Massive oil and gas disruptions - Imminent Danger to the U.S. # 2
By Don Koenig - 2006
Possible causes – Terrorism, war, natural disasters, punitive measures taken against the U.S. by one or more oil producing nations.
U.S. Vulnerability - The United States production of petroleum products continues to fall while use continues to rise. The United State now imports most of her need for petroleum products. Any large-scale disruption of petroleum products to the United States would have consequences so severe to the U.S. that she would face a massive inflationary depression or she would be forced to go to war to secure access to the oil and gas.
Minor disruptions of oil supplies have recently been simulated and in the simulations gas prices rose to nearly five dollars a gallon. Hurricane Katrina is a prime example of a disruption caused by nature and it drove gas prices to over $3 a gallon but is has now stayed there and is heading higher. Future disruptions almost certainly will occur since demand in the world is now near maximum world production levels. Yet, there is extreme danger that the disruptions to the oil supply within the next two decades will become much worse than any of these recent simulations or the disruptions caused by nature. The U.S. is more vulnerable than most other advanced nations because her lifestyle requires her to import much more oil than any other nation on earth.
Likelihood of this threat occurring before A.D 2025
It is extremely likely that this will occur. The threat is even imminent at the time of this writing. I would put the likelihood of a large disruption of oil occurring in the next two decades as a 10 on a scale of one 1 to 10.
Saudi Arabia is the largest producer of oil on earth yet the government of Saudi Arabia is tenuous at best. The majority of the population of Saudi Arabia is against the royal family with its amoral princes who oversee the country. The royal family largely retains control by tyranny and bribery. The largest exporter of radical violent Islamic fundamentalism in the world comes out of Saudi Arabia and it is also a real threat to the royal family. If the government of Saudi Arabia becomes unstable, either the U.S. will have to send in troops to protect the oil fields or the United States will see oil prices that are beyond belief.
Oil supplies in the world are so tight that Iran also could bring about this scenario if she were to take punitive action against the United States by lowering production and by disrupting shipping lanes in the Persian Gulf. If you honestly look at the situation in Iran today it is very difficult not to see this situation developing in the next few months or years. Something will have to be done about Iran's nuclear program and if that something comes by the hand of the United States or by Israel, oil prices will rise to levels where only the rich in the U.S. can afford it.
Likewise, another major Middle-East war with Israel would see a coordinated effort to cut off oil to the United States. Then the U.S. would only have only one recourse, and that would be military action.
A wider war against radical Islam by the United States could also bring a coordinated effort by oil producing nations to discipline the United States and/or bring more terrorism against oil production and refinery targets.
These are the largest dangers but they are not the only dangers. Many of the oil rich countries could undergo upheaval or civil war and bring oil shortages that would cause disaster to the U.S. economy. A coordinated attack by terrorists on oil production facilities or refineries would also bring about similar results.
The U.S. government should have regulated oil companies and overridden environmental groups that hindered their development so that there would be a sufficient margin of spare capacity in the refining of oil. The government should have provided alternative sites where the refineries could be built in areas where environmental concerns were valid. There has not been one new refinery built in the U.S. for thirty years and there is only one planned in the next five years. This is inexcusable! It takes no divine insight to see that the lack of refinery capacity someday will bring huge disruptions. More refineries should have been and should be a vital national security issue. This failure in leadership now allows the American citizen to become hostage to every miscalculation by the oil industry or to any disruption within or without its control.
I think the oil companies were all too willing not to build new refineries. They all know refined inventory is so tight that shortages are now inevitable when there is a cold winter or some other unforeseen event. However, they also know these inevitable shortages allow them to make huge amounts of money. The oil lobby has enormous power over the politicians. If the oil lobby really wanted new refining capacity they would have obtained it. The reason it did not happen is that it was not in their interest to push for refineries and to have surplus in their inventory. Most of politicians in the U.S. do what the huge lobbies want because it will get them large contributions for reelection. Thus far the politicians have done nothing to fix this problem at the expense of all the people in the United States.
Effects of massive fuel shortages – Short term effects would see price of gas and heating oil that become so high that low wage earners could not afford to travel to their jobs. Those on low and fixed incomes could not afford to heat their homes. All products would have higher costs due to increased production and transportation costs. The social pressures would eventually bring about gas rationing and price controls leading to a secondary gray market for gas that only the rich will be able to afford.
High gas prices and shortages would bankrupt major industries dependent on travel and tourism. Longer-term effects would bring about the collapse of real estate prices in all areas where long commutes are necessary. SUV, RV and truck sales would be almost non-existent. Make no mistake about it, any medium or long-term shortage of oil and gas will bring about grave consequences to the economy of the United States and it will affect the lifestyle of everyone in the country. With the high debt the United States is carrying the whole financial system house of cards would likely collapse. The end will be a major inflationary depression that will require the United States to withdraw from world police actions and to attend to matters at home. I suggest it will bring about a scenario in the United States similar to what took place in the Soviet Union twenty years ago.
What can be done to stop the threat?
There must be an immediate major effort by the U.S. to develop all sorts of alternative energy and end foreign oil dependence.
New refineries need to be built ASAP and the federal government needs to take proactive steps to see that this gets done.
The oil cartel is price fixing and it needs to be ended by international law.
The United States must stop selling its soul to the lowest bidder for cheap energy. The only reason the U.S. is dependent on oil is that she is addicted to unrealistically low energy prices from nations that can get a barrel of oil out of the ground for almost nothing. The United States has the technology to develop alternative energy at reasonable prices but she is too near-sighted to see the danger ahead and to do what it takes to avoid the coming energy crunch.
There is also political cost to taking a correct stand against the multinational oil companies and the oil lobbies and to take the necessary action to legislate the bills necessary to break the United States from bondage to foreign oil producers. How many in the United States government have the guts to do what is right for the nation instead of seeking financial favors from lobbies to get them re-elected?
This selfishness by politicians will lead The U.S. to its ruin. She cannot even get election laws changed to stop the buying of policy because the power crazy politicians want the present laws since it enables them to get all the money they need to retain power. Very few incumbents in the United States government are ever defeated because challengers simply do not have the same access to money from special interest groups who give campaign contributions for legislative favors.
The U.S. can develop alternative energy sources at a reasonable price but she cannot do that overnight and until she develops alternatives she will be held hostage by every two-bit dictator or terrorist organization that arises. Regardless of initial cost, new energy sources must be developed. The price of alternative energy sources will come down when used in mass or the price of oil will eventually go up to match the cost of the alternative. Sooner or later this has to happen anyway - there should be no doubt about that.
The U.S. can make things much easier on herself if she becomes proactive rather than reactive. Doing what it takes to get the U.S. weaned off of the oil bottle will be much easier in good times than it will be in a time of crisis when she suddenly finds the mothership has dried up.
The United States is rich in renewable energy sources and that is one of the ways she should pursue. The U.S. could produce tremendous amounts of bio-mass to make alcohol or bio-diesel for fuel. The U.S. has tremendous reserves of coal and oil shale that could be developed at less than today's prices. Canada, her friend to the north has enough peat to supply the whole hemisphere for centuries.
What nation on earth could mass produce solar and wind power like the United States if she really got serious? There simply is no reason for the United States to be held hostage over energy. She certainly has the means to do something about it. The real question is does the United Sates have the will, and do her politicians lead or react? If they do not lead and they continue to sell the U.S. people into slavery to the oil producers what will the United States people do about it? If they do nothing and demand nothing from their representatives they have all this and possibly worse scenarios to look forward to.
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