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Posted on 03/20/2008 11:16:35 AM PDT by Uncledave
By GAL LUFT luft@iags.org
By now it is abundantly clear that the U.S. economy is in dire straits. What should also be clear is that the path to economic recovery will be compromised as long as America is dependent on imported oil to the degree that it is while oil continues to hover over $100 a barrel.
At current oil prices, this country sends overseas $460 billion per year to finance the daily buying of 12 million barrels of imported oil. This amount of money is about the size of our defense budget and three times the size of the ''economic stimulus'' package recently passed by Congress. But the real economic impact of oil dependence is hidden to most Americans. Energy economist Milton Copulos (who passed away this month) calculated last year that the grand total of all external costs associated with foreign oil dependence -- including the cost of oil-related defense expenditures, amortized cost of supply disruptions, and lost economic activity and tax revenues -- stands at $825 billion per year.
A double whammy
To put the figure in perspective, this is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil, making the cost of filling the gasoline tank of a sedan $214, and of an SUV $321. At today's oil prices, these costs would be even higher.
For the U.S. economy, oil dependence is a double whammy. While it contributes to our economic decline, it allows OPEC governments, many of which do not have our best interests in mind, not only to laugh all the way to the bank but to literally own the bank. The recent buyout by foreign governments of chunks of America's prime symbols of economic prowess -- like Citigroup, Merrill Lynch, Morgan Stanley, Blackstone Group and Bear Stearns -- is only the preview to what is yet to come should the petrodollar fueled transfer of wealth continue.
To understand the forces at play it is instructive to visualize the scale of OPEC's potential wealth in comparison to that of the consuming countries. At $100 a barrel, OPEC's oil assets stand at roughly $92 trillion, equivalent to almost half of the world's total financial assets and nearly twice the market capitalization of all the companies traded in the world's 27 top stock markets. If one adds the worth of OPEC's huge gas reserves as well as additional oil reserves that have not yet been discovered, the wealth of OPEC more than doubles.
If oil prices climb to $200, as President Hugo Chávez of Venezuela recently warned, this wealth would double again. While the value of the dollar and the U.S. economy is shrinking, OPEC's monumental wealth enables its countries unprecedented buying power. As an illustration, at current oil prices it would take OPEC just six days to buy GM and three years to buy a 20 percent voting block in every S&P 500 company. It is hard to see how such buying power amassed by oil producers would not upset the West's economic and political sovereignty. At the current rate of investment, foreign governments are likely to be increasingly willing to translate their wealth into power, dictating business practices, vetoing deals, appointing officers sympathetic to their governments, dismissing those who are critical of them and imposing Islamic laws on Western corporations.
Since stopping foreign investors from providing cash infusions for big companies in distress is not an option, the only way to stop the bleeding is for the United States and other major consumers to break the strategic stronghold of oil over our transportation system. Congressional leaders can start doing so by mandating that every new car sold in the United States is capable of running on -- in addition to gasoline -- nonpetroleum fuels like alcohols, coal-based fuels and electricity made from domestic resources.
Terrible choice
To make a car flex-fuel so it can run on any combination of gasoline and alcohol would cost an automaker an extra $100 -- the cost of one barrel of oil. If each passenger car and truck sold in America were flex fuel, the cost to automakers would be less than the $30 billion the Fed forked over last weekend to salvage Bear Stearns' riskiest assets.
The United States is essentially facing a terrible choice between a financial meltdown and a metastasizing sovereignty loss, political decline and eventual enslavement to OPEC and its whims. It's past time for Congress to recognize that the solution to our economic predicament lies in our garage.
Gal Luft is executive director of the Institute for the Analysis of Global Security and co-chair of the Set America Free Coalition.
Please Freep Mail me if you'd like on/off
The USA became a net oil importer about 1970. The party was over then but we can still pretend.
Government Mandates...
Let us thank the rinos and the democommunist.
The Saudis (and OPEC) keep the right folks' pockets stuffed.
OPEC is quickening its own demise. By choking production and increasing prices, it will increasingly drive innovation and research into alternative energy sources. It won't happen overnight (nor should it) but it will happen. In the long run, these oil-related growing pains are a good thing.
All we need is already here in capped oil wells. Uncap the wells, free the oil!
Moreover, President Bush should issue a proclamation proscribing any legal challenge to same as a directive based on a National Emergency.
The Saudis (and OPEC) keep the right folks' pockets stuffed.
True. We can blame the left, and we should, but there are many Republicans who are assisting with our national suicide. They should all be imprisoned in Gitmo if you ask me. Treason is still a crime, even if we don't prosecute it anymore.
If we stopped burning oil for heating and power generation, that would leave plenty for our automobiles and reduce emissions if we use our own oil resources in ANWR, the Gulf, of the Continental Shelf, etc. Nuclear plants, cleaner coal, wind power where it is feasible.
Of course, man-made climate change is a sham and a scam. But, common sense conservation can solve most of our problems.
Good post and I agree.
Some good points there
bump
BLACK-GOLD BLUES
Anything that grows ‘can convert into oil’
Company finds natural solution that turns plants into gasoline
http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=59402
Posted: March 19, 2008
9:44 pm Eastern
By Joe Kovacs
© 2008 WorldNetDaily
After three years of clandestine development, a Georgia company is now going public with a simple, natural way to convert anything that grows out of the Earth into oil.
J.C. Bell, an agricultural researcher and CEO of Bell Bio-Energy, Inc., says he’s isolated and modified specific bacteria that will, on a very large scale, naturally change plant material – including the leftovers from food – into hydrocarbons to fuel cars and trucks.
“What we’re doing is taking the trash like corn stalks, corn husks, corn cobs – even grass from the yard that goes to the dump – that’s what we can turn into oil,” Bell told WND. “I’m not going to make asphalt, we’re only going to make the things we need. We’re going to make gasoline for driving, diesel for our big trucks.”
How does the Miami Herald feel about drilling for oil in the Gulf off Florida’s coast? Gov. Jeb Bush and Florida Republicans and Democrats opposed it: NIMBY.
Not a lot of oil is used for power generation. Much of what is used is refinery "leftovers" like residual oil and petroleum coke. These are heavy hydrocarbons left over after products like gasoline and diesel have been removed from the crude oil.
Residential heating does take a very big piece of the pie either, but more than electric power generation.
America is dependent on imported oil by choice.
Dead on !
That is the only cure for 99% of Americas woes IMO.
Create cheap energy by drilling in the CONUS and it’s territorial waters NOW ! There is 200 years of oil reserves within those limits that will feed even the most thirsty of systems in the US.
The restricting paper dam created by the EPA is that limiting factor IMO. That is the singular political cure vs this BS ethanol or hybrid crap.
Yes, we as a nation need to work on better mileage per gallon vehicles. But no so much for conservation of resources as much as for the economy ! Cheap energy means people go places, have money to spend , save and invest. The manufacturing base, small and large business thrives when energy and fuel is cheap. Not what “”uses”” that resource is cheap.
This nation has 9 regions to the best of my knowledge that Nixon created. Each of those 9 regions should have at a minimum a dozen new nuclear power plants and refineries built within 5 calender years or we perish as a nation. We fall to a position well behind even the worst of third world countries due a incremental balkinization effort underway through such political decisions.
Reinvest foreign aid, that is given to nations seeking to destroy us . Use that foreign aid to build these projects.
Just my opinion of course.......
Never re-elect anyone ! Time to put the professional polidiots out of business !
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