This is Part I of a series on the changing dynamics of the single most important energy source for our economy, and will be for the foreseeable future - crude oil. 

First, we all must know and agree that not all crude oil is the same.  Each source of crude oil has a different chemical and physical make up, and how it is refined into all its various products (just for gasoline and diesel would make all but the most remote refineries a black hole for investors).

Further, types of crude oil being utilized in refineries have changed over the years. The days of the simple refinery consisting of a crude unit to heat and fractionate crude into say gasoline, diesel, kerosene (jet fuel) and fuel oil is long gone. 

There's no resisting starting this week's HFR with the funniest headline of the year:  Man Beats Woman With Frozen Armadillo.  Only in Texas.

I also have to tell you about Steven Pinker's book that just came out:  The Better Angels of Our Nature:  Why Violence Has Declined.  Both Joel Wade and I are fans of Pinker, professor of evolutionary psychology and cognitive science at Harvard.  (See Joel's The Blank Slate, April 2006.)

Pinker takes a gargantuan amount of evidence  to amass an irrefutable case that we today are living in the most peaceful era of human history - by far.  Really far.  But is it the freest?  That's another question.  Euroweenies are way less violent than they used to be, but are also way less free, having relinquished their freedom to Leviathan.  This, of course, is Zero's plan for us.

Nonetheless, Pinker provides cause for optimism.  The trajectory of declining violence is one of centuries now.  We are on the cusp of staying on it while expanding our freedom, which we have the opportunity to do little more than 12 months from today.  All we have to do is carpe diem.

Speaking of Euroweenies...

There’s a red-breasted rumor bird that’s been flying around Washington for a while now, but recently it’s been nesting in Capitol Hill. Talk to just about any Congressional Committee Chairman and they’ll tell what this bird has whispered in their ear.

The latest news from the EU Crisis Front:  Southern Europe's debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilization plan gaining momentum in Germany. 

The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.

The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton's Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.

Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20% of their debt as collateral. "The assets could be taken from the country's currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tons of gold, valued at €98bn in March.

Rough justice.  You've all seen the phone camera pics and videos.  They are horrific, but you can't have much sympathy for a murderous monster like Gaddafi.  He got what he deserved - especially since he was given a plethora of opportunities to safely leave Libya and live out his days in comfortable exile.  The choice to end like this was his.

So Bush got Saddam and Zero will claim he got Gaddafi - even though Marco Rubio was right in observing that it was the Brits and French.  The contrast in how they were "gotten" is, however, instructive in the extreme. 

That contrast is between the humane calm professionalism of American soldiers pulling Saddam Hussein out of his spider hole, and the bloody frenzy of ragtag Libyan rebels pulling Moammar Gaddafi out of his drain pipe. 

This is the difference between civilization and barbarism, between democracy and mobocracy.  It is tempting to say the difference is reflected in that between the Tea Party and Occupy Wall Street.

Sarajevo, Bosnia-Herzegovina. This is a beautiful place with a tragic history. As Communist Yugoslavia broke up after the fall of the Soviet Union, a Serbian nationalist by the name of Ratko Mladic commanded the Serbian forces that not only killed many residents in Sarajevo, but is said to have conducted the massacre of over 8,000 Bosnian men and boys in the Bosnian city of Srebrenica in July 1995.

Mladic was captured in Serbia last week (5/26) and now is in Scheveningen Prison in the Hague, awaiting a war-crimes trial.

The evening after the announced capture of Mr. Mladic, there did not appear to be much in the way of celebration that one might have expected in Sarajevo. Many young Bosnians, both men and women, were in the bars and restaurants having a good time as they do on most summer weekends. Good Moslems are not supposed to drink but, even though Bosnia is a majority-Moslem country, most seem to be far from rigorous in following their faith..

As one young Bosnian who had been wounded in the war said to me, "Most of us now are more interested in building our lives than we are following the religion of our ancestors and fighting old grudges."  There's hope now for the Balkans.

The White House is becoming increasingly concerned about Pootie-Poot. He actually said point-blank to one of Bush’s key advisors: “Mr. Bush is in no position to criticize me on my actions towards the Russian press - look at how he fired Dan Rather.”

Today (5/220, Fitch Ratings has downgraded Japan two notches to A+ -- just above Spain and Italy -- citing a surge in public debt since the Lehman crisis and the lack of any plan to restore fiscal probity.

Key indicators are deteriorating on almost every front, raising concerns that the world's third largest economy is running aground after two "Lost Decades".

Japan's debt has jumped by 61 percentage points of GDP since 2008, compared to eight points for the AAA bloc. Public debt is expected to reach 239% of GDP this year, uncharted levels for a major economy in peace-time. `Net debt' - subtracting Japan's vast holdings of foreign bonds - is nearer 137% but this is rising at an even steeper trajectory.

"Japan's addiction to public sector spending is way beyond the boundaries or remedial `austerity'," said Dylan Grice from Societe Generale. "Political pressure on the Bank of Japan to crank the printing presses into top gear will become irresistible. We see no alternative."

The next GOP presidential candidate debate is four days from now, Tuesday, October 18, in Vegas on CNN.  It will focus primarily albeit not exclusively on foreign policy.

I've been asked by friends of a particular candidate to provide him with a private briefing on the most critical foreign policy issues America faces.  What follows is not the usual HFR but a condensed summary of that briefing, which contains much of my Map of the Future talk at Rendezvous XI last weekend.

Russia.  Putin is an ersatz macho-man, all hat and no karovi.  Russia's navy is made of rust.  Russia's ill-trained army of drunkards couldn't conquer Romania.  Russian male life expectancy is lower than that of Bangladesh.  Russia is a mafiacracy with a doomed economy dependent on oil & gas exports that fracking in Europe & the US will make uncompetitive.  Do svidanya.

China.  No wives, no water, no banks - and a hyper-dangerous military.  Much of China is uninhabited - deserts, mountains, and wastelands.  Habitable China is about the size of the US east of the Mississippi, with over a billion people squeezed into it. Northern China is turning into a waterless dust bowl.  Scores of millions of Chinese men will never get married due to the Chicom's idiotic one-child policy and resultant mass female infanticide.

Would you think it is smart to create regulations that make it all but impossible for Americans living abroad to get a bank account in the country where they live?

Do you think it makes sense to impose regulations and costs on U.S. financial institutions that would drive needed foreign investment out of the United States for the sole purpose of helping foreign governments collect taxes from their own citizens?

Last week, the Internal Revenue Service (IRS) and U.S. Treasury held a hearing on a proposed regulation that is so dumb and destructive that people had assumed it was buried for good a decade ago, when it originally was proposed. The Treasury/IRS is embarked on a program that can only be called national economic suicide.