Tuesday, December 19, 2006

The Fed’s muzzle the scientists and the Iranians muzzle the U.S. Dollar

December 19, 2006

On Thursday, December 14, 2006, the front page of The Wall Street Journal had this one sentence statement:

“ U.S. Geological Survey staff has been ordered to alert higher-ups before saying or publishing anything sensitive, the Associated Press said.”

There was no article to accompany that single sentence, yet it made it to the front page of the WSJ – pretty valuable publishing Real Estate.

I asked several “man (and woman) on the street” types to read this and tell me what, if anything, it meant. Not one thought anything of it, nor did anyone know who the U.S.G.S. was or what they did. Clearly, the WSJ did not put this on their front page for public consumption.

So, what does it mean? While I cannot say with certainty, I can speculate. SOMEONE from the U.S.G.S. alerted the Associated Press that the “staff” (scientists, geologists, mathematicians) had been muzzled by the “higher-ups” (political appointees and operatives), to prevent said staff from “saying or publishing anything sensitive”. What, in Geological terms, could be so sensitive? Could it be that the staff at the U.S.G.S. has something different to say about the oil and gas supply situation than what the “higher-ups” want the public to hear? What might that be?

To my mind, it would be a good bet that the “staff” at the U.S.G.S. is starting to come around to the reality that the peak in global oil production is more likely to be in the 2005-2012 time period, rather than the 2025-2030 time period – the official company line of the U.S.G.S. The reason that this is so sensitive is that the U.S.G.S.’s published opinions on this matter are used by the Oil and Gas industry, the Automotive industry, and the Federal Government as the basis of their individual strategies, and any change coming out of the U.S.G.S. would be highly disruptive.

Iran made it official. Iranian Government spokesman Gholam-Hussein Elham said “that all Iranian hard-currency budget revenues for the next fiscal year will be calculated in Euros”. – WSJ

Could this be the beginning of the end of the petrodollar? Maybe. Clearly, this event lessens its influence, in any event. Under no circumstance is this positive for the U.S. Dollar, and if another major exporter should reject the dollar in favor of the Euro (or Gold)… it is lights out for the Greenback.

Greg Jeffers

Mentatt (at) yahoo (dot) com