Oil & Finance… The Epic Corruption

In his latest controversial book, Raymond J. Learsy presented a real-time account of a nation in crisis, filled with contemplations and reactions. He suggests ways to reduce dependence on foreign oil, develop alternative energy sources, stabilize economy and shore up the national security. Learsy condemns governments of major countries, mainly the U.S, along with the OPEC for providing misinformation about the oil prices, which has pervaded the understanding of how oil prices were determined and how the willful disinformation that was being circulated by them to make people meekly acquiesce to a rigged, manipulated and speculator driven market

1-How has the collusion of major petroleum companies with federal governments created the bubble of economic crisis?
Non Opec nations that have significant domestic oil production as the U.S., Canada, U.K., etc. tend to be influenced by the priorities of their oil sector who are wealthy, powerful and have access to the halls of government. This results in quiescent policies regarding oil trading on the commodity exchanges and a benign policy toward the OPEC nations who openly control supply to manipulate price. Thereby the governments become accomplices in imposing or permitting quintessentially manipulated markets to determine excessive pricing which have little basis in the realities of market supply and demand. These speculation driven prices becomes an enormous tax on national economies in that oil is a mainstay of the economic infrastructure.

2- Why do you perceive the role of OPEC as the main corruptive participant?
OPEC controls some 40% of the world’s oil production and thereby has enormous sway over the availability and the pricing of oil. It is a tool used with great effectiveness in skewering price ever higher. The price of oil has increased near ten fold over the last dozen years. Virtually no commodity basic to the economic well being of the world has had such dramatic increase and the resulting negative impact on economic activity.

3- What are the major powers/countries manipulating and controlling the petroleum industry worldwide?
Clearly the countries having the greatest impact in manipulating and controlling the price of oil are the members of the OPEC cartel, which include Algeria, Angola, Ecuador, Gabon, Kuwait, Indonesia, Iran, Iraq, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela. Also, we can add to them the Russia whose objectives are given their significant oil production aligns itself with OPEC without being an OPEC Member. Non- OPEC countries such as the U.S., U.K, Singapore, and Hong Kong… etc. also add to the brew by sheltering commodity exchanges without adequate oversight resulting in wild speculation if not manipulation.

4- How has the manipulation oil prices been used to dominate the nation’s economic health?
The recent events in Libya can best describe the detrimental effect of manipulated oil prices and control. Just recently, it was determined that Colonel Quadaffi stashed away some 220 billion dollars in accounts in Europe, U.S… etc. This is a massive theft of the Libyan people’s treasure. One can only imagine how that sum could have benefited the Libyan nation.

5- What is the difference between the Enemies Foreign and Enemies Domestic?
Enemies Foreign are of course the OPEC cartel controlling and manipulating important levels of supply. Enemies domestic are those interests both in the oil industry and the financial sector who are able to extract favorable treatment for their industry and the speculative trading in oil futures. Further, the situation in the U.S. is exacerbated by the Sovereign Immunity extended to the national oil companies of the OPEC countries permitting their collusion to go unchallenged before courts of law, an escape non-national corporations do not enjoy when engaging in collusionary practices.

6- Focusing on the Middle East and the Arab World, to what extent does the Kingdom of Saudi Arabia take part in this corruption phase?
Saudi Arabia is of course the major producer of oil in the Middle East and the de facto leader of OPEC. It is the only OPEC country with massive excess capacity and therefore has the capability of rendering and OPEC quotas null by threatening to ramp up production. Sadly, the Kingdom uses much of its wealth to propagate religious intolerance and political instability in many countries with resulting disequilibrium.

7- In your opinion, what is the effect of the Arab revolutions (aka Arab Spring) on the petroleum market worldwide?
The Arab Spring one would hope portends great changes. With open societies and open economies, the potential for international investment and international cooperation in all manner of industries is enormous. The result would be greater national development and wealth and a higher standard of living for all. As the Arab Spring Blooms, it and the world, will become a better place. Importantly, the Arab Spring can do much to counter the ‘Dutch Disease’ a phenomenon that took place in Holland in the 1960’s. Having found a massive deposit of natural gas off the coast of Holland, the industriousness of many of the Dutch atrophied as they relied more and more on their natural resource wealth. What had been considered a boon to the economy became a hindrance to industriousness and initiative. The nations of the Arab Spring, having shed the autocracy that shackled their freedoms, would do well to examine closely the example set by Norway, a nation whose oil wealth is organized in such a way that all its citizens benefit and their society is enriched.

8-How has the oil industry been a key element to legalize army invasion in Iraq or to impose U.S. sanctions, such as the case of Iran?
What role the oil industry played in the invasion of Iraq is hard to say. It is a question I would dearly love to ask the then Vice President Cheney. One can well imagine that the presence of oil in such a strategic oil producing region of the world counted in degree possibly as much as the fabled “weapons of mass destruction”. As to Iran, the issue becomes more the reality of Iran’s nuclear program and the government’s brutal subjugation of all political opposition. Here, the most telling act to bring about change would be extending to Iran an embargo on all oil shipments, as the European oil consuming nations have recently imposed on all imports of Syrian oil.

9- Can you summarize the “Epic Corruption” discussed in your latest book in few words to our readers?
The “Epic Corruption” I refer to is best understood by the ‘Occupy Wall Street’ (OWS) movement, a movement in large measure inspired by the recent events in Egypt. My book focuses on the ability of the few, be it in the oil industry or the financial sector to twist and turn policies of their governments, the press and sadly our common sense to permit massive extortion of wealth from the citizenry at large.

10- In your book, you provided a five-year analysis, from 2006 to 2010, but how do you see/evaluate the coming five years (2011 to 2015)?
We are at the cusp of formidable new age when it comes to oil and fossil fuels. New drilling techniques have made it possible to access significant deposits of natural gas and eventually oil. In the last few years, in the United States alone, vast reservoirs of ‘shale gas’ accessible through the new technology have been discovered, increasing the proven reserves of natural gas in the country five-fold and putting it at the cusp of turning the U.S. from a massive importer of natural gas (LNG) to an exporter. Similar technology is also being applied to oil drilling with ‘shale oil’ now being produced in North Dakota. Potentially there are vast resources of shale gas to be developed in China and in Europe (Poland), and that is only the beginning. Shale drilling technology will be a game changer in the years ahead. Not to be underestimated, will the enormous efforts being made to develop alternative fuels, electric cars and on, all of which will play significant roles in the decade to come.

  About Raymond J. Learsy
Raymond J. Learsy, a graduate of the Wharton School, made his life in the fast-paced, risk-filled world of commodities trading, beginning in 1959.
In 1963, he started his own firm and over twenty years expanded from the U.S. into Canada, the United Kingdom, Luxembourg, Brazil, and Pakistan, trading in an array of bulk raw materials and commodities, shipping to customers worldwide.
In the 1980s, he shifted gears as a private investor, from 1982 to 1988, served as a Reagan appointee to the National Endowment for the Arts.
Currently, he is a member of the Woodrow Wilson International Center for Scholars. Ray Learsy’s richly informed analysis of the international oil trade, OPEC, and its impact on the American and world economy has been featured in the National Review Online and the New York Times. Learsy is the author of Over a Barrel: Breaking Oil’s Grip on Our Future an analysis of the international oil trade

Interview by Yomna Bassiouni


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