Based on projections from the Energy Information Administration January 2008 Short Term Energy Outlook, OPEC net oil export revenues could be $850 billion in 2008 and $783 billion in 2009.

Annual assessment of the Director of National Intelligence almost always captures top headlines. But the assessment of February 6 was the first in describing a possible collusion between Russia, China and Organization of Petroleum Exporting Countries (OPEC) as a “financial threat“ to the US.
When one gets away from the sensational headline, the gist of the story is that the United States is afraid that these actors could use their growing financial clout to advance political goals, Atimes reported.
But one must keep in mind that OPEC, China and Russia--since they are the owners of billions of reserves in US dollars, which OPEC and Russia have earned through oil and gas trade, and which China is spending in acquiring secure energy sources--are also worried about the continued weakening of that currency and are actively and openly discussing the likelihood of using either a basket of currencies for their respective payments or completely switching over to the euro.
It is also well-known that China and Russia view their highly visible financial status as a political tool, which they will use to maximize their interests. All countries do this. The United States has been a master in this realm. If anything, China and Russia seem to be developing their future courses of action by keenly studying those of the United States. But none of those actors are likely to take any action that would damage America’s global standing.
The United States relies heavily on Western oil companies for the supply of not only its own energy needs but also those of other industrial countries. It might not have played a direct role in the significance of futures markets in the international energy transactions starting in the early 1980s, but it did not take any action to undermine their role either. It did sanction the role of long-term energy contracts between oil-producing countries and Western multinational oil corporations, for they guaranteed against haphazard price fluctuations.
In other words, America’s energy policies have fully complemented its global interests, as they do now. The energy policies of China and Russia are no different in that regard.
The international dimensions of China’s energy strategy include: seeking oil and gas reserves in Asia and the Middle East (Iran supplies 14 percent of China’s oil imports and Saudi Arabia exports 17 percent of China’s oil needs); Africa (Sudan, Chad, Nigeria, Angola, Algeria, Gabon, Equatorial Guinea, and the Republic of Congo), Latin America (Venezuela, Brazil, Peru, Ecuador), and Central Asia (Kazakhstan and Turkmenistan). China already imports 64 percent of Sudanese oil production.
Regarding Central Asia, according to one source, “China is setting up extensive railway linkages over two different routes to oil-rich Central Asia. The connectivity to Kyrgyzstan, Uzbekistan and Kazakhstan will enhance the competitiveness of Chinese oil companies bidding for energy assets in those countries.“
China is fully aware of America’s dependence in West Africa. A dispatch of the January 28 China Post notes, “West Africa already provides 17 percent of US oil imports.“ Since the United States is keen to ease its reliance on Middle Eastern energy, its dependence on West Africa is likely to rise to 25 percent by 2015.
The second dimension of China’s energy strategy is the establishment of pipeline networks involving Iran, Pakistan, Kazakhstan, Turkmenistan and Russia. The chief driving force of China’s oil pipeline strategy is that 80 percent of its energy supplies pass through the Strait of Malacca, which can be easily blocked. Besides, America’s warships maintain a large and constant presence. Reliance on overland pipelines reduces China’s vulnerability.
The third characteristic of China’s energy strategy is to proactively seek oil reserves in far-off places, sign joint-venture or production contracts with those governments and make generous offers to construct infrastructure as “icing on the cake“. Such arrangements are especially popular in African countries, where they are direly needed. In the West, China’s energy proactivism is derisively referred to as “energy mercantilism“.
The final characteristic of China’s strategy is energy cooperation with Russia in upstream as well as downstream operations. The chief architect of Russia’s energy strategy is President Vladimir Putin. Even as a strategy, it is only a small part of Putin’s overall “vision“ for his country, which, in his view, is constantly mistreated by the United States. He accuses Washington of overstepping Russia’s national borders “in every way in the economic, political and cultural policies it imposes on other nations“.
In Putin’s assertion of Russia’s position, energy has become an important factor. Russia has the world’s largest gas reserves and the third-largest oil reserves, and he has decided to use them to enable his country to emerge as a superpower. For that reason, he decided to increase state control of Gazprom--Russia’s largest energy company and the largest extractor of natural gas--and to complete state control of pipeline networks that deliver fuel to the West.
Another aspect of Putin’s energy strategy is to enhance the role of Russia-backed, rigid, bilateral, private, long-term supply contracts. The unstated but enormous outcome of Russia’s policy is whittling away the importance of liberal US-based oil markets that are also dominated by the US dollar.
One must also examine the nature of cash reserves for China, Russia and OPEC states to understand why any possible collusion among these actors might not necessarily be harmful to US interests.
China’s cash reserves in May 2007 were reported by CNN as follows: With $1.2 trillion in reserves, most of it in dollar-backed assets, China plans to launch the world’s largest investment fund. It could play havoc with the US economy. It says an influx of funds in the first three months of 2007 “boosted China’s foreign reserves to $1.2 trillion--an Everest of money that towers over reserves held by any other nation.“ These numbers have only gone up in 2008.
According to a report in the February 1 edition of the Boston Globe, Russia accumulated $157 billion in its oil proceeds fund, one of 40 or so sovereign wealth funds worldwide with a total of $2.5 trillion under management.
Regarding OPEC income, the Energy Information Administration (the data bank of the US Department of Energy) estimates that members of OPEC earned $675 billion in net oil export revenues in 2007, a 10 percent increase from 2006. Saudi Arabia earned the largest share of these earnings, $194 billion, representing 29 percent of total OPEC revenues. On a per-capita basis, OPEC net oil export earning reached $1,147 billion, an 8 percent increase from 2006. Based on projections from the Energy Information Administration January 2008 Short Term Energy Outlook, OPEC net oil export revenues could be $850 billion in 2008 and $783 billion in 2009.
Given the vast sums of dollar reserves, it is perfectly legitimate for OPEC as well as for Russia and China to seek the “best possible means“ to sustain the value of their final accumulation. There is nothing perverse or malevolent about such actions.

Incomes in emerging economies are down by 40 percent in China and India, 17 percent in Indonesia, 41 percent in the Philippines, 32 percent in South Africa and 24 percent in Argentina.

The economics profession underwent a revolution in December last year, as economic understanding of the world suddenly shifted.
According to Indiaoutlook.com, suddenly the world has more poor. Incomes declined in emerging economies: down by 40 percent in China and India, 17 percent in Indonesia, 41 percent in the Philippines, 32 percent in South Africa and 24 percent in Argentina.
For Indonesia, the decline was far worse than the Asian crisis, and for China and India, the decline was worse than the one experienced by Germany during the Great Depression. Yet hardly anyone noticed.
The event was the release of new estimates of purchasing power parity, or PPP. Measured as part of a large international endeavor called the International Comparison Program, PPP aims to accurately calculate a country’s economic power rather than simply dividing total national output by a country’s population.
As every tourist knows, prices of goods and services differ widely between the countries. Poorer countries generally have lower price levels. A nice dinner, a haircut or a concert ticket, using market-exchange rates, cost much less in China or India than in the US or Norway.
But the good or service is the same and, in principle, must be valued equally. The objective of the project is to compute difference in price levels, so that each unit of consumption can be valued the same, regardless of where it’s consumed. Only then can true output and welfare differences between the countries be assessed.
Measuring price levels is an immensely complicated project that involves detailed reporting of more than 1000 prices of goods and services in almost 150 countries. A project of this magnitude has never been undertaken before. The most similar project took place in 1993, including data for about 100 countries and a limited range of goods.
More importantly, the 1993 survey did not include China, which officially participated for the first time in the 2007 report, or India, which had participated since 1985.
The recent data include not only China and India, but countries that include 95 percent of world population and about 99 percent of world output. The list of surveyed goods and services was augmented, the methodology improved and 146 national statistical agencies collaborated along with international bodies including the United Nations, the International Monetary Fund, the World Bank, Eurostat, the Economic Commission for Latin America, Asian and African Development Banks and others.
Price comparisons are important for at least two reasons:
First, they provide so-called PPP exchange rates, that is, in principle, with one PPP dollar, one can purchase the same bundle of goods and services in all countries. For example, with 100 PPP dollars, you would be equally well off in India and the US, even if that may involve only 30 “real“ greenback dollars in India and 100 greenback dollars in the US.
Second, by using these exchange rates, we can convert incomes expressed in local currency and obtain “true“ gross domestic product (GDP) per capita, reflecting real welfare and productivity of citizens. All inter-country comparisons, including poverty rates, depend on PPPs. When we say that one-third of the population in India lives at incomes below $1 a day, that one dollar a day is a PPP-converted dollar a day.
For modern global economics, PPP is like oil. One cannot move far without a method of comparison. So on December 17, 2007, this most detailed study of the world economy ever undertaken issued the conclusion that price levels in most Asian countries--in particular India, China, Indonesia and the Philippines--are much higher than assumed by economists, based on the outdated 1993 results.

The Foster & Partners-designed Masdar project is no doubt a bid to diversify the UAE's petroleum-rich economy as well as green the country's image.

In the windswept deserts of Abu Dhabi, construction is under way on a green oasis planners say represents one of the most ambitious urban building projects ever.
On February 7, the United Arab Emirates-funded consortium behind Masdar City, a zero-carbon, zero-waste, self-contained community meant to house 50,000 people, finally broke ground, launching the first of seven building phases to be completed over the next eight years. All told, the $22 billion megaproject will include cutting-edge solar power and water treatment systems, nonpolluting underground light rail, and a small research university operated in conjunction with the Massachusetts Institute of Technology.
As reported by Businessweek.com, the Foster & Partners-designed Masdar project is no doubt a bid to diversify the UAE’s petroleum-rich economy as well as green the country’s image. But more important, it is the latest in a growing list of high-profile, high-promise, environmentally friendly city design projects around the world.
With mounting concerns over global warming and exploding urban populations, the race to design and build the model “green city of the future“ is on. The sites proposed are of such scale and complexity that they represent a major new front in green innovation.
Equally ambitious projects to build entirely new, sustainability-focused cities are cropping up on nearly every continent. Well-known architectural firms such as Charlottesville, Va.’s William McDonough & Partners and London’s Arup have signed on to create massive green projects in China, which will effectively test the ability of engineers and urban planners to manage that country’s staggering and often environmentally ravaging growth.
In a similar vein, the governments of Costa Rica, Norway and even Libya have announced grand, state-sponsored development plans that promise some version of carbon neutrality--offsetting greenhouse gas emissions, often by producing clean, renewable energy.
Smaller private and public developments throughout Europe and North America abound, powered by everything from solar energy and hydrogen fuel cells to even human waste.
Developments such as Masdar and Arup’s $1.3 billion Dongtan project on Chongming Island, off the eastern shore of China, certainly have advantages over so-called in-fill projects, or plans that attempt to retrofit existing buildings and cities along green principles.
According to Khaled Awad, director of property development at Abu Dhabi Future Energy Co., which is overseeing Masdar, starting from scratch allowed the city’s designers to position the development’s layout such that its wind turbines can generate as much clean power as possible.
That’s not a luxury afforded to an existing city whose plan may have been laid out hundreds, if not thousands, of years ago.
And as a reminder that innovation does not have to be expensive or high-tech, energy-savvy buildings that use things as simple as better insulation form one of the core components of many of the major city projects now planned, says Gary Lawrence, who heads up Arup’s urban strategies.
But even the glitziest, most intelligently designed projects have raised significant questions from environmentalists about how much of an impact new developments can have on the global environmental crisis.
According to the United Nations Population Fund, the number of urban dwellers will rise to 5 billion by 2030. That’s some 60 percent of the world’s population, most of them flooding into existing urban centers.
And, of course, there are concerns about so-called greenwashing, or misleading sustainability claims.
Monitoring how these projects account for energy consumption once they are complete is likely the best indicator of how seriously their managers take the sustainability issue.
After all, some much-vaunted planned green communities never made it off the paper they were printed on, while others have progressed at a much slower clip than originally hoped. The experimental green village of Arcosanti outside Phoenix, which was begun in 1970, is still under construction, for example.