Do You Smell A Rat?

British Petroleum was formed to exploit Iranian oil fields

Go figure.

You're looking at a $13 trillion national debt.

Over the past decade, there has been a 135 percent increase
in the money supply.

The People's Republic of China holds a $995 billion tab on
the U.S. Treasury.

What happens when the worth of the dollar falls further, as
it will?

They're going to start selling those bonds.

Where does America's credit rating go from there?

That doesn't even deserve an answer.

The implications for American middle class earners and fixed
income pensioners are not good.

Who made these decisions and why did they make them?

You know, it wasn't always that way.

Oil production rose from 8.3 million barrels a day in 1948
to 42 million barrels a day in 1972. U.S. production? It
increased from 5.5 million barrels per day to 9.5 million
barrels during that time.

Reserves?

American reserves rose from 62 billion barrels in 1948 to
534 billion barrels in 1972, an increase of nine times, but
that left American reserves at only 7 percent of the world's
proven supply of crude, down from the 1948 percentage of 34
percent.

Said the Middle East Oil Committee of the British Cabinet
Office in 1954, "A reasonable basis has now been reached for
a partnership between the oil companies and the Middle East
Governments...

"Any further encroachment by the Middle East
Governments...would seriously damage our oil supply system."

To put it mildly.

Then came Enrico Mattei, whom Daniel Yergin termed "a new
Napoleon" in his monumental history of the petroleum
industry, The Prize.

He knew Italy in particular and Europe in general had no
proven petroleum reserves in a world that was rapidly
kicking out old colonial powers and taking on bold new
independence in such spots as Somalia, Yemen, Jordan, Syria
and Iran.

A big part of World War Two was fought over that sticky
conundrum.

With the cash he found in natural gas reserves in Italy's Po
Valley, he gathered the various Italian hydrocarbon
producers into one umbrella conglomerate, Ente Nazionale
Idrocarburi. Through its subsidiary newspaper, "El Giorno,"
he financed and promoted various politicians and they formed
a new, anti-fascist government.

The problem: the "seven sisters" - the four Aramco
partners, Jersey (Exxon), Socony-Vacuum (Mobil), Standard of
California (Chevron), and Texaco - joined Gulf, Royal
Dutch/Shell and British Petroleum, to form a new consortium
tied up in the massive Kuwaiti oil field under the new name
Anglo-Iranian had taken on during World War One, British
Petroleum.

Mattei's problem: he wasn't a member of this exclusive new
club and he needed to become one.

But things didn't work out all that well. The partnerships
he formed with the Shah of Iran were based on oil properties
that didn't have very lucrative pools of oil.

Now what?

For American companies, staying at home was far too risky.
Standard of Indiana made the first penetration into the non-
Arabic kingdom of Iran, its Persian forbears Aryan and not
Arabic.

Arab nationalism had begun to ascend under the leadership of
Egypt's Nasser. He wasn't alone.

The Prime Minister of Iran, Mohammed Mossadegh, nationalized
British Petroleum in 1951.

He had to go, and go he did when the CIA put a British
Sergeant Major on the Peacock Throne as the Shah.

Our story so far: in 1979, Ayatollah Khomeini was placed in
charge by zealous Shiite student militants after they ran
the Shah into exile, nationalized the oil fields and took
everyone in the American Embassy hostage.

The crisis was resolved after certain back room deals were
reached with the incoming Reagan Administration. They let
the hostages go just minutes after The Gipper took the Oath
of Office.

That's the way it is.

The problem is this.

We are stuck. The balance of trade has been in the toilet
since post-war years, Americans pay any outrageous price
they are charged for petroleum products and our government
scrambles and scrambles to finance the whole pyramid
constructed of cards by selling bonds to stone enemies of
the Marxist variety.

Meanwhile, British Petroleum's "company man" made what is
being passed off as a blunder, an error of judgment, on
Earth Day, no less, and told the Halliburton's crew on
Deepwater Horizon that the alarming figures showing on the
pressure checks weren't all that important, to start
cementing the well on top of seawater pumped into the hole,
to forego the expense and trouble of stabilizing the
situation with mud that is way, way heavier than seawater.

The Transocean crew, Halliburton's people and everyone else
on the rig argued against his decision, but he said that was
the way it was going to be.

Casing pipe, mud, oil and a natural gas came rumbling out of
the ground at terrifying pressure. The resulting explosion
was nothing short of spectacular.

That's the way it is.

Boy, was he ever right. It blew out, burned, then sank the
rig in water a mile deep. They are no closer to plugging
the hole today than they were on Earth Day, and the Obama
Administration, chief among its players, Attorney General
Eric Holder, is talking about filing criminal charges.

There is an across the board moratorium on offshore drilling
in American waters.

Do you smell a rat?