[Kzin]

With their populations growing ever more restive at the scandal of blasphemous Danish cartooning, all the Arab/Muslim heads of state confer secretly at the Ali Baba Motel in Dubai, and the next week announce their response to the West.

Saudi Arabia, Kuwait, Turkey and Pakistan withdraw their permission for U.S. forces to occupy any portion of their soil, and the new Iraqi Parliament joins in their declaration to insist that U.S. troops withdraw immediately. These nations and Iran also place an immediate embargo on all oil sales to the United States and E.U., and sell their oil exclusively to their new buddy ..... CHINA! Hey, they may be godless atheists, but they're not Crusaders!

In a gesture of fellowship, goodwill, and making a buck, the Chinese send one million "students" (i.e, People's Liberation Army soldiers) to Saudi Arabia and Kuwait at the invitation of their governments.

China says that it will possibly consider re-selling some of its surplus of oil to the West, at a 20% mark-up (naturally) and only what they have left over from their economy's rapidly growing needs.

What do the U.S. and E.U. do?

[Blackferne]

Problems with the scenario.

1) China relies on the US and EU for pretty much all of its export markets. Considering more than 50% of their oil comes from those regions a 20% hike would really halt their economic activity and both the EU and the US would suffer from stagflation. The chinese currency (currently tied to a basket of currencies) would suffer as well. World wide depression would occur. China knows this and wouldn't stick it to the west like that because they know that their future is with us as their consumers.

2)What makes you think that if the PLA went to some of these areas, they wouldn't just take some of them over?

But holding true to the scenario what would the EU do:

Well we'd try to secure all non Islamic oil supplies world wide. I could see a new cartel forming like OPEC2 taking countries like Mexico and Venezuala from the original OPEC. (Both of their economies have too much invested in CAFTA/NAFTA to be dicks about it). Throw in the North Sea Oil Fields and securing Russian oil supplies we see a regionalization where the economies of the First World (and a few second and third world countries) working cooperatively to truly make workable alternative fuel options. The EU, Canada and the US would suffer initially, but after a transition period of let's say 10 years would be a more independent manufacturing and energy consuming set up.

China on the other hand is now flush with oil and makes some initial money off of the resale oil they are making. This allegiance however proves more costly in the long run because they a) start losing market share in the US and EU because of costly tarriffs being applied by both trade zones b) the lack of markets cools their economy drastically leading to massive unemployment and civil unrest.

The wild card (not addressed in the original question) is India. They are just as oil hungry as China, but everyone forgets about them. They would likely be shut out of the china deal (China would insist) and subsequently gets picked up by the EU and the US as the new hot place to have cheap products built. Wal Mart opens 400 new stores by 2012 in India.

[Rodd]

I dont know whats more amazing, that Kzin knows enough to create this situation or that Blackferne fielded it as well as he did

[Kzin]

Hey, our own oil companies jerk us around with 20% price jumps whenever they feel like it, the Chinese are fast learners.

[Blackferne]

Originally Posted by KzinKiller

Hey, our own oil companies jerk us around with 20% price jumps whenever they feel like it, the Chinese are fast learners.

Yeah but you think Exxon will drop their mark up? Their mark up PLUS the Chinese markup will severly impact the US economy.

Edit: Also Rod I have a degree in Poli Sci (Foreign Policy specialization), a minor in economics and read/listen to the news alot.

[alloftheabove]

o.O

[Kzin]

Originally Posted by Blackferne

Yeah but you think Exxon will drop their mark up? Their mark up PLUS the Chinese markup will severly impact the US economy.

Sure, but a 20% wholesale price swing isn't earth-shattering by recent standards, it wouldn't get Exxon's shorts in a twist.

As for moving offshoring to India .... governments might be all over it, but the huge multinationals with billions invested in Chinese factories aren't going to just walk away, are they? With the enormous U.S. debt to China and the huge capital investment of U.S./E.U. corporations there, a lot of political pressure will be applied to governments to not "over-react".

[Rodd]

Originally Posted by Blackferne

Yeah but you think Exxon will drop their mark up? Their mark up PLUS the Chinese markup will severly impact the US economy.

Edit: Also Rod I have a degree in Poli Sci (Foreign Policy specialization), a minor in economics and read/listen to the news alot.

Dude thats awesome... whats your profession?

[Welshy]

We have a large oil reserve under the Barrier Reef.

Bidding starts at one dollar.

[Blackferne]

Originally Posted by KzinKiller

Sure, but a 20% wholesale price swing isn't earth-shattering by recent standards, it wouldn't get Exxon's shorts in a twist.

As for moving offshoring to India .... governments might be all over it, but the huge multinationals with billions invested in Chinese factories aren't going to just walk away, are they? With the enormous U.S. debt to China and the huge capital investment of U.S./E.U. corporations there, a lot of political pressure will be applied to governments to not "over-react".

Well politicians coloring the chinese as one of them (Islamic Fundies who want to destroy america) will start applying tarriffs like mad. The Tarriffs will be easier initially in the EU anyway. The coroporations will start moving more resources to India as a result and probably selling off the Chinese factories to whatever Chinese businessmen who can buy them.

The thing you have to remember is that IslamicOpec's actions in the original scenario amounts to an economic act of war. Governments will have to pacify an unsettled soccermom nation by portraying someone as the enemy and China will get the rap for it.

And India has additional bonuses that China doesn't. First they have a democracy which means multinationals facing lower cost of production and import export ease, will also be able to buy influence in ways they cant in communist china. Second there is an abundance of english speaking workers already, many who are well educated. This gets rid of the language barrier for many companies. And since India would likely be shut out of Islam OPEC oil, they will likely be doing whatever they can to get the business. Tax breaks and all sorts of stuff.

But you are right about alot of "let's not overreact pressure" but like I said in my first answer, China already knows their future lies with us and not them.

[Blackferne]

Originally Posted by RodFlanders

Dude thats awesome... whats your profession?

I work for a phone company doing nothing really related to my degrees.

[Kzin]

Originally Posted by Blackferne

But you are right about alot of "let's not overreact pressure" but like I said in my first answer, China already knows their future lies with us and not them.

So, how does China prevent the tariffs crippling their economy?

As you said, that first decade of all Gulf supplies being cut off would be a huge blow to the EU/US economies (and China's, if their trade was cut significantly) ... so don't they play the US and EU off each other with promises of favorable oil prices? They didn't "invade" anyone, after all, they're only trying to promote "peace & prosperity" (*cue Little Red Book waving*) by mediating this unfortunate dispute between their good friends and assuring a steady supply of oil at "reasonable" prices.

*edit -- and remember, when China and the Islamic states announce this decision, there's still a ton of U.S. armor & airpower based in Saudi, Kuwait and Iraq ..... does it all peacefully pack up & go home just because the Saudis & Kuwaitis asked us nicely?

[Rodd]

Originally Posted by Blackferne

I work for a phone company doing nothing really related to my degrees.

Why?

[Blackferne]

Originally Posted by KzinKiller

So, how does China prevent the tariffs crippling their economy?

As you said, that first decade of all Gulf supplies being cut off would be a huge blow to the EU/US economies (and China's, if their trade was cut significantly) ... so don't they play the US and EU off each other with promises of favorable oil prices? They didn't "invade" anyone, after all, they're only trying to promote "peace & prosperity" (*cue Little Red Book waving*) by mediating this unfortunate dispute between their good friends and assuring a steady supply of oil at "reasonable" prices.

I see the US and to a lesser degree the EU looking at a severing of oil supplies as almost an act of war. And given our "you are with us or against us attitude" I see them looking for alternatives and they wouldn't want China to aid our new "enemy".

Oddly I think that such a scenario, while hard for us for a while, might be what is necessary for us to kick our unhealthy and unsafe dependence on foreign oil.

[Arzen]

the government would release the NSA/CIA gag order on hydrino technology and we'd launch into the bright future of tomorrow using good clean water as our primary energy source.

[Blackferne]

Originally Posted by RodFlanders

Why?

When I graduated from college my first job was at an ISP, and when that folded in the tech bubble I bounced to a phone company. If you want to do serious political work it takes way more hours than I wanted to put in, also you have to often work in the DC area (I like Austin) and do it for little pay.

[Welshy]

Originally Posted by RodFlanders

Why?

Lets just say it was his "calling" in life!


HO HO HO! RUUUUUUUMBLES CHRISTMAS!

[Kzin]

Originally Posted by Blackferne

When I graduated from college my first job was at an ISP, and when that folded in the tech bubble I bounced to a phone company. If you want to do serious political work it takes way more hours than I wanted to put in, also you have to often work in the DC area (I like Austin) and do it for little pay.

Interesting ... I had a pretty similar major in undergrad, and when it came right down to it, I didn't want to join the Foreign Service and I didn't want to be a professor of poli sci so I didn't go on to grad school like my professors wanted .... moved back to the west coast and got a job in something totally unrelated to my undergrad work.

[Rodd]

Originally Posted by KzinKiller

Interesting ... I had a pretty similar major in undergrad, and when it came right down to it, I didn't want to join the Foreign Service and I didn't want to be a professor of poli sci so I didn't go on to grad school like my professors wanted .... moved back to the west coast and got a job in something totally unrelated to my undergrad work.

No wonder you both are the only two people who can talk about this shit realistically

[alloftheabove]

obviously the rest of us don't understand it well enough... shit did i just admit to not understanding it well enough...