Chavez: Venezuela Moves Reserves to Europe

[It is clear to the whole world what is coming for the US economy. Gulf energy production is still almost completely shut in and won’t be repaired for years. It makes no difference if half of the refineries are back up because they can’t get product. Rig damage is far worse than expected and there is still no full assessment of the pipelines running from platforms to shore. Bush just added $300 billion in new expenditures for clean up and said he wouldn’t raise taxes. Consumer confidence is plunging. Credit card late pays and defaults are soaring. Venezuela will not be the last nation to pull its reserves out this fall and winter. To put it bluntly, the US is now a bad investment. And the two-plus billion dollars a day needed to finance our economy is going to dry up very quickly.

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CARACAS, Venezuela (AP) - Venezuela has moved its central bank foreign reserves out of U.S. banks, liquidated its investments in U.S. Treasury securities and placed the funds in Europe, Venezuelan President Hugo Chavez said Friday.

"We've had to move the international reserves from U.S. banks because of the threats," from the U.S., Chavez said during televised remarks from a South American summit in Brazil.

"The reserves we had (invested) in U.S. Treasury bonds, we've sold them and we moved them to Europe and other countries," he said.

Chavez, a sharp critic of what he calls "imperialist" U.S.-style capitalism, has often criticized foreign banks for the power they wield in international financial markets at the expense of poorer countries.

Chavez again proposed the creation of a South American central bank that would hold the foreign exchange reserves of all the central banks in the region.

"I'm ready right now with the Venezuelan central bank ... to move $5 billion (euro4.15 billion) (of Venezuelan reserves), to a South American bank," Chavez said.

Chavez has also argued against central bank autonomy, saying excess foreign reserves should be spent on economic development projects.

Under his presidency, Venezuela's mostly pro-Chavez Congress changed central bank laws earlier this year so the government could tap reserves for spending, despite criticism that it would lead to devaluation of the local currency and higher inflation.

Every year the central bank must now compute an "optimum" amount of reserves and hand over the rest to a newly created national development fund.

Money held in the fund will be used for overseas purchases and to pay off outstanding debt.

Foreign exchange reserves held by the central bank stood at $30.434 billion (euro25.27 billion) as of Sept. 28, according to central bank data.

[New rigs to replace those destroyed by the hurricanes won’t be built until 2008. Each at a cost of up to $500 million. The Bush administration is launching a conservation campaign. That must hurt. 97% of oil production and 80% of GOM natural gas production shut in indefinitely. All this at a time when the US must not only restore production but make up for every drop and cubic foot that was lost and then refill the Strategic Petroleum Reserve. New projects coming online are going to be way less than the stock peddlers have told us. All this at a time when the global decline rate is about a million barrels per day.

As much as the major media dance around all this, the writing is on the wall for the US economy this winter. –MCR]

Damaged, lost rigs used for exploration may delay discovery of new global oil supplies, paper says.

NEW YORK (CNN/Money) - Hurricane Rita caused record damage to offshore oil and natural gas rigs, according to a published report, and that could delay exploratory drilling planned to meet the world's growing appetite for oil.

The Financial Times cited market intelligence firm ODS-Petrodata as saying the storm that hit near the Texas-Louisiana border early Saturday will cause a shortage of rigs off the Gulf Coast this year. Rigs are movable and used for exploration and development, as opposed to platforms, which are fixed and used to extract oil from established offshore reserves.

The newspaper reports that the hit taken by rigs could delay exploration drilling as far away as the Middle East.

"Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita," ODS-Petrodata's Tom Marsh told the newspaper. He said that while Hurricane Katrina hit an area where there were mostly mature oil and gas platforms, "Rita came to the west where there is a lot of (exploratory) rig activity."

The newspaper reports that according to the Coast Guard, nine semi-submersible rigs have broken free from their moorings and were adrift. Numerous drillers, including Global Santa Fe (Research), Transocean (Research), Noble Corp. (Research), Diamond Offshore Drilling (Research) and Rowan Companies (Research), have reported missing or damaged rigs from Rita.

Rigs were in short supply even before the hurricanes, the newspaper reports. They cost $90 million to $550 million, and a rig ordered today to replace a damaged or destroyed rig won't be available before 2008, according to the report.

Report: Problems getting workers, helicopters, equipment slowing repairs to offshore production.

NEW YORK (CNN/Money) - Getting off-shore oil and natural gas platforms back in service after two Gulf of Mexico hurricanes is proving difficult, according to a published report Friday.

The Wall Street Journal reported that efforts to restart facilities a week after Hurricane Rita blew through the area are being hampered by a lack of sufficient workers, helicopters and equipment.

The federal Minerals Management Service reported Thursday that about 99 percent of oil production in the Gulf, or about 1.5 million daily barrels, remains shut down, while about 80 percent of natural-gas production, or nearly 8 billion cubic feet of gas a day, remains shut.

Much of that was taken offline as a precaution before Rita hit. Still, production returned much faster immediately following Katrina last month and Hurricane Ivan last year, the Journal reports.

"A lot of dock facilities that boats would leave from are gone. Hangars are messed up. Helicopter availability is tight," Tony Lentini, a spokesman for the Houston-based exploration company Apache Corp., told the paper.

The storm also did significant damage to rigs, which are used to explore for new offshore sources of oil and gas. The two hurricanes either sank or seriously damaged 13 drilling rigs, the Journal reported, citing ODS-Petrodata, an offshore market-analysis firm. That shrank an already tight Gulf of Mexico fleet by 12 percent, and could hamper exploration for months to come.

"Will it be more difficult to drill? Yes. Will it be more expensive? Yes. Will the end product cost more? You bet," Al Reese Jr., chief financial officer of ATP Oil & Gas Corp., told the paper.

Restarting seven refineries hit hardest by Rita -- from Port Arthur, Texas, to Lake Charles, La. -- is also taking longer than originally thought, the paper reported. A bit more than 20 percent of U.S. refinery capacity is now out of service from damage from either Rita or Katrina.

Reliable electricity is turning out to be the biggest hurdle for restarting refineries in the hard-hit area around the Texas-Louisiana border. The Minerals Management Service's own office in Lake Charles could be shut for a month due to lack of electricity.

Even some refineries not hit head on by the storm are taking somewhat longer to fix than originally expected. BP said Thursday it could be several days before damage to insulation is repaired at the nation's No. 3 refinery, its 437,000-barrel-a-day Texas City facility. Texas City is near Galveston and Houston.

The paper reports that repairs could take longer than expected and will likely keep upward pressure on fuel prices, renewing concerns about heating costs this winter.

It's also pushing the Bush administration to unveil a national energy-conservation campaign next week, aimed at giving consumers, businesses and federal agencies tips on saving energy during the winter heating season. Conservation has been at best a low priority for the administration in the past.

Department of Energy Secretary Samuel Bodman is expected to showcase a public-education effort Monday called "Easy Ways to Save Energy," according to department officials familiar with the plan, the Journal says. The department, working with the nonprofit Alliance to Save Energy, will encourage consumers to add insulation, repair weather stripping, install thermostat timers and take other steps to reduce heating bills.

New satellite observations show sea ice in the Arctic is melting faster, while air temperatures in the region are rising sharply, scientists said.

(AP) – New satellite observations show sea ice in the Arctic is melting faster, while air temperatures in the region are rising sharply, scientists said.

Since 2002, satellite data have revealed unusually early springtime melting in areas north of Siberia and Alaska. Now the melting trend has spread throughout the Arctic, said a U.S. collaboration of scientists.

The latest observations through September show melting in 2005 began a record 17 days earlier than usual.

The observations showed 5.3 million square kilometres of sea ice as late as Sept. 19. That’s the lowest measurement of Arctic sea ice cover ever recorded, the researchers said. It’s also 20 per cent less than the average of end-of-summer ice pack cover measurements recorded since 1978.

At the same time, average air temperatures across most of the Arctic region from January to August 2005 were as much as three degrees C warmer than average temperature over the last 50 years, said the team of researchers from two universities and NASA.

“The melting and retreat trends are accelerating,” Ted Scambos, of the University of Colorado at Boulder’s National Snow and Ice Data Center, said in a statement released by the university.

“The one common thread,” Scambos said, “is that Arctic temperatures over the ice, ocean and surrounding land have increased in recent decades.”

The scientists stopped short of directly blaming the melting trend on global warming but said they have few other explanations at this point.

During the 1990s, a cyclical atmospheric circulation pattern called the Arctic Oscillation was believed to have been pushing sea ice out of the region and into adjacent waters. But the oscillation has weakened in recent years and yet the melting continued and even accelerated.

“Something has fundamentally changed here and the best answer is warming,” said Mark Serreze, another researcher at the snow and ice data centre.

Sea ice records in the Arctic are sketchy before 1978. Since satellite observations began in earnest, researchers said Arctic ice has been retreating at a rate of more than eight per cent a decade.

And, they suspect, the melting may only contribute to even higher arctic temperatures in the future. That’s because the bright white ice tends to reflect more of the sun’s radiation. With more of the dark ocean exposed, the seawater tends to absorb more heat and reduce the amount of solar energy reflected back into space.

The researchers used satellite data from NASA, the National Oceanic and Atmospheric Administration and the U.S. Defence Department, as well as data from Canadian satellites and weather observatories.

The Colorado institute led the study that also involved two NASA laboratories, the National Oceanic and Atmospheric Administration and the University of Washington.

As the United States greets the Islamic world with increasing fear and hostility, China is embracing it with an astonishing enthusiasm, and young Muslim youths are responding in increasing numbers –– in effect, creating a modern Silk Road culture.

China ’s boom in trade and technology is exerting a powerful pull. Its first-rate universities, tremendous employment possibilities and economic opportunities look increasingly attractive compared to those in the West. The price is right, too.

At a top U.S. university, a foreign student pays $25,000 per year in tuition. At Beijing University, it costs $2,500 or less.

Add to this the fact that security issues in the West have made it increasingly difficult for young Muslims to obtain visas for work or study. Even if they are able to get the documents for New York, Moscow or Paris, they face increasing discrimination from officials and the public.

The city of Urumqi in the Xinjiang autonomous region of Western China reflects the new migration. This ancient city is now a boomtown, with a skyline of tall buildings reminiscent of Chicago from a distance. It had more than $5 billion in trade last year, doubling on an annual basis. It is a magnet for chronically unemployed youth of Central Asia.

Siamak is a 24-year-old Kyrgyz pharmacy worker, translating between Russian, Uighur, Kyrgyz, English and Chinese for the thousands of traders exporting Chinese pharmaceuticals. He is completing an advanced technical degree at the University of Urumqi. “The Chinese are making everything,” he exclaims. “I think this is the best place to be to learn about electronics.” He shrugs off any difficulty with speaking Chinese. “It’s just another language. It took me about 3 months before I could understand the classes. Then it was easy.”

Shahrom, a young Tajik, transports goods to Dushanbe and Afghanistan. Now that the first road ever is open into land-locked Tajkistan, huge amounts of goods are transported during the six months of the year that the route is open. It costs less that $200 to transport a whole truckload from Urumqi to Dushanbe. Shahrom already knew Russian, Tajik and Uzbek, which is close enough to Uighur to make communication easy. After six months, he too, is almost fluent in Mandarin.

“I love it here,” Shahrom says. “Living is cheap, there is lots of work, food is good and I have a girlfriend. What more could I want? At home I could be unemployed or go to Moscow and work a construction job for little money and live in a basement with 16 other guys.”

In Beijing, Muslims from Central Asia and the Middle East are showing up in increasing numbers. Iran has a flourishing trade with China, and there are regular flights between the two nations. Bagher has been in Beijing for more than 10 years. He is an aficionado of Beijing opera, and a successful tea trader. “The Chinese don’t care what I do with my private life,” he says. “They may be hard on their own citizens who protest, but I am free to live as I like.”

Despite ethnic and economic tension between Han Chinese and Uighurs, Islam is widely tolerated, and many Muslims are ethnic Chinese. Islamic supermarkets dot the cityscape north of the Forbidden City in Beijing, and there are as many Arab, Persian and Central Asian customers today as Chinese. Mosques throughout Beijing create a welcoming atmosphere for these new pioneers.

As human ties strengthen, the natural resources of the Middle East and Central Asia will increasingly flow to China, rather than the West. The cross-fertilization of cultures that once made the Silk Road the economic engine that ran the world is about to be reborn, and the United States and its allies are in danger of standing on the sidelines watching the caravan move on.

William O. Beeman is professor of Anthropology, director of Middle East Studies at Brown University and a contributor to Pacific News Service.