Oil producers reach for more powerA chilling article, to be sure. Read the rest with the warning that you will need to catch your breath.
[...]In the U.S., the strategy, as articulated by President Bush, is to put all our hopes in new technologies like straw-grass ethanol, hybrid cars and coal-to-oil plants that might bear fruit over the next 15 years. And in the meantime, we'll all think about driving less.
It's easy to poke fun at a plan that seems to have been brainstormed by a committee of ostriches with their heads buried in the, well, sand. But it's not like our economic allies and competitors have done a whole lot better.
The European Union has a two-pronged approach:
- Produce more energy from nuclear plants and from renewable sources like wind and solar.
- Buy more natural gas from the Russians.
I only see one tiny problem with each prong:
- The European Union says member countries are falling way behind their relatively modest targets for nonpetroleum energy sources.
- Russia's promise to be a reliable energy supplier is close to worthless.
China has come up with its own two-part strategy. Part One involves cozying up with any pariah regime that happens to sit on oil. So the Chinese are going to supply patrol boats to the Nigerian government so it can quash the rebellion in the oil-rich Niger delta. Last year, China signed an $800 million deal for 30,000 barrels a day of Nigerian oil. Arms for oil, anybody?
Of course, any government that is counting on the governments of countries such as Nigeria and Iran to honor deals is doing some major wishful thinking of its own.
Part Two of the Chinese strategy is predicated on building as many new nuclear power plants as it can, as quickly as it can. The nuclear industry promises that the new generation plants are a huge improvement over the last generation. China looks like it has signed on as a massive testing ground for this next-generation technology.
Against that backdrop, the energy strategy set out by the world's net oil exporters is a model of clear thinking and simplicity. It, too, has two parts.
First, seize greater effective control of all the oil inside the national borders of the oil producers in the name of national oil companies.
Second, build new refineries in Saudi Arabia and the rest of the Persian Gulf to become the main global exporter of finished petroleum products such as gasoline, heating oil and jet fuel.
What does this OPEC strategy mean? It's effectively puts companies like ExxonMobil and Shell under OPEC control, as the "host" countries will extort huge royalties out of the oil companies for their rights to pump oil, until such time as their own national (or, more likely, "nationalized" as in seized) refineries can take over the process, insuring themselves a good long term profit at the expense of the short-sighted quarterly bottom line of Western companies.
Someone once said that capitalism is the worst economic model except for all the others. I think we're watching capitalism be taken down a peg, and ain't a damn thing we can do about it. This is all starting to sound like Frank Herbert's "Dune."
So when Bush talks about an "energy policy" and alternatives like switch-grass ethanol or hybrid cars (neither of which is really an alternative in that it weans us off oil), now you'll understand why. He's terrified that the one area he should have been on top of, as a former oil man (*snark*) is taking him by complete surprise. When history records this era, the one failure it could never forgive him for is a lack of effort to avert and plan for the coming oil crisis.
I made a prediction about two years ago that oil would hit $150 a barrel by the year 2010 (that was in 2003 dollars.) I was obviously being conservative, but I couldn't have dreamed of this worst case scenario. This will have enormous implications in all sectors of our economy, including housing (the bubble bursting and energy prices being triple what they were last year is not a coincidence), food, even medical care.