The US shale gas boom, drastically cutting the cost of gas, is shaking the foundations of the Saudi Arabian economic model -- and more is coming. The highly profitable $100bn Gulf petrochemical industry is taking a hit as its biggest customer -- the U.S. -- is importing less and relying instead on domestic production.
US petrochemical companies, propelled by cheaper access to raw materials, are competing effectively against companies like the Saudi Basic Industries Corp (Sabic), the world's largest chemical maker. Sabic also has some home-grown problems. The rapidly growing Saudi population wants to consume (subsidized) petrochemicals at home, air conditioning Saudi houses and running Saudi cars instead of exporting product abroad. Falling production, demand, and prices are beginning to hurt the once stalwart $89bn company. . . .
US gas prices have plummeted due to new techniques, known as fracking and horizontal drilling, developed to extract the vast deposits of shale gas in the North American bedrock. Production has jumped by nearly a quarter since 2000, reducing demand for Saudi gas. If China figures out how to exploit its own shale gas reserves the Saudis will have every reason to be nervous. The two pillars of the Saudi economy -- oil and petrochemical exports -- will both be on shaky ground.
But the changing energy landscape threatens more than economic consequences for the Gulf state. The US could surpass Saudi Arabia as the world's leading oil producer by 2020, and this could mean big changes for US foreign policy and the domestic economy.
Terroristic Islam worldwide is basically a Saudi export, fueled by Saudi money. The less Saudi money, the better.
Buying up the almost worthless Current TV at an exorbitant price and securing the advocacy of Al Gore is only part of the Middle East oil producers' efforts to halt our use of shale gas. Other strategic moves including getting celebrities, style setters and opinion makers onboard.
This week we learned that serial federal law violator HHS secretary Sebelius and Valerie Jarrett illegally sat on an FDA study that establishes that genetically modified salmon was perfectly safe for people and the environment:
The AquAdvantage salmon developed by AquaBounty Technologies of Massachusetts -- an Atlantic salmon modified with a growth hormone gene from Chinook salmon so it grows to maturity faster -- had been winding its way through the federal approval process for 17 years. Two years ago, the FDA had said it was going to release its environmental assessment, the final document in the approval process, within weeks. It was finally and quietly posted on the FDA's website only last Friday -- just hours before the long holiday weekend -- and published in the Federal Register on Wednesday.
The release came, FDA sources say, in response to the publication of an investigation in Slate by the Genetic Literacy Project two days before, on December 19. The GLP, which I head, had reported that the FDA had definitively concluded last spring that the fish would have "no significant impact" on the environment and was "as safe as food from conventional Atlantic salmon." However, the draft assessment, dated April 19, 2012, was not released -- blocked on orders from the White House.
The seven month delay, sources within the government say, came after discussions late last spring between Health and Human Services Secretary Kathleen Sibelius' office and officials linked to Valerie Jarrett at the Executive Office, who were debating the political implications of approving the GM salmon. Genetically modified plants and animals are controversial among the president's political base, which was thought critical to his reelection efforts during a low point in the president's popularity.
Cheaper wholesome food which has no negative impact on the environment -- it's not what the NYT food editor or the administration want, apparently.
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