"Deja Vu all over again," as Yogi Berra must be saying, with the USA pathetically more over an oil barrel than ever, as markets for the black gold go bonkers again. The Brent price hit $105, its highest for 30 months, and the NYMEX crude future jumped $6.62 or 7.68%.
Thirty-seven years after the first Arab oil embargo in 1973 went a long way toward wrecking our economy, a tribal chief in Libya says Libyan oil will be cut off to the West, unless the West stops Qaddafi from murdering his citizens with machine guns, fighters, and naval craft. With Libya producing about 1.6 million barrels per day, the 17th largest producer in the world, and nerves in the oil market already on edge, the threat of a tribal chief was enough to cause a near frenzy.
The only thing surprising about the cut off threat is that it came from someone trying to stop his murderous government from murdering and was not made by the murderous government. But just wait a bit more for that to happen.
So what is the West's response to the threat of a cut off? The International Energy Agency sends forth a spokesman to say a combined 1.6 billion barrels of oil is in reserves in the USA, Japan, Britain, and Germany and can be used to stabilize oil markets if supplies are disrupted. My goodness the whole West has laid away oil equal to less than 3 months usage by Uncle Sam alone.
PATHETIC, STUPID, DANGEROUS! No more oil Deja Vu all over again. It's past time to stop importing oil and laying it away.
Every dollar increase in the barrel of oil means exporting about another $4.5 billion to feed our oil addiction and drives up our crippling trade deficit that is the biggest single American job killer. Pennsylvanians are already paying $3.58 per gallon for heating oil or $3,000 for a winter's supply when the median family income is $49,000. Our economy and families can't stand the price.
And to top up this toxic tank, our health and environment is being damaged by a fuel that is dirtier and more expensive than available substitutes (See CNG: Saving $1.85 per gallon). Madness!
In the coming weeks, I will unveil a plan to make Pennsylvania Energy Independent and to stop using imported oil by 2015 to 2020. Pennsylvania must show America how to break the oil addiction, end Oil Deja Vu All Over Again, and no longer be pathetically over a barrel!
Some believe that increased domestic production, coal-to-liquids and increased reliance on Canadian tar sands are practical alternatives to incrementally reduce US dependence on OPEC. Reducing US oil demand is probably the best way to protect consumers, but what are your thoughts on the supply side?
ReplyDeleteWe must get off foreign oil and reduce overall oil consumption. Becoming hooked on Canadian oil does not cure our addiction. The problem is not OPEC oil per se.
ReplyDeleteThe problem is foreign oil that is priced in a global market. Yes, the Brent and WTI prices have diverged to some extent just recently (see post Curious Oil Prices: Portending What?). But they are still connected and may well return to their normal pricing relationship of WTI actually being at a small premium to Brent. The Canadians are not going to sell us below market price oil. If some of the OPEC countries cut off oil to the West, the global price of oil goes way up.
Our economy is stressed by oil at $100 per barrel; it is broken by oil at $150 per barrel or higher. Exporting cash to Canada kills as many American jobs as exporting cash to Opec. Our trade deficit swells no matter to where we are exporting our cash to import oil. The Canadians won't cut us off, but they will be glad to pocket the profits when supply disruptions raise the price of their oil.
We need to substitute natural gas (see post CNG: Saving $1.85 per gallon), electricity, and biodiesel for oil. Rapidly.
I should also say oil domestically produced, coal to liquids, and Canadian oil sands all have higher environmental impacts and carbon emissions than natural gas, electricity or biodiesel substitutes. The cleaner substitutes for oil are also the more secure and cheaper fuels for sure when oil is at $100 or higher.
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