As I sit here writing this column from the oil rich Middle East, I am reflecting on the political oil wars that we are hearing so much about from President Bush, Congress and the presidential candidates. Yet, no matter our favorite party, branch of government or candidate, the whole story is not being told.
During the last week in April, there were press briefings galore in Congress with words and accusations flying everywhere. The price of oil is killing our economy, small airlines are folding and larger ones are laying off employees or trying to merge. Trucks and their drivers are parading around the Capitol on a daily basis, honking horns and making it clear that it is difficult to survive with the gas prices so high.
The Democrats want the president to stop adding to the strategic oil reserve, which is 97 percent full. So far the president has not budged. The Democrats figure that it could save Americans 5 to 24 cents per gallon. Their plan put forward in four congressional bills includes holding OPEC accountable for price fixing (HR 2264), cracking down on gas price gouging (HR 1252), repealing subsidies to oil companies, investing in renewables (HR 5351) and developing new mileage standards (HR 6).
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During several of the pressers, the Democrats rattled their swords. They pointed out that the Saudis had reduced their oil output by 800,000 barrels a day since 2005. Then came the threat, saying that Congress would "block their, (Saudi Arabia, Kuwait and UAE), lucrative arms deals." Of course Americans would be on the Democrats' side on this one. Why should we sell arms to countries that are making record profits? The answer is two words: Russia and China. Having just returned from Sudan, it is clear that as soon as the United States opts out of oil production, then China is going to opt in. If that means the price of entry is arms sales, then China and Russia are going to "pay that price" and sell arms. The threat of no arms sales sounds great to the Americans watching the evening news, but it is short sighted indeed.
All of this saber rattling took place against the backdrop of Exxon Mobil releasing its quarterly profits, which are a whopping $10.25 billion for the quarter. The numbers look great for oil investors now, but there are clouds over the horizon, and the large investors are well aware of the darkening cloud cover.
That cloud is called Hubbert's peak. M. King Hubbert predicated in the mid '50s that the world was reaching peak oil production and that the United States would reach it by 1970. He was laughed at and disregarded. Hubbert was right, and one member of Congress has been the lone voice for Hubbert's Peak and the implications that it brings. That member is Republican scientist Roscoe Bartlett from Maryland. As the lone wolf he has said, "You can't pump what is not there." This might explain why there is less oil being pumped from Saudi Arabia. They might be close to peak oil production. There was a stated increase in Saudi "oil reserves" about 10 years ago, but there is no data real data to back up this alleged "find." Saudi Arabia going dry is a very scary situation for the economy and Middle Eastern stability, and cutting off arms sales isn't going to change that fact.
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Ordering GAO studies, Rep. Bartlett has continually been on the floor of the House showing graphs and pushing for renewables and alternative energy sources. He was also first out of the box to discuss what he terms as the "investment risk" of doing business with countries that have the largest proven reserves and carry the most political risk. Those just happen to be Iran, Iraq, Nigeria and Venezuela. He has many ideas, including plans for the U.S. to achieve energy independence. One is a bill for "net metering" which encourages Americans to sell back any energy they produce using solar, wind and other alternative energy sources.
There are numerous ways to mitigate the effects of peak oil in the U.S. or anywhere else, but these require long-term planning, investment and action. Idle threats such as cutting off arms sales or stopping CEOs from taking home more bacon are not going to address the problem. Rep. Bartlett has been saying what no one wants to hear. It is time we paid attention.