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.
What export are you talking about? We import most of our Petroleum.
-Produce cars that burn CNG (compressed natural gas) and LPG (liquified propane gas). Already available as after-market modification which is cheaper fuel source, cleaner burning and available in abundance domestically TODAY!
-Develop a comprehensive national energy policy (political football that has been kicked around for years without resolution along with social security, healthcare reform et al ad nauseum)
-Accelerate the dates by which new autos must meet higher mileage requirements. It's ludicrous for Congress (Pelosi) to take credit for addressing the problem when new reqs aren't fully implemented for more than a decade.
-Create significant tax incentives to encourage and reward entrepreneurs, oil companies, whoever to develop commercially viable alternative sources of energy.
My response to realism’s post.......
http://www.freerepublic.com/focus/f-news/1988913/posts?page=31#31
He mentioned exporting, I said stop or control such if it was happening.....
That’s what I am talking about.
I do agree with the president, we have an addiction to cheap oil. Basically the only way to cure an addict is to take away the substance of the addiction gradually or cold turkey. We do need to learn to do more using less.
The Google guys pumped $100 million into the design of cheap ($1 per watt) solar cells. It's happening.
The only crude oil we export is to Canada. That is just a matter of the location of the closest refinery to that particular oil field.
Crude Oil Exports by Destination
http://tonto.eia.doe.gov/dnav/pet/pet_move_expc_a_EPC0_EEX_mbblpd_m.htm
Perhaps you are interested in doing less or paying more for other sources. Most of us are not.
This country should do more to produce the resources we have.
Will we as a nation implode before common sense takes over? I really think we will. The stranglehold that radical environmentalism has over the hearts and minds of the average stupid American is disheartening. It would be oh-so-easy to build nuclear power plants and drill in ANWAR. Those 2 things alone would drive gas prices down to $1.00 (or less) and create a much stronger, safer America. It is going to come down to force, I’m afraid, to stop the maniacs who are slowly killing us.
How would building nuclear power plants lower gasoline prices? Next to no petroleum is used generate electricity. Much of the petroleum that is used is refinery “leftovers”; residual oil and petroleum coke that remain after product like gasoline and diesel have been removed from the crude oil.
bump
I think we can all agree that growing more corn is the only real way to the greedy capitalist oil companies in their place.
LOL
Fluid mechanics is primarily a manipulation of Bernoulli's principle, which is simply the equivalence of the various forms of Newtonian energy in fluid form, pressure, elevation in a gravitational field, velocity of mass. They can be easily, and are routinely throughout the mechanical world, transposed to one form or the other. When a bungee jumper departs the New River bridge, his initial potential energy of elevation is variously transformed into the kinetic energy of descent, the extended energy of the spring (bungee cord) and his changing elevation; and subsequently transformed back again, ad infinitum until entropy saps it all.
As posts #42 and #45 above imply, nuclear energy, gasoline, coal, and renewables, are all the same thing. It can be measured in Joules, BTU's, calories, electron volts, and a few other units. But all the same thing. And the sooner ignorant politicians, and economists, understand it the better off we, in the United States, will be.
This arrogance knows no party boundaries.
But they do not have the same applications or the ability to be used for transportation.
this is why I hate liberals so much. We have to buy our oil from somewhere. Why do they prefer buying from some POS dictator to us drilling it ourselves? If they are so anti-pollution, why wouldn't they trust us to do a better job of being "clean" about it than China?
The bigger problem for me is that when we had Republicans in charge of the House, Senate and as President, we did not pass laws allowing drilling in these areas.
You know that's not going to happen. We're going to allow our enemies, both external and internal, to bring us to our knees and reduce us to below 3rd world status because we have to take care of the caribou and polar bears, the REALLY important things in our environment. Besides leaving any "carbon footprint" is EVIL and it's much better if we all willingly freeze to death and sacrifice ourselves and our children, for the sake of the animals, so that Al Gore can ascend to heaven and reside at the left hand of George Soros. /s
>>we’ve got to stop the flow of oil money into OPEC coffers.”
There’s the nail on the head. Truth if I’ve ever heard it.
Let's be bi-partisan about that! ;^)
Let's be bi-partisan about that!
OK by me. How about 3D to 2R? I fault the Democraps for harboring the Green Wieners amongst themselves. I fault the Rearpublicans (O SHAME!) for not doing a goddam thing about this when they easily could have.
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