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The American Obsession For Oil

The American Obsession For Oil

by Marvin Pirila

 

Oil today is forty times its price in 1970.  Scott Burns, MSN’s MoneyCentral

 

The U.S. Consumes 7.6 billion barrels of oil each year. -- Time Magazine

 

The United States consumes more gasoline than the next twenty countries combined.  – Lester Brown, Earth Policy Institute

 

The greatest vulnerability of the U.S. is its dependence on foreign oil.  There is a thin line separating the supply and demand of oil, and a single catastrophe can have devastating economic effects.  Absent a catastrophe the sheer demand of newly developing countries, especially China and throughout Asia, is highly likely to create supply problems.  As supplies fail to meet demand the price of oil barrels will continue to rise.  Considering the economic plight of the world right now that would lead to devastating effects.

 

A look at the price of oil over the last 10 years paints an ugly picture of days ahead.  In early 1999, the price of oil was $10 a barrel, and since has soared to more than $140, before coming down to the current $70 a barrel.  China’s explosion in demand was just taking hold when the world’s economy plummeted.  From 1999 – 2007 China’s oil use almost doubled to about 7.5 million barrels a day.  Could it have had a role in the economic collapse?  Will the tipping point be found when the economy begins to recover?

 

Oil Monies are Making OPEC Countries Rich – Even Rogue States

 

From 1999 to 2007, the annual oil revenues for OPEC nations more than quadrupled to an estimated $670 billion.

 

The American economy will always remain vulnerable due to the U.S.’s dependence on many oil-rich third-world nations, many of which are corrupt, volatile, and unpredictable. 

 

What country leaders are outright enemies of the U.S.:

 

1. Iranian President Mahmoud Ahmadinejad – Iran is ranked 6th in proven oil reserves (2006)
2. Venezualan President Hugo Chavez – Venezuela is ranked 7th in reserves
3. Russian Prime Minister Vladimir Putin – Russia is ranked 8th in reserves

 

As a staunch support of Israel politically, economically, and militarily we will always remain the enemy of the states calling for Israel’s destruction.

American’s shouldn’t be comfortable knowing their money is going to countries that desire the annihilation of the United States.  While we are on the verge of economic collapse, the value of the dollar has fallen allowing foreigners to grab up chunks of American property.  The U.S. is quickly losing its “superpower” status and becoming a subservient nation.

 

Our national security hinges on a readily available supply of oil.  Underscoring this reality, Frederick W. Smith, a former marine, Vietnam vet, and FedEx founder, made the statement, “A lot of analysts think that as much as 40 percent of the entire U.S. military budget can be attributed to protecting the oil trade.” Source:  Fareed Zakaria, “A Marine’s New Mission,” Newsweek, February 11, 2008, www.newsweek.com/id/107577.

 

Mr. Smith also pointed out that our country’s dependence on foreign oil is only slightly less a risk factor than terrorism and weapons of mass destruction.

It costs the United States billions of dollars in military costs to protect oil interests, just to be subject to volatile, sometimes crippling, prices.

 

Why Gas Rises faster than Crude Oil

 

Gas prices rise faster than crude oil because the cost of crude comprises roughly half the cost of a gallon of gasoline, according to the Energy Information Administration. If a barrel of crude containing 42 gallons rises in price by $10, each gallon of crude rises in price 23.8 cents. That does not include costs to refine the crude into gasoline, federal and state taxes tacked on to a gallon of gasoline, or marketing and distribution charges.

 

In 2004, total daily demand was 20.7 million barrels, according to the Energy Information Administration. Supply, including more than 10 million barrels of imported (17.5 million barrels) crude. That's a deficit of 3.2 million barrels of crude oil every day.

Another reason for price spikes is tight gasoline inventories, which can't provide a cushion when demand spikes, refiners say.

Refineries typically balance gasoline supply and demand by tapping excess production that is stored at refineries or through imports. However, over the last 25 years, gasoline inventory has substantially dropped to save money, according to a recent study by the federal General Accounting Office. Inventories have dropped to fewer than 23 days' consumption in 2004, from roughly 40 days in the early 1980s. (“Gasoline prices up like a rocket, down like a feather,” Rick Stouffer, Pittsburgh Tribune-Review, Sunday, September 25, 2005).

 

Oil Production Cannot Keep up to Supply

 

The International Energy Agency (IEA) projects that by the year 2030 there will be at least a 50% increase in oil demand.

 

Many analysts believe that oil production has already hit its peak, or very close to it.  Additional demand can only worsen the already stressed level of production, inevitably driving prices up even higher.

 

Proved oil reserves are misleading in large part as they take into account vast fields of tar sands.  They are available, but are difficult and costly to extract, and requires enormous quantities of water and natural gas.

 

Where are the Oil Refineries We Need?

 

Older refineries are not as efficient as they should be. The number of refineries, in fact, is not adequate to process the demand for fuel. It has been well documented for years that huge oil tankers are often "stacked" on the oceans just waiting for a chance to unload their cargo. The oil is there but we (U.S. companies) have not been willing to bite the bullet and increase our refining capability in order to handle the petroleum we need (“Consumers trumped once again by ill-timed oil price increases,” Posted: Friday, Sep 23, 2005 - 05:34:29 pm EDT, Larry Hypes.

 

Petroleum Use Statistics

 

 -The U.S. uses more petroleum than any other nation (avg. of 20 million barrels a day in 2007).
 -The U.S. has the most automobiles of any country (130 million – 1980)
 -Automobiles consumed an estimated 100 billion gallons of gas (1980) or 40% of U.S. oil consumption
 -The transportation sector accounts for 60-70% of national petroleum use

 

Pure-alcohol vehicles can result in a lower level of regulated exhaust emissions than gasoline-powered vehicles.

 

Several factors that are now forcing consideration of nonpetroleum alternative fuels are:
 

     -Oil reserves worldwide are declining
 -Demand for oil is increasing worldwide
 -Prices for oil continue to rise, contributing to rising inflation
 -Supplies from producer nations are subject to sudden disruption because of war or political reasons.

 

Conclusion

 

The U.S. demand for imported oil is the #1 economic, political, and security problem.  These problems include:

 

• Huge trade deficits
• Economic vulnerability to restricted supply
• Higher oil prices result in a corresponding increase in inflation
• Rogue countries receive huge amounts of money that they use to undermine U.S. objectives
• A weaker dollar
• Higher military costs
• Growing energy dependency on foreign suppliers