Blazing Saddles

Guest Post by Stupid Equity Guy

Blazing Saddles: or How the US is handling the future of its own Superpower Status

[the Johnsons load their guns and point them at Bart. Bart then points his own pistol at his head]

Bart: Hold it! Next man makes a move, the nigger gets it!
Olson Johnson: Hold it, men. He's not bluffing.
Dr. Sam Johnson: Listen to him, men, he's just crazy enough to do it!
Bart: [lower register] Drop it! Or I swear I'll blow this nigger's head all over this town!
[higher register]
Bart: Oh, lo'dy, lo'd, he's despit! Do what he sayyyy, do what he sayyyy...
[the Johnsons drop their guns. Bart jams the gun into his neck and drags himself through the crowd and towards the station]
Harriett Van Johnson: Isn't anybody going to help that poor man?
Dr. Sam Johnson: Hush, Harriet, that's a sure way to get him killed!
Bart: [higher register] Oooh! He'p me, he'p me! Somebody he'p me! He'p me! He'p me! He'p me!
[lower register]
Bart: Shut up!
[Bart places his hand over his own mouth, drags himself through the door into his office]
Bart: Ooh, baby, you are so talented! And they are so DUMB!

The US Government is using the above type of logic to push for the end game in the world energy/food complex. While a Putin ran Russia has decided to gain control of its energy exports and reinvestment strategy’s, along with control of export supply. The US has also started its own approach to controlling its greatest export values. Its simplicity is staggering. Its impact will cause nations to fall, and civil unrest to expand in the coming months and years.

If the US is faced with an energy supply disruption, then the US will convert its supply of food into bio fuel. The nations that supply us with computer chips or energy can eat their own products if they force the issue of world domination.

The US has built the ability to hold the world hostage for food. Much like our gluttony based usage of raw energy & our food consumption habits being what they are, the US has the ability to tighten its belt on demand, while others have already had to tighten their own belts based on lack of supply.

The US is one of, if not the world’s biggest exporter of food. Currently, the US is the 5^th largest exporter of rice for example, a staple food of 3 Billion people around the planet. The price of Rice has increased in the US by 77% since October 2007.

From Bloomberg:

“…The price of rice has climbed lately. The World Bank estimates 33 countries face potential social unrest because of increasing food and energy prices, Robert Zoellick, the bank president, said on its Web site April 2.

``Everything is going up at the moment,'' said John Clemmow, executive director of risk-management products with UBS AG in London. There are shortages ``across the whole spectrum,'' he said. ``It's very concerning.''

The US is the third largest producer of Petroleum products. The US imports the majority of its energy refining complex needs, while exporting finished products to the third world nations which do not have enough refining capacity of their own.

As the world capacity to produce more energy is constrained by physical operational limits of production with on going yearly decline rates in fields growing, the supply demand pricing curve is being pushed farther out on the line. Export nations have started to build new state of the art refinery, to recapture the crack spread for their own nations GDP numbers.

In the 1970’s under both a Republican (73 crisis) and Democratic (79 crisis) presidency’s, the US found its access to imported energy needs constrained. At this time, the US has both a SPR plus also a secondary source of emergency fuel.

Its own excess food production capacity is now able to be put to use producing bio based fuels in sizes large enough to make an impact. In the state of Iowa, There are 24 dry mills in production and a further 27 additional ethanol plans under construction. The build out of bio refineries is continuing across the nation as a whole due to congressional mandated required supply numbers.

In the March 11^th 2008 edition of the World Agriculture Supply and Demand Estimates Ending stocks of grains are projected to be dropping to 10%, the lowest since 1946/1947. The price per bushel has been estimated to be $6.50 while it is estimated that the world will have the lowest reserves in 30 years.

These locations will allow the US to reverse flow its own food exports into consumable fuel domestically, pretty much on demand.  That is, we can export food to feed the world, or we can dilute our own hydrocarbon production refining products with an increasing level of bio based alternative fuel mix.

The change over from a gasoline blended supply point of view, to a mandated 5% or 10% ethanol mix, has quietly increased the US supply of gasoline blending products, while lowering the crack spread on gasoline profits lately.

In the end game of who has what others absolutely need, Food is a higher demand necessary item then energy is. The US is blessed with a supply of water, farm land and domestic energy production such that it can decide which balance is in its national best interest. The rest of the world is not as well prepared as the US is for an energy / food crisis.

In the coming years, the US will continue to control the world’s attention via the use of its extra supply of food. While the US has exported its manufacturing and energy supply needs, it has done so in a way that is just now becoming noticeable to the rest of the world.

Disclosure: Stupid Equity Guy is long commodities and expects that in the coming years they will continue to be a supply constrained resource do to the globalization of 3^rd world nations. Life on this mortal coil is predicated on access to air, water and then food. The rest of life nothing more then a desire to increase the pleasure of ones own life. The value assigned to pleasure products when basic staple supplies are in doubt will be what makes the markets even more interesting then they are today.

 

 

Comments

[just a guy]

Interesting thoughts but aren't there some important limitations in the use of ethanol fuel you are glossing over here? For some things you just need good old-fashioned petrol.

[Stupid Equity Guy]

I completely agree on the need for petro products in the supply stream. The US is the third largest producer of petro in volume in the world behind SA and Russia, it was the worlds largest producer for decades. The US has kept its east coast and most of the west coast off limits along with about 1/3rd of the GOM, not even commenting on the arctic reserves.

This article was not about the ample long term reserves the US has of petro products, if it chooses to tap them, but about how the US has moved up the "food" chain and is grabbing for control of a must have.

That is, YOU, must have air to breath, water to drink and food to eat, everything else in life is an upgrade. The US is seeking to gain control of its exports of food and decide if it is in the US benefit to feed the world @ X price. We will be able to start to control cash flows internationally again as we convert food into ethanol and the world realizes it does not have enough to eat.

Its a geopolitical food play that is hidden inside of the ethanol label. Its not about some corn growers converting their crop into booze and saving the US energy issues.

Ethanol as an energy source is a joke in my opinion. A bad one...

but as a Geopolitical weapon, it could kill more people then all of the wars of the 20th century combined once the hunger is out of control around 4th world nations and there are not reserves to tap to feed the hungry. Thats when things start to get interesting.

Best,

~SEG

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If the US is faced with an energy supply disruption, then the US will convert its supply of food into bio fuel. The nations that supply us with computer chips or energy can eat their own products

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