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Prepared by the
Institute for the Analysis of Global Security

October 30, 2003
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NDCF report: the hidden cost of imported oil
National Defense Council Foundation: if reflected at the pump, the “hidden costs” of oil would raise the price of gallon of gasoline to over $5.28.

Thirty years later oil is still a big gun
Thirty years ago, on October 17, in an attempt to influence U.S. Middle East policy, the OPEC cartel, spearheaded by Saudi Arabia, decided to cut oil supply to the U.S. Can it happen again, and what can we do about it?

Dangerous Dependence
The United States should decrease its use of Middle Eastern oil and develop alternate fuel methods or risk even greater reliance on the Arab world, warns one energy expert.

Minding Its Business
Saudi Arabia, which has demonstrated its willingness to use its vast oil reserves as a foreign policy tool, has not acted to aid U.S. efforts to rebuild Iraq.

Fencing in looters and saboteurs in Iraq
Too many people in and outside of Iraq are hoping to deny Iraq a better future through a campaign of sabotage and plunder of the country's neglected oil facilities. The problem, and possible solutions.

In this hemisphere

Unrest in Bolivia over gas deal
Riots over a proposed $5 billion project to export natural gas to the U.S. forced Bolivia's president to step down.


Prospects on Russia’s stance towards OPEC
In September Saudi Arabia’s de facto ruler Prince Abdullah made the first visit to Russia by a Saudi head of state in over seven decades. The future of Moscow’s stance towards OPEC is a critical question for the world oil market. Will Russia be willing to cooperate with OPEC and thus further strengthen the power of the cartel to set a price range for oil?

Energy security and liquefied natural gas
Demand for natural gas has increased as have the security vulnerabilities presented by liquefied natural gas terminals and tankers.

On the technology front

Genesis Fueltech reports successful long term test of methanol reformer
Phillip Piffer, president of Genesis Fueltech, reports on testing of the company’s newest methanol to hydrogen fuel processor.

Caterpillar and FuelCell Energy Announce Largest Fuel Cell Power Plant Installation in Illinois
The fuel cell power plant, which can supply electricity to more than 250 average American homes, will be connected to the Peoria area electricity grid.

Plug-in hybrid electric HUMVEE for the U.S. military
International Truck and Engine Corporation has a cooperative agreement with Vision Technologies Systems, Inc, to design and market a repowered solution for the HUMVEE® which includes a hybrid electric drive with plug-in power.

Hydrogen fuel cell powered special operations vehicles for the Army
Quantum Fuel System Technologies Worldwide, Inc., will develop and demonstrate a high performance, hydrogen fuel cell powered light-duty, special operations vehicle. Fuel comprises 70 percent of the supplies transported by the Armed Services to support battlefield operations.

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Back Issues

Unrest in Bolivia over gas deal

Almost a year after violence erupted in Venezuela, another Latin American country, Bolivia, has undergone its worst crisis in over 20 years of democracy. Four weeks of deadly street riots against the country's unpopular President Gonzalo Sanchez de Lozada left more than 74 protesters dead, finally bringing to his October 17 resignation. The riots were triggered by a government decision to embark on a $5 billion project to export natural gas to the U.S.

Though the Andean nation of 8 million is the poorest country in Latin America - over 70% of Bolivians live below the poverty line - it has large underground reserve of natural gas that the government is planning to harvest, in association with a British-backed consortium, Pacific LNG. What made the decision particularly controversial was the government intention to export the gas through Chile, with which Bolivia has a century-old border dispute.

Bolivia became a landlocked state in 1879 after a war against Chile, which cut its access to the sea. Since then Bolivians view Chile as a national enemy, the country responsible for them being landlocked, and the idea of giving Chile a lucrative gas deal without a sea access deal in return is unacceptable to them. Tens of thousands of opponents of the deal blocked highways into the capital La Paz carrying banners with slogans against the government: "Chile will steal the gas from us" and "Chile is our enemy."

There were other issues: Bolivia has a long history of foreign exploitation, beginning with Spanish colonists sending home its silver and leaving Bolivians deprived. Millions of Bolivian Indians and slaves died extracting silver for the Spanish and many see the gas-export project as a return to that legacy. Bolivians are concerned that, as before, the money will end up in the pockets of elites rather than benefiting the population at large.

Uneven distribution of wealth has already sparked political violence. Earlier this year, in February, 32 people died in rioting in La Paz after the president tried to impose new taxes in order to meet austerity measures prescribed by the International Monetary Fund. Later, in September, seven people were killed in clashes with the security forces.

The October riots were too severe for President Sanchez de Lozada to remain in power. After a bloody day on October 12 in which 20 protesters were killed after thousands of troops backed by tanks were sent to quell unrest, Lozada agreed to reconsider the deal "until consultations have been conducted with the Bolivian people." He said the consultations would be wrapped up by the end of the year, and a decision would be made as to whether the gas will be shipped through ports in Chile or Peru. But this came too late to satisfy the angry Bolivians and Lozada was forced to step down. Bolivia's new president, Carlos Mesa, said he will review the free-market energy sector policies that helped spark the deadly revolt.

A decision to suspend the deal would deny Bolivia the funds required to address its severe social and economic problems. Equally controversial would be a decision to go ahead with the deal and the months ahead will require Mesa to carefully negotiate a creative solution that would allow Bolivia to sell its gas while using the revenues to improve the country's welfare.

From a U.S. perspective the gas controversy comes at a time natural gas is in high demand. The U.S. accounts for over a quarter of global natural gas consumption and is currently facing a shortage likely to drive prices up as winter arrives.

Also see:
Energy security and liquefied natural gas

Greenspan warns on implications of natural gas shortage

The U.S. faces a shortage of natural gas

Fueling the Future: The Prospects for Russian Oil and Gas by Fiona Hill and Florence Fee