With oil closing at $96.20 a barrel on Friday and the United States importing as much as 12 million barrels of oil daily, Americans are now paying other countries some $1.15 billion per day for continued dependence upon foreign oil.
On a yearly basis, that amounts to some $421 billion for foreign crude.
By comparison, oil was averaging $24 a barrel in Jan. 2001 when President George Bush was inaugurated for his first term. At that time, there was an outflow of only $288 billion per year for foreign oil.
With Turkey threatening to invade Iraq to attack Kurdish insurgents and with Pakistan currently under martial law with the prospect of a presidential election in January still shaky, we’re on the verge of oil topping $100 per barrel.
Should Israel or the Bush administration decide to launch a pre-emptive strike on Iran, oil could easily skyrocket to more than $125 a barrel overnight.
Rapidly rising oil prices are putting great pressure on the U.S. dollar, as sending overseas more dollars to buy foreign oil aggravates an already negative balance of payments situation.
Rapidly rising oil prices threaten to intensify our expanding current account trade balance, measured as a percentage of Gross Domestic Product.
All this adds pressure to a rapidly devaluating dollar that ended Friday at a new low of 75.39 on the U.S. Dollar Index.
On Friday, the dollar also closed at $1.467 against the euro, continuing a string of continued dollar lows against the euro.
Moreover, rising oil prices are driving a dramatic shift of wealth, with U.S. dollars flowing overseas to oil producing countries, including dedicated enemies of the United States.
According to the Energy Information Administration of the U.S. Department of Energy, or EIA, America’s five top suppliers of oil, Canada (1.95 million barrels of oil imported to the U.S. daily in August), Saudi Arabia (1.47 million barrels), Mexico (1.38 million barrels), Nigeria (1.18 million barrels) and Venezuela (1.14 million barrels) are each receiving over $90 million from the United States each day, as long as oil remains over $90 per barrel.
The dramatic oil price increases of recent months have resulted in oil windfall profits to countries which are sometimes less than certain friends of the United States.
In the 1980s, President Reagan was able to pressure the fall in the Soviet Union, in part by working with oil producing countries including Saudi Arabia to increase world oil supplies and push the price of oil down to under $14 a barrel in 1989, thereby squeezing Russia’s oil exporting revenue.
Today, Russia, with oil exports of 6.57 million of oil a day in 2006, is not far behind, with over $600 million a day in oil revenue at current prices.
Iran, the United Arab Emirates and Venezuela import over 2 million barrels of oil a day, realizing over $180 million.
Iran uses much of its oil windfall profits to support Islamic radicals and terrorists, including Hezbollah in Lebanon and Hamas in the Gaza, both sworn enemies of Israel.
Dubai, rapidly becoming the Singapore of the Middle East, has accumulated more than $100 billion sovereign funds available for international investment.
Venezuela’s windfall oil profits provide a strong economic base from which Hugo Chavez continues to rail against the United States in South America and around the world.
A Standard Charter bank study estimates that sovereign wealth funds, largely held by the OPEC oil producing countries, could grow from their current value of $2.2 trillion to $13.4 trillion, largely fueled by windfall price increases in their oil exporting revenue.
Saudi Arabia, the world’s largest oil exporter, exported over 8.65 million barrels of oil a day in 2006, meaning that today the kingdom leads the world at realizing more than $832 million a day in oil-import revenue at today’s prices.
According to the most recent figures from the EIA, the United States in August imported an average of 10,284 million barrels of oil per day.
The EIA also reports U.S. oil consumption has exceeded 20 million barrels of oil a day, at an average of 20,588 million barrels of oil a day in 2006.
In recent years, the EIA reports estimate the U.S. is approaching importing approximately 60 percent of the oil we consume, as much as 12 million barrels of the 20 million barrels Americans use every day, in rounded numbers analyzing U.S. oil imports and consumption over the past 3 years.
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