. Good ideas like adding services that don't have any revenue benefit, don't go over well when you haven't been making a profit in 6 years.

In short, we have been fighting for our very existence. In today's business world, the "fat" gets cut very quickly. She was often confused (and me too, sometimes) why I didn't support her ideas more even though I saw some of the benefits. But, I had been converted from the "good ideas" gang to the "let's do what's necessary to keep our jobs" gang in the first 3 months of 2003. I personally was not looking forward to somebody viewing us as "fat" to be trimmed. I don't want to try to look for another job or stand in the unemployment lines. I like my job and unemployment would barely make my mortgage payment. Since she didn't see that, kept butting heads and had not improved the status of the SCB (sales, costs and bad debt), she was gone.

I can tell you I spent hours talking to her about it. I can tell you that I risked my job trying to save her job. In the end, it didn't matter because she was just too damned stubborn. Every time I thought I had her turned in the right direction, 2 days later I would be hearing the same stuff from her. Finally, I had to stop because I felt myself teetering on the edge of "who's side are you on anyway?" And since I believed in the tenets we were trying to re-instill in our division, I picked the "I am going to keep my job, you do what you think is best" side. Two weeks later she was gone.

I can't say it was bad. It was a really strange thing to go back to the facility and see all of her staff, who had been previously hostile and down right dragging their feet about changing, suddenly be all smiles and couldn't do what you wanted fast enough. Not that they all changed. Some of the managers are still being pains, but smaller pains at least. This is the group I talked about in a previous post when I mentioned I was constantly having to "referee" between them and the billing center. I don't think these folks have the idea that the billing center needs to be able to bring in cash so we can pay their pay checks. I think they think the money grows on magic trees behind our corporate office.

So, the facility was without a manager and I was standing in for a week. We have been rotating responsibility while we looked for a new branch manager. Finally got one and she starts this week. I am excited because, when I interviewed her, she actually knew what the hell she was talking about and could understand that SCB came before "good ideas". Let us hope this is a step in the right direction for the facility. As it is, I spent the whole week trying to get many of their issues back on track and spent the evenings trying to do my normal analyzing and pushing the agenda. I was a little too tired to write in the blog.

Sometimes I feel a little hostile towards these folks myself. I posted before that I participated in determining 15 people to be laid off so we could save the division and remaining 135 people. I would do it again (particularly as I am one of the 135). But, it isn't really "fun". My family has a side joke about me being the "axe" woman. Honestly, I prefer to be the "hiring" woman with lot's of sales, really low cost of goods and a happy staff that we grew with our revenue. As it is, I would just like to maintain status quo on the staffing and get our sales out of the dump.

We actually have a work force of 75% women (can you believe that?). I work in healthcare so it shouldn't be too surprising. Many of the women are single parents or are married and need the second income. Most of the guys are married and need their income just as badly to support growing families. Most of our staff are long time employees. Laying them off is like cutting off a member of your family. The first group of people we laid off was very hard for me. I didn't cry or anything quite so faint hearted, but I had a few sleepless nights about it. After that, I had pretty much reconciled myself to the necessity. I basically had to steal myself against those feelings and treat it like the business that it was. It's not really easy, but less troubling when you think about it in context of who you are saving and not who you had to cut adrift.

And since I am a selfish yuppie, I didn't mind saving myself either. I hope that's not too hard for some to read, but this is the place to write my true feelings on the subject.

Ok...enough about work. Last week was also a week of reflection for me. The week was full of news coverage and special programs about the late President Reagan. I missed most of the funeral processions because I had to work. My Mom recorded them for me and I spent a good part of Saturday watching everything from the ceremony at the Rotunda all the way to the burial at his library in Simi Valley. It was very moving for me. First, the processions were incredible. I don't know if I will ever see another "state funeral" like this in my life time. The honor guards were very precise, well turned out and highly respectful. One picture that comes to mind is the close up of a Marine crying. When a Marine cries, you know it is a sad day indeed. The other pictures were mostly of Nancy Reagan.

The picture where she puts her head down on the coffin at the Rotunda and was speaking to Mr. Reagan was sad. Even more so, at the last ceremony in Simi Valley, when she was sitting in the lone chair by the coffin while the soldiers performed the flag ceremony. I thought that seemed very representative of their last years together. I wonder how many times she sat by his bed alone and just looked at him? Last but not least (and, ok, I was crying) she walked up to the coffin and touched it for the last time. It was then that she started crying in earnest. I don't know about privately, but publicly, while seeming a little frail (she is 82) she seemed stoic. When she finally broke down, it tore me up. Not because this was "Reagan" or anything political, but simply because it was a woman who really loved her husband, cared for him during his darkest hours and would now be lost without him. That is just sad, whoever the deceased is.

Other stirring moments come to mind as well as a few perversely funny ones. For instance, I can now hum the entire march "Hail to the Chief" because they played it so many times, every time his coffin passed in and out of buildings. What was a little funny about this is it kept bringing to mind a movie I had seen with James Garner and Jack Lemmon titled "My Fellow Americans". James Garner's character was telling Jack Lemmon that he made up his own words to the song...

"Hail to the Chief, I'm the Chief and you must hail me..."

You have to know the movie and the song to understand how funny I thought that was. Particularly as Mr. Reagan had a very fine sense of humor and I imagined him standing off to the side laughing his ass off every time the honor guard had to stop at the top of the stairs with his 800 pound casket and wait for the song to end before they could go on.

OK...maybe I have a sick sense of humor, but it's funny dammit!

The stirring parts were mostly the pageantry of seeing the different military units represented in full dress. The "Home Guard" Marines who were very precise in their marching. The bands playing "Battle Hymn of the Republic", "God Bless America", etc. The thousands and thousands of people who lined the streets in both California and Washington to say good bye (or good riddance if you were a Dem).

A really stirring moment was during the "Cathedral" ceremony where friends and national leaders gave eulogies, the Irish Tenor sang, and the Marine band played several songs. The best was when they were singing the "Battle Hymn of the Republic". In the audience were people like Mikhail Gorbechav, Iyad Alawi (Iraq), King Abdullah II (Jordan), etc. The fourth (?) verse of the battle hymn says:

In the beauty of the ages
Christ was born across the sea
With a glory in his bosom
that transfigures you and me.

As he died to make men holy
(Here the whole Marine Choir kicks it into LOUD)
Let us die to make men free!

His truth is marching on...(Chorus)

Anyway, maybe I was the only one that saw the significance of that song, sang like that at that precise moment, but it did tickle me a little. Particularly, the democrats who were falling asleep in their chairs (names not mentioned here) looked like they were jolted awake pretty quick!

Last funny, interesting part of the Cathedral ceremony. I wonder if anybody noticed that Margaret Thatcher and ex Arch-enemy Mikhail Gorbechav were setting together? How is that for ironic? And then, she had her speech played (she was very ill) and mentioned the "evil empire" at least 3 times in regards to Mr. Reagan's legacy of shutting down the Coms. Dude looked like he had ate a dozen lemons when they panned back to him.

Still..it was funny.

Last comment on the subject. As a previously devout Democrat, even during my time as a Democrat, I recognized that this guy had done some extraordinary things with our economy. Further, I will never forget the speech at the Berlin Wall:

Mr. Gorbechav, open these gates!
Mr. Gorbechav, tear down this wall!

Then the Picture. The first picture of a man with a sledge hammer, hammering the wall with all his might. And no one shot him or came to stop him. And then he was joined by hundreds if not thousands of people, ripping at the wall. Tearing it down. The first slab falling. The complete jubilation.

When the lone man with a sledge hammer walked up to the statue of Saddam Hussein and tried to break it down, I was reminded very strongly of the scene at the wall/

I could go on and talk about the liberation of Poland, Lithuania or any number of other countries, but it would be redundant. The man simply orchestrated one of the greatest feats in history. All without firing a shot. Not only did he liberate these countries, but he liberated the American people from the depression brought on by failed policies, failed wars and failed presidencies.

Anybody who tries to denigrate Mr. Reagan's contribution to the world and to America is just a slug in my opinion. So, he wasn't perfect. I have said it before and I'll say it again, some folks wouldn't be happy if Jesus himself was the president. These same people probably would have been complaining that the fish and the bread that Jesus multiplied and fed thousands with at the "Sermon on the Mount", wasn't cooked right or had too much salt! (Please excuse the blasphemy).

I guess I was a little irritated that some people had to come out of their little holes and try to tear down a dead man. Whatever anybody thought about him, he was one of our presidents and he was DEAD! What kind of no class, disrespectful bunch of jackasses are these people? The man had alzheimers for the last 10 years. He was sick and old. 93. That is like insulting your grandfather or something.

Ok...no more rants. I'm just scared that our future is full of these kind of folks. And, based on the polls, they are somehow convincing people that this is a good thing. Let's get Kerry in there. If nothing else, he can tell us what kind of no good bastards we are. Maybe he can convince enough people of that fact, they won't pay attention to what he's doing while he rapes the economy and throws our foreign policy back into the "detente" era. He'll be president, chanting Rodney King phrases to our adversaries, "can't we all just get along?".

My answer is not only no, but HELL NO!

I want my enemies clear and in front of me. No ambiguity. I don't want to be guessing if this person is helping or hindering me. I want them identified and then a target on their ass. Thank you very much. I WANT wanted posters that say "Wanted: Dead or Alive".

Sorry...my barbarian heart is speaking again.

Opposition to Islamic Fascism

You cannot oppose these ideas with flowers, with an olive branch, with words of peace. History has proven that you cannot appease these people, you cannot treat with them for peace. You cannot try to change their ideas with speech.

As much as they believe in their idea, deeply and without reservation, we must believe just as strongly that the only way to oppose this "evil" ideology is the spread of freedom and prosperity through out that region. That we must achieve this freedom at whatever cost, lest it means our freedom, our way of life be destroyed.

It is obvious from the last 30 years, that we cannot change the political structure of this region, create freedom and prosperity, by whispering in dictators ears that their people should be free (diplomacy). We cannot continue to hand money to these regimes in hopes that the influx of capitalist capital will inspire an economic revolution that will translate to a bloodless revolution to democracy, freedom, hope and prosperity.

These things, these hopes are not transparent to the people in these countries. To them, it appears only that we "prop up" dictators and assist in their oppression. The ever widening spread of the Islamist ideology tells us that we do not have time to wait for these "peaceful" policies to change the world in which this idea has taken root. The very slowness of this policy gives the enemy the time needed to spread their word and consolidate their base of operations.

That is the danger of returning to our old policies. The policies that many European nations and Democratic leaders in the US would like us to continue.

Bush's policy is a radical change from "business as usual". This policy recognizes that the future depends on making changes now before it is too late to stop the tide.

The first change is to insure that no dictator in that region will willingly join forces with these people in the purpose of destroying the US or any other free society. That they will not give succor, economic or material support. Whether that is money or actual weapons of mass destruction, those dictators must be the first to go.

The second change is to replace this ideology based on despair, poverty and hopelessness with an ideology of freedom, prosperity and hope.

That is the reason for war in Iraq and why the success of freedom for the Iraqi people is important in the war to defeat this ideology. Iraq must be, as Ronald Reagan once said, "the shining city on the hill" for the middle east. The hope is that people in this region will see this shining example of freedom and want that more than they want oppression, death or destruction.