Oil, OPEC, and You
So, over the weekend, there was a great article in the Washington Post, about the oil economy and the transfer of wealth from oil-importers like the United States and oil producers -- OPEC member states like Saudi Arabia, Libya, Venezuela, and Indonesia, for example.
After reading it, I can't help but think that the United States, and the Cowboy President ain't playin' the game right. $700 billion a year are flowing to the world's oil-exporting countries, most from middle class residents of the United States, much of it going to three nations that are particularly nettlesome to the US: Iran, Venezuela, and Saudi Arabia. While the Arabs are nominal allies, the al Saud monarchy are always on the verge of a popular uprising, destabilizing the government. Of course, the Iranians and Venezuelans continually thumb their noses at the US, in part because they are flush with cash.
Then there's Russia. The resurgent Russians are building malls and buying lots of expensive European cars, while the government is paying down debt and refurb'ing their military.
There's a lot of money changing hands. With oil hovering at $100 a barrel, that's plain to see, and all one needs to do is look at the cost of a gallon of gas at your local filling station to see the day-to-day effects. Take a look at this graphic, provided by OPEC themselves, showing how pervasive the oil economy really is.
Add to all this, the fact that OPEC met over the weekend. It wasn't what they said during their meeting. It was what they didn't say. Essentially, they wanted some assurances about future demand as they contemplate whether to increase oil output. As they see it, OPEC members observe Europe, moving towards carbon credits, and renewables; and in the US, there's a real chance to elect an anti-Big Oil person president. So, they made veiled threats that, without such demand assurances, they'd do what(ever) they could to dissuade the United States from moving away from petroleum, to solar, wind, and hydrogen to power homes, businesses, and transportation. That might include actually cutting production, which would drive petroleum prices even higher, doing more damage to an already fragile American economy.
Now, bear in mind, the United States, uses about 350 million barrels of oil a day solely for transportation -- cars, trucks, trains, and buses -- but mostly cars, and light trucks like SUVs. That's fully 15% of the daily output of oil for the entire world. You think our wallets are getting soft now, imagine what $4.00 or $5.00/gallon regular unleaded does to each of our little, individual economies?
"Now," you ask, "how is the US not playing the game right? The big oil companies are American, right?" Yes, you're correct. But, the oil producing nations can close the spigots at will. Most of the oil companies operate subsidiaries that are partly owned by companies in the host countries. Those companies are also, many times, state-owned, especially in Iran, Saudi Arabia, and Venezuela. Thus, these foreign governments can simply nationalize the oil companies -- effectively killing the stream of oil, and that, my friends, is how things go from bad to worse. Whereas some people think that we control all the levers of production, the fact is, the oil companies are only partially in control, although they've been enabled by the occupant of the White House and his boy.
Those two cats think they're in control, but not so much.
So, what are we to do? Of course, we could cut back, and conserve, but Americans hate giving up anything, including our huge SUVs.
Or, well, we could learn from Brazil: their 29-year-old ethanol fuel program uses cheap sugar cane, and with modern equipment, almost half of Brazilian cars are able to use 100% ethanol as fuel, which includes ethanol-only engines and "flex fuel" cars. The Brazilian ethanol program provided nearly 700,000 jobs in 2003, and cut 1975–2002 oil imports by a cumulative total of $50 billion. Today, Brazil gets more than 30% of its automobile fuels from sugar cane-based ethanol.
Now that's an energy policy we could learn from. And maybe we can even tell OPEC to kiss our collective asses.
After reading it, I can't help but think that the United States, and the Cowboy President ain't playin' the game right. $700 billion a year are flowing to the world's oil-exporting countries, most from middle class residents of the United States, much of it going to three nations that are particularly nettlesome to the US: Iran, Venezuela, and Saudi Arabia. While the Arabs are nominal allies, the al Saud monarchy are always on the verge of a popular uprising, destabilizing the government. Of course, the Iranians and Venezuelans continually thumb their noses at the US, in part because they are flush with cash.
Then there's Russia. The resurgent Russians are building malls and buying lots of expensive European cars, while the government is paying down debt and refurb'ing their military.
There's a lot of money changing hands. With oil hovering at $100 a barrel, that's plain to see, and all one needs to do is look at the cost of a gallon of gas at your local filling station to see the day-to-day effects. Take a look at this graphic, provided by OPEC themselves, showing how pervasive the oil economy really is.
Add to all this, the fact that OPEC met over the weekend. It wasn't what they said during their meeting. It was what they didn't say. Essentially, they wanted some assurances about future demand as they contemplate whether to increase oil output. As they see it, OPEC members observe Europe, moving towards carbon credits, and renewables; and in the US, there's a real chance to elect an anti-Big Oil person president. So, they made veiled threats that, without such demand assurances, they'd do what(ever) they could to dissuade the United States from moving away from petroleum, to solar, wind, and hydrogen to power homes, businesses, and transportation. That might include actually cutting production, which would drive petroleum prices even higher, doing more damage to an already fragile American economy.
Now, bear in mind, the United States, uses about 350 million barrels of oil a day solely for transportation -- cars, trucks, trains, and buses -- but mostly cars, and light trucks like SUVs. That's fully 15% of the daily output of oil for the entire world. You think our wallets are getting soft now, imagine what $4.00 or $5.00/gallon regular unleaded does to each of our little, individual economies?
"Now," you ask, "how is the US not playing the game right? The big oil companies are American, right?" Yes, you're correct. But, the oil producing nations can close the spigots at will. Most of the oil companies operate subsidiaries that are partly owned by companies in the host countries. Those companies are also, many times, state-owned, especially in Iran, Saudi Arabia, and Venezuela. Thus, these foreign governments can simply nationalize the oil companies -- effectively killing the stream of oil, and that, my friends, is how things go from bad to worse. Whereas some people think that we control all the levers of production, the fact is, the oil companies are only partially in control, although they've been enabled by the occupant of the White House and his boy.
Those two cats think they're in control, but not so much.
So, what are we to do? Of course, we could cut back, and conserve, but Americans hate giving up anything, including our huge SUVs.
Or, well, we could learn from Brazil: their 29-year-old ethanol fuel program uses cheap sugar cane, and with modern equipment, almost half of Brazilian cars are able to use 100% ethanol as fuel, which includes ethanol-only engines and "flex fuel" cars. The Brazilian ethanol program provided nearly 700,000 jobs in 2003, and cut 1975–2002 oil imports by a cumulative total of $50 billion. Today, Brazil gets more than 30% of its automobile fuels from sugar cane-based ethanol.
Now that's an energy policy we could learn from. And maybe we can even tell OPEC to kiss our collective asses.
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Yes and yes again.
Indeed. Just shows what nincompoops we have in office right now, and how deluded much of the public really is.
We should enjoy the oil while it flows, because it surely will stop flowing, possibly way sooner than later.
Don't believe the ethanol hype. Brazil can get away with it only because they have sugar cane. Trying to do the same here with corn would take more energy to make the ethanol, than you get out of the ethanol. Don't even get me started on what trying to grow enough corn (or cane) to meet any appreciable fuel demand would do to land and food costs (bye-bye corn bread and corn pudding - the only corn you'll get is corn-rows).
I'm all for the environment, and reduced dependency on foreign oil, but ethanol was meant for drinking, not for driving!
Peace
@Schwarzfischer:
Welcome aboard Brotha!
While I agree that ethanol isn't the end-all-be-all of alternative fuels, we need to start somewhere, right?
And you're absolutely correct that the crowding-out that would take place if we grew corn mostly for fuel, would raise grocery prices ridiculously, on everything from beef, and chicken (both fed on corn and corn meal), to that latte at Starbucks (incresed milk costs).
I'm for biodiesel myself. And there's a guy in Kansas who can convert that Escalade from a 12 mpg guzzler to a 50 mpg sipper, running on french fry grease! That's what I'm talkin' about! Plus the exhaust has a nice aroma...