Wednesday, June 25, 2008

Mideast oil countries use sovereign wealth funds to perturb economy, guarantee food supplies; new gov't intelligence reports


Michael Gerson has an interesting op-ed “The Wrong Way to Kick an Oil Habit” on p A13 of today’s (June 25) Washington Post (link here A windfall profits tax might discourage domestic production when we need it. But the normal working of energy markets might not solve the problem either. Perhaps he is echoing the criticism by George Soros of international “market fundamentalism.”

Gerson discusses the way oil producing countries are deploying their “sovereign wealth funds.” Although there is some pretense of humanitarian and charity work, many of them (especially desert Arab countries) are investing in agricultural areas in order to gain some control of food supplies. They could engender the same sort of tensions as Americans generate by importing too much oil. This is an interesting viewpoint.

Author William R. Morris discussed the sovereign wealth fund concept in his recent book “The Trillion Dollar Meltdown,” reviewed here on by books blog. He traces seigniorage and the devlopment of SWF's and explains the destabilizing effect they can have on the global economy.

NBC Nightly News tonight mentioned that the Department of Energy issued its 2008 Energy Outlook today, with sobering predictions of a 50% increase in world demand in two decades with increasing carbon dioxide emissions, link here.

NBC also reports that the National Intelligence Council will soon has a report indicating how it views global warming as a threat to national security. The Council has a number of reports for purchase in this area which the visitor can peruse now, and apparent more will be added soon on sea level rise, drought, and competition for resources. This is becoming a sustainability problem The CNN story " Global warming could increase terrorism, official says," on the NIC report is here.

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