Conspirazoid Delusions About Gaza And Natural Gas

Seriously, these people are mad. Or illiterate, perhaps

So we’ve a big thing about how all this fighting in Gaza is really about fossil fuels. @JamesMelville seems to think it’s true:

“Everybody wants Gaza’s gas.”

Oil and gas reserves - that’s the real proxy war in the Middle East.

This video provides a really succinct summary of the situation.

This “really succinct” summary includes the idea that the invasion of Iraq was all about access to that country’s oil. Which is very silly indeed. Before the war people paid Iraq for the oil. During the war people paid Iraq for the oil. After the war people are paying Iraq for the oil. The war hasn’t changed Iraq’s oil price - the global oil price has changed it, but not the war - and so the effect of the war upon access to Iraq’s oil has been, well, it’s been zero.

No, it’s not possible to then go off and say that Iraq wouldn’t sell to Americans and that’s why or anything like that. The US didn’t buy much Middle East oil anyway - mainly West African instead. But more than that, this is idiocy about how commodity markets work.

This is something we can test with a more recent example. So, there are sanctions on Russian oil these days over Ukraine. Western Europe, the US, doesn’t buy Russian oil. Russia is still exporting about what it used to. Because it’s a commodity, oil is.

What’s happening is that the Russian oil that used to come to Europe now goes to - say - India. And the Far East, or Middle East, whatever, oil that used to go to India now comes to Europe (the US is now a net exporter itself). Because that’s what happens with commodities. The very name, commodity, means they are substitutable. So, if one particular source cannot sell to one particular user then there’s a bit of a reshuffle. The same oil gets produced, the same oil gets consumed, it’s just the consumption has been moved around a bit and is now by different people. The nett effect of sanctions on Russian oil has been, more or less, to increase the profits of those who run oil tankers. Ho Hum.

We’re also treated to the revelation that the US wants everyone to use liquefied natural gas because the US is the big exporter of LNG (well, it’s one). Therefore the US insists that Israel must develop the LNG fields off Gaza. Which is insane. If you’re an exporter you don’t want to start insisting on the start up of your own competition. The US demanding that the LNG not be produced at all would make logical sense but that’s not how conspirazoid ignorance works, is it? It has to be both a conspiracy and also a ludicrous one.

And a third claim. That this natural gas off Gaza is really worth $500 billion. That’s half a trillion dollars. We’ve looked at this value of gas off Gaza claim before and it’s tittery. $4 billion (that’s four billion, not five hundred billion) might be a reasonable claim and that’s just not enough to go to war over.

So, where does that $500 billion claim - that tittery to the point of not just big knockers but aureolae and sticky out nipples as well - come from? There’s a Substack trying to make the case here. The valuation comes from this UN report:

VI. Estimating the value of the oil and natural gas reserves in Israel: What is the Palestinian share of these resources?

The total of all of the estimated reserves of natural gas in Israel is over 38 trillion cubic feet, which, based on the average price of $3.852 per 1,000 cubic feet, exceeds $146.3 billion. Subtracting the investment cost to develop the gas reserves, of 14.84 cents on each dollar invested, gives a net value for the gas reserves of $124.6 billion. To this is added the value of the proven reserves of oil of 11.5 million barrels, at $65 per barrel, or $747.5 million. Subtracting the average cost of production of a barrel of oil, at $23.50, decreases the net valuation of Israeli oil reserves to $477.25 million.

A much larger value is associated with the estimated 300 billion tons of shale oil reserves, although a barrel of shale oil costs more to produce than a conventional barrel of oil. With regard to shale oil, there is a need to convert from tons to gallons, using a gallons per ton value of 6, which gives 1.8 trillion gallons of oil or 42.9 billion barrels based on the fact that there are 42 gallons per barrel. The cost of production of a barrel of shale oil has fluctuated between $25 and $95 per barrel. Using a weighted average cost of production of $50 per barrel, the current net price drops to $15 per barrel. The total net value of the estimated Israeli shale oil reserves is herefore $653.5 billion.

These oil and natural gas resources have been recently discovered in the self-declared exclusive economic zone of Israel, but took millions of years to accumulate under the sea and the ground in the areas in which they have been found. The fact that, before 1948, Palestinians owned most of the total land mass of historic Palestine raises the question of whether they have the right to claim a share in these reserves, which were under land they owned before 1948. In this regard, it is worth noting that General Assembly resolution 181 of 29 November 1947 allocated 42.88 per cent of historic Palestine to Palestinians, while the Oslo Accords implied that Palestinians would be entitled to at least 22 per cent of historic Palestine. There is a need for further economic and legal studies to ascertain the Palestinian share in historic and shared oil and gas resources.

Well, that’s increasing the mammary supply there. It’s not all reserves. Most of that is resources - subject to considerable uncertainty. It’s also not true that the Palestinians owned it before 1948. It was a British Mandate before that, before 1918 it was Ottoman Empire. So, unless we’re about to say that Iraqi oil revenues should be sent to Ankara that historic ownership doesn’t really seem to apply.

But the $500 billion isn’t, even in the UN report, the value of the gas reserves in Gaza or even off Gaza. It’s all the hydrocarbons under all of Israel and Palestine - and a very juiced valuation of that all as well. That is, it’s absolutely nothing to do with any war in Gaza. It wouldn’t even belong to Gaza even if there was a split but to the Palestinian Authroity.

But now we’ve got knobs running around shouting that it’s all about the $500 billion. See, there’s a video about it!

What is it about the conspirazoids that they never even bother to grasp their own sources? Or is that a necessary starting point to be a conspirazoid?