I am currently attempting to apply some critical analysis to his work on the non-energy crisis. I am particularly interested in clarification around his exact position as to why the government does not want all of this oil from the north slope coming to market.
1) In the original version of his book, the reasoning provided was based on the desire of the US Government to nationalize the oil industry by attempting to bankrupt an industry that was struggling at the time. The US oil industry as a whole escaped insolvency and is quite healthy today. So, this is no longer realistic.
2) In his recent interviews, Williams claims that the US government wants to continue the arrangement with the middle eastern countries that are accepting only US Dollars for oil. He claims that to do this requires honoring our purchase commitments (staying dependent on middle east oil). Failure to do so might provoke these countries to abandon the petro-dollar, resulting in a US Dollar crisis.
The problem I have with #2 is this ... If there is as much oil under the north slope as Williams claims, the effect on the US Dollar is probably not as dramatic as he claims since the US is the dominant consumer of oil. As a percentage of world oil supply in US Dollars, the transactions would be denominated in less Dollars. But it would be somewhat offset by the sales of the new Alaskan oil supply in US Dollars.
None of this is attempting to validate or refute any evidence that vast oil pools exist under the north slope. I am approaching it from the standpoint of whether legitimate reasons have been provided as to the reason why the government would take such a position.
Comments?
Thanks,
Brian
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