[Allan Topol / AllanTopol.Com]
Lightning paced thriller writer
of International Intrigue
National Bestselling Author
HOME NEWS CONTACT BOOKS ORDER SUBSCRIBE NEWSLETTER ARTICLES

Oil Folly
by Allan Topol, [IMAGE]2005

ARTICLE ORIGINALLY APPEARED AT MILITARY.COM, July 12, 2006

Photo Courtesy: Julie Zitin
[Allan Topol / AllanTopol.Com] I remember distinctly sitting behind the wheel of my car at four a.m. on a cold morning in late 1973 on McArthur Boulevard in Washington waiting in line for an Exxon station to open. I was furious at Saudi Arabia and the other Arab oil exporters for imposing an embargo on the United States. However, I was almost as angry at our own government. “They couldn’t let this happen,” I kept saying to myself as I sipped coffee from a thermos.

Of course I was not alone in my views. As a result of the sentiment among the American population as a whole, President Richard Nixon announced a goal of “energy independence” in 1973. That was 33 years ago. In the intervening period, we have had more than one Democrat in the White House and more than one Republican. We’ve had Democratic control of one or both houses of congress and we have had Republican control of one or both houses.

We have not taken any steps toward “energy independence.” Indeed in every respect, the current situation of the United States is far worse than it was in 1973.

At the time, of President Nixon’s pronouncements, the United States imported a third of its oil. At the present time, notwithstanding new domestic sources of supply, offshore and in Alaska, we now import sixty percent of our oil. Even more troublesome, this percentage must increase over time not only because United States consumption continues to increase, but because domestic production is in decline. Indeed, ever since the early 70s United States domestic production has been going down following standard analyses of oil production.

Three primary factors have contributed to the worsening of our country’s oil situation.

The first is the continued surge in United States demand. Somewhere in the period since 1973, we lost our way on oil conservation. The increasing numbers of small cars which minimize gasoline usage gave way to the huge percentage of SUVs and minivans on the American roads. If you bother to count them in a parking lot or on a highway, you will be astounded at the huge percentage of SUVs and other high gasoline usage vehicles on American roads. In other areas of American life, the noises we made about energy conservation have failed to produce meaningful results. Yes, we did develop the U.S. Strategic Oil Reserve, however that only provides relief for days and weeks. However, that’s not a long term solution.

The other primary factors are world wide supply and demand. It is not surprising that the price of gasoline exceeds $3 a gallon and keeps rising. Nor is it surprising that the price of oil has crashed through $70 a barrel several months ago en route to a cost in excess of $100 a barrel.

Worldwide supplies are tight and diminishing. Much of the oil is produced in trouble spots of the world such as Nigeria where an insurrection has shut off twenty percent of production, or Iraq where the oil industry has been ripped apart and Venezuela where governmental policies have reduced output. Terrorism, insurrections and storms like Katrina will continue to batter oil production.

Likewise, shipping routes and pipelines are vulnerable to sabotage and blockage. Then there are the Chinese, who are busily making private supply arrangements with numerous oil producers, thereby taking those nation’s oil output from the world market.

The situation on the demand side is equally ominous. In 1973, the United States dominated the oil consumption market. Prices rose sharply with changes in U.S. consumption. Currently, the United States consumes less than one fourth of the 82.5 million barrels of oil being consumed daily. China has replaced Japan as the second largest consumer with 8.5 percent of global oil consumption. Moreover, the Chinese consumption figures are rising rapidly as the Chinese people are not only enjoying economic prosperity, but developing a love of the automobile similar to what occurred in the United States decades ago. Other nations in Asia, including particularly India and in Latin America now have developing economies, euphemistically referred to as emerging markets, which will also use increased quantities of oil.

As a nation, our entire economy is at risk if we remain subject to continually increasing costs for imported oil. The impact on inflation and the American way of life will be devastating in the decades ahead. The President and Congressional leaders must utilize experts perhaps by forming a committee, akin to the Manhattan Project during the Second World War, to deal with the matter of U.S. energy independence. What is troublesome is that none of our political leaders are making serious noises about addressing this problem.