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Chris Nelder. logi Energy-China: The Vampire Squid of Commodities. Part Two

Outmaneuvering America

Rodgers has no doubt that China understands peak oil and expects future supply disruptions, which is why it’s accumulating foreign assets and diversifying its import options.

Peter Dea, the president of oil and gas exploration and production company Cirque Resources LP, made the same point a bit more obliquely, rhetorically asking if China had no doubts about the future of oil, why would they have recently outbid Exxon Mobil for new drilling in Ghana?

Putting a finer point the difference between the strategies of the U.S. and China, Dea wryly observed that the U.S. has potential for offshore drilling for natural gas, but “it won’t be developed until the U.S. takes energy resource planning as seriously as China does.”

That doesn’t appear to be in the offing any time soon. Washington doesn’t seem to understand the commodity markets at all, Matthews said, nor the shrewd moves that China is making. While Japan already has a strategic mineral stockpile, and China is quickly amassing one, the U.S. is selling off its key minerals: “The lack of knowledge and concern over it in Washington is horrifying, and I can’t explain it,” he moaned.

Well, I have explained it: America has no energy plan, and we won’t have one until we give up our fantasies about energy independence or drilling our way out, admit that oil is peaking, and get serious about planning accordingly.

While America was busy with its hallucinated wealth meltdown and trying to raise some cash by selling assets at garage sale prices, just one of China’s three major oil companies, CNPC, secured 75 resource projects in 29 countries.

Another of the three, energy giant China National Offshore Oil Corporation (CNOOC), just bought oil assets in the US for the first time. The size of the deal for four deepwater exploration licenses in the Gulf of Mexico was undisclosed, but Norway’s Statoil, the seller, characterized it as “small.”

Still, the purchase is bound to make it more difficult for China to maintain a low profile as it snaps up resources.

Perhaps that’s why it has begun trying to cover its tracks: China OGP, an oil industry newsletter issued by Xinhua news agency, recently announced that it would no longer publish data on China’s stockpiles of crude oil, gasoline, and diesel. (As if that data weren’t hard enough to get already! Killin’ me.)

The lesson on China for retail investors should be clear: Buy domestic reserves while they’re cheap, and hold ‘em, hold ‘em, hold ‘em.

Until next time,


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2 Responses to Chris Nelder. logi Energy-China: The Vampire Squid of Commodities. Part Two

  1. Ken Reser says:

    With all the fanfare Rare Earth metals are currently recieving from speculators and US Gov’t of late I wish to raise your awareness to the unsung #1 “Strategic Metal” and what they are not discussing at some peril as the USA has “NO” domestic Supply of this critical mineral to the US Steel Industry.

    Having read Senator Lisa Murkowski’s article in the Capital Hill Newspaper “Roll Call”…..
    Murkowski: Increase Domestic Production of Rare Earth Minerals
    By Sen. Lisa Murkowski Special to Roll Call
    Oct. 19, 2009, 12 a.m

    I would like to bring to your attention a much more pressing issue with regard to “Streategic & Critical Metals” category for the the United States industrial base as well as the Military Defense Industry.
    I will be brief in this presentation.

    *The US “National Research Council of The Acadamies“ lists these
    Minerals as Strategic Metals. Gallium, Indium, Lithium, Manganese,
    Niobium, Tantalum, Titanium, & Vanadium.

    “Quote“- from words of Brian Gilbertson who is the CEO of
    Manganese miner Pallinghurst and former CEO of BHP Billiton.


    Points to consider with regards to Manganese use and production
    in N America`s Steel Industry.

    -Manganese has NO substitutions in all Steel production and besides
    being imperative to all Steel production it is highly strategic to the
    Military Defense Industry.

    -The US Government has sold off almost all of it`s strategic stockpiles of
    Manganese over the last few years.

    -China supplies just over 97% of World`s Electrolytic Manganese
    Metal. (EMM)

    -China`s taxes it`s exports of all Manganese by 20%.

    -US adds another 14% Import Tax.

    -S Africa, the only free world suppier of Manganese is facing production
    cuts due to high electrical costs, power shortages, high transport costs
    and lack of infrastructure.

    -Iron & Steel production uses 10 to 20 lbs of Managanese per Tonne
    of Steel.

    -Manganese is the 4th largest traded metal commodity worldwide.
    Approximately 30 B lbs per year.

    -Mn demand growing by 8% per year, Electrolytic Manganese by 26%
    per year for last 5 years. (EMM demand currently at 2.6 B lbs per year,
    up from 660 M lbs in 2002)

    -Most important is the fact that -There is virtually No “Domestic“ N.
    American Manganese production currently and thus the US and
    Canada are at the mercy of out of country supplies of the most critical
    of metals to our infrastructure and industrial base.

    -Chinese and S African Manganese shipments also subject to Trans
    Oceanic shipping costs for N American Steel Co`s.

    -There is a Jr Miner active with an advanced Manganese project at
    Artillery Peak Arizona with over 10 B lbs of Manganese, Indicated &
    Inferred (NI-43-101) getting little to no recognition and it appears
    they can produce Manganese at about one half the cost of China`s
    production. (Rocher Deboule Minerals Corp.) http://www.rdminerals.ca/
    They control the Artillery Peak Arizona project which is the largest
    known low grade Manganese deposit in the USA.

    In closing, having done much personal research, and having read & written
    numerous editorials on Manganese over the last two years, most
    recently in March 2009 posted on Kitco`s Base Metals, titled
    USA`s Number One Strategic Metal-Manganese,
    http://www.kitco.com/ind/Reser/mar312009.html I do feel qualified to speak
    to this topic, and to myself it appears N America and in particular the FACT
    that the USA`s Steel Industry is or could at any given time, be at the total mercy
    of out of country supplies of the most critical of metals, Manganese.

    Thank you for your time in this matter:

    Best Regards: Ken Reser

    Ken Reser
    Office Ph: 403-844-2914
    Cell: 403-846-9770
    Email: ykgold@telus.net

  2. Pingback: Drumbeat: November 20, 2009 | Bear Market Investments

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