On the web since 1997
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On the web since 1997 |
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Foreign Oil NewsflashLuke Hodgens / Powerhouse Profits -- According to the International Energy Agency, the world economy will face higher oil prices than in the past decade. Since more oil supplies are coming from politically unstable nations like Iraq, Russia and Saudi Arabia, production delays, sabotage and costs are likely to rise.Since dependence on these unstable, unfriendly nations will increase over the coming years, producers in these OPEC nations will be able to impose higher prices almost at will. The IEA said that because of the growing stranglehold these nations enjoy, prices per barrel in real terms are likely to rise to $27 per barrel in 2010, $31 in 2020 and $34 in 2030. The estimations are in 2000 dollars and oil has been trading below $20 per barrel in real terms from 1985 to 2000. Thanks to our unstable and autocratic friends overseas, and our environmentalist friends at home, we'll be paying roughly 70% more for a barrel of oil in the coming decades. These simple facts should be reason enough for America to pass the energy bill and begin cutting our foreign energy needs. The Middle East has been riddled with crisis for centuries and the likelihood of peace is almost zero. Ignoring these facts will not make them go away. Organizations like Greenpeace and the Sierra Club have become walking contradictions. While they preach clean environments here in the states, they're all too happy to allow OPEC nations to pump and pump and pump - as long as it's not in their back yard. It's fine and dandy if we drill oil from the desert, but we must not touch the tundra. The environment is very important to maintain, but not at the expense of humanity. OPEC Asks Us a Doozie In late October, the Organization of Petroleum Exporting Countries approached the US Government with some laughable requests. OPEC asked the US to release some of our Strategic Petroleum Reserves to help reduce oil prices. OPEC is now asking us to manipulate the market. The current OPEC president, Purnomo Yusgiantoro of Indonesia, said the cartel asked the White House to release some of the 670 million barrels we have reserved for dire emergencies such as embargos or war. The White House reply: No way Jose. President Bush has repeatedly said the SPR will not be used to manipulate the market. Dumping oil on the market would have little effect on prices anyhow. Oil analysts say that releasing oil from the reserve will, at similar amounts to Clinton's release in 2000, not cause prices to drop since US refineries are running near full capacity. Amerada Hess bid for oil back in 2000 when President Clinton released 30 million barrels from the reserve and now believes the supplies they receive from Venezuela and Africa would be more competitive than prices paid for US strategic reserves. A huge release of reserves, held to benefit America in times of crisis, would effectively help other nation's energy bills as well. Dumping 100 or 200 million barrels (an enormous amount) on the market would not only bring down US prices, but world prices would drop too. The point of our reserves is not to help China buy oil at cheaper prices. Our strategic reserves are just that - strategic. Our "strategy" is to maintain a savings account for a rainy day - and it's not raining. A more logical and effective way for US prices to drop, besides passing the comprehensive energy bill and the ANWR amended budget, would be to allow the fast track construction of more refineries. Our refineries are currently operating at over 90% capacity. The environmental roadblocks constructed by Congress and local governments have caused oil refining to fall way below demand. Cartel Leaders Gather Our friends in the OPEC cartel will officially meet in CAIRO, Egypt tomorrow to discuss how to destroy our economy. When oil was trading at $50 per barrel, OPEC members told us they would do everything possible to ease prices - and they have not. Prices have come down for one reason only - American inventory buildup. So now that oil has fallen to the low $40's, OPEC is scrambling to figure out how to keep prices high. When they meet, there's a better than 50/50 chance they'll decide to turn off the spigot. Oil futures are trading higher by 31 cents today in preparation for the cut. Luke Hodgens is the editor of |
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