Energy
Independence and Global Warming in a Time of
War
DavidJ.Jonsson September 4,
2006
There is no magic wand which one could use
to provide energy security.However, a
key element in finding a solution is to understand the magnitude of the
problem.
Perhaps most fundamentally, we must integrate
the energy, environmental and foreign policy tracks of our national security.
For too long these have been separate, and the energy, environment and foreign
policy worlds have hardly spoken to each other. But if we make energy security
a top foreign policy priority, we can work for a world in which the interests
of energy consumers and producers are increasingly aligned rather than torn
apart. At the same time, energy and environmental initiatives can significantly
advance our foreign policy interests. See also my article: Axis of
Appeasement – The Inconvenient Truth covering
the strategy of the Islamists for world domination.
We have a choice. There are too many crises
coming to our front burner at the same time: Iran ,
North Korea , Venezuela , Iraq
and Nigeria
to name just a few. Thomas Sowell commented in his article, Point
of No Return?: “It is hard to think of a time when
a nation -- and a whole civilization -- has drifted more futilely toward a
bigger catastrophe than that looming over the United States and western
civilization today.”
“Nuclear weapons in the hands of
Iran and
North Korea mean that it is only a
matter of time before there are nuclear weapons in the hands of international
terrorist organizations.
North Korea
needs money and
Iran has
brazenly stated its aim as the destruction of
Israel -- and both its actions and
its rhetoric suggest aims that extend even beyond a second Holocaust.”
“Send not to know for whom the bell tolls.
It tolls for thee.”
After riding through the present crisis, the
U.S. and other key energy states can go back to the lack of a serious energy
security policy, which characterized the quarter century since the crises of
the 1970s—the Yon Kippur war and ensuing embargo. Or we can respond to the
wake-up calls of recent months.
The first point to understand is that today
energy interdependence is a fact of life. The
US imports more than half its
energy from other countries today, and we can expect to import two-thirds by
2025. Americans depend on OPEC producers for over one-third of our energy, and
the world depends on OPEC for over half.
Energy Security and Foreign Policy
Energy security is a critical element in
foreign policy!Energy security requires
access to sources of production, security of transportation, control of the
facilities for processing the raw energy (oil, natural gas, coal, etc.) into
useable forms—gasoline, electric power, petrochemicals, fertilizer, cement and
metals, etc. and ultimate delivery to the end use consumer. In many cases the
outsourcing of processing of energy into useful products resulted from the
desire to export the pollution, not reduce it and become Greener than
thou.Failure in any step can lead to
the downfall of the West. Here is why.
1.he
establishment of the boundaries for Iraq
following WW 1 was in part dictated by the access to oil and transportation
routes from Iran.
2.The
ultimate fall of
Japan
in WW11 can in part be related to lack of energy resources. Some have commented
that
Japan would have
fallen even without the dropping of the bomb.
3.The
result of the Yon Kippur War of 1973 led to embargos of oil shipments to the
West. Europe entered into the Euro-Arab
Dialog. The embargo was lifted for Europe. Europe also realized that they could attain economic
markets in the Mid-East by agreeing to demands. The EAD led to the Islamization
of Europe, resulting from the agreement to open the borders to immigration.
See: Eurabia:
The Euro-Arab Axis by Bat Ye’Or. The 1970s were a fashion
disaster: one of those fashions, petrol-pump queues, could yet be repeated.
4.The
fall of the Berlin Wall can in part be laid to the success of
Saudi Arabia in
using oil as a weapon. By Saudi increasing oil production and thus lowering the
price of oil,
Russia ran out
of money.
5.Prior
to being selected to lead
Russia,
Putin wrote that a key element of his leadership would be the use of oil as a
tool for geopolitical control. President
Vladimir
Putin
seems determined to restore his country to the superpower status it held when
he was a KGB officer. He hopes to accomplish this by turning
Russia into an
energy heavyweight, enriching the country's new elite in the process. Putin
learned his lesson well from
Russia’s
encounter on production levels with Saudi. Now
Russia is an observer in the
Organization of Islamic Conference (OIC) and the
SCO, and also coordinating
production with OPEC.
6.So,
what are we doing? Making deals with some of the most unsavory characters this
side of a Star Wars cantina to maintain energy Interdependence. Today, the
actions of the West are occurring because we maintain the Policy of
Interdependence in the supply of energy resources.
Independence vs. Interdependence
The policies promoted for energy
interdependence rely on someone else to be nice and supply our energy needs.
Production
Energy interdependence requires the defense
of not only the resource, it also leads to using the best technology to
maximize recovery in an environmentally sustainable manner
AND requiring defense of the shipment of the oil to
market. Oil production and processing and alternative fuels produced in the
U.S. must meet
U.S environmental standards; these strict requirements do not apply to foreign
sources. Becoming more energy self-sufficient by increasing domestic production
and conservation will reduce global pollution including reduction of Greenhouse
gas.
Transportation
Defending oil transportation routes under policies
of energy Interdependence is even more difficult because it involves multiple
countries and they are more susceptible to terrorist action. The amount of oil
moved on the major transport routes exceeds the production of individual
countries.
There are 5 transit choke points in the
distribution of oil. It is not sufficient to have friendly relations with the
exporting countries; we must also defend the transportation routes.
·
Strait of Hormuz
– 15-15.5 million bbl/day.
·
Strait of Malacca
– 11 million bbl/day
·Bab el-Mandab –
3.2-3.3 million bbl/day --
the strait separating the continents of Asia (Yemen on the Arabian Peninsula)
and Africa (Djibouti, north of Somalia on the Horn of Africa), connecting the
Red Sea to the Indian Ocean (Gulf of Aden).
·Bosporus/Turkish
Straits – 3 million bbl/day
·
Suez Canal and
Sumed Pipeline – 3.8 million bbl/day
If China
gets involved consider the Panama Canal and Trans-Panama Pipeline – 400,000
bbl/day and also Russian exports of oil and gas to Europe representing 30% of
the gas and 30% from Algeria.
According to an AP report on July 27, 2006: Iran Test-Fires Sub-To-Surface Missile
“Iran test fired a new submarine-to-surface missile during war games in the
Persian Gulf on Sunday, a show of military might amid a standoff with the West
over its nuclear activities.”
“In an advance for
Iran's weapons industry, the Thaqeb is the
country's first submarine-fired missile that leaves the water to strike its
target, adding to
Iran's
repertoire of weapons that can hit ships in the Gulf.”
“Iran already is equipped with the
Shahab-3 missile, which means “shooting star” in Farsi, and is capable of
carrying a nuclear warhead. An upgraded version of the ballistic missile has a
range of more than 1,200 miles and can reach Israel
and U.S. forces in the Middle
East.”
Members of the OIC of which
Russia is an
observer member control all of these transit choke points. Any one of these
choke points could to be attacked or the controlling countries could decide to
restrict passage.
Terror on the High Seas
Consider also the potential for attack on
one or more of the supertankers on the high seas. Maritime terrorism has
emerged as a formidable threat in the world, targeting both civilian and naval
vessels.A typical modern supertanker can carry
approximately two million barrels of oil. Three supertankers can carry all of
the oil used by Japan
in a day.Such an event would cause a
major environmental problem, let alone the potential for the necessity of
defending and securing the transporting of all the oil, petrochemicals, Urea,
etc. Can you imagine the cost of such an operation that would exceed the
problem of protecting our airlines? Our energy transportation infrastructure is
at risk. An attack anywhere in world would increase the global insurance rates
to war risk status. This risk premium would need to be added to the cost of
oil. Such an event may have a greater impact on Western economies than 9/11. In
the article A Time Bomb for
Global Trade: Maritime-related Terrorism in an Age of Weapons of Mass
DestructionbyMichaelRichardson, “Al-Qaeda has said a number of times that it wants to shut key
sea-lanes to strike a mortal blow at the political economy of the West.”
Energy
Independence Cannot Consider Only Oil
Security
Understanding this is critical, not only
from a defensive position but also as an offensive position against our
potential enemies. Moving production and manufacturing offshore resulting from
increased regulation and CO2 caps does not increase security and may cause
increased global pollution.
Defensive
1.Energy is imported to the U.S. not only in the form of oil.
It is imported in the metals such as aluminum, steel, titanium, in the form of
petrochemicals, fertilizer, etc. In many cases, we are dependent on these
products imported from the same countries as our oil, which are not necessarily
friendly to the U.S.
2.Some of our energy is imported in the form of gasoline.
This will increase. Saudi Arabia has plans to increase their refining
capacity from 4 MM BBL/day to 10 MM BBL/day, further making the West reliant on
refined product. This is significant because it reduces flexibility of supply
sources and potentially damages the global environment. The potential for oil
refineries abroad that can serve the U.S.
is so strong that Chevron Corp., though based in the car-happy state of California, is investing in a giant new oil refinery in India rather
than try to build a new refinery at home. The companies have turned away from
building new refineries at home because the numbers work better abroad, where
costs and red-tape and environmental requirements are reduced. Purchasing
refinery-processing services overseas also increases the U.S. foreign
debt. Thus, transferring wealth abroad. Such actions fit the strategies set out
by the Leftists for reducing the energy security and increasing foreign debt of
the U.S.
3.Who
is going to set the environmental standards?
4.Consider
Urea. As we all know from our gardening experience, we have to apply nitrogen
fertilizer to have good growth. The
U.S. imports
over 50% of the Urea used to support the food chain. We need these products even
to grow the corn to make ethanol. Relying on bio-fuels from crops may jeopardize
both the energy and the food supply. The food supply chain is subject to the
foreign supply of nitrogen to grow crops.
Offensive- Iran’s Achilles Heal
Iran has to
import about 50% of their refined product, mostly from the Gulf
States. Without the refining capacity
they are vulnerable to having all their transportation system shut down. In volume terms, Iran
is the second largest importer of gasoline in the world after the United
States
Iran is the
world's second-largest producer and exporter of crude oil, but its antiquated
refineries are able to meet barely 60 percent of the domestic demand, according
to Iranian government figures. Production stands at 10.5 million gallons a day,
compared with daily demand standing at 18.5 million gallons. The situation in
Iran is sufficiently severe that
Iran is
considering rationing. The government is also working on other schemes to cut
gasoline use, including a program of switching cars to natural gas.
Even
Iran
recognized the issue of the vulnerability of Interdependence that the
U.S. populous,
Congress and the Administration have not yet adequately addressed.
Iran's economy
relies heavily on oil export revenues, with such revenues representing around
80-90 percent of total export earnings and 40-50 percent of the government
budget. Strong oil prices the past few years have boosted
Iran’s oil export revenues and helped
Iran's economic
situation. This has emboldened
Iran in their support of the
Hezbollah and their nuclear program. For 2005,
Iran's real
GDP
increased by around 6.1 percent. Inflation is running at around 16 percent per
year, though unofficial estimates place the figure at 40-50 percent.
Iran’s oil
export revenues have increased steadily, from $32 billion in 2004, to $45.6
billion in 2005, with 2006 estimates at $46.9 billion.
Without both supply of oil and refinery
capacity, the U.S.
could face similar problems. As the oil producing countries shift to export of
refined products, the flexibility of supply sources (Interdependence) will dry
up. Consider the impact on the gasoline price following Katrina.
Impact on the West of Supply Disruption
In an editorial in the Financial Times on
August 26, Oil pressure puts heat on the economy, the commentator
explains “why a rise in oil prices from $13 a
barrel in 1998 to $73
today has not caused inflation and lower growth is a puzzle.
One explanation is that oil is now less important to the economy:
America
produced twice as much real gross domestic product per barrel of oil in 2005
as it did in 1973. Policymakers,
however, should no longer rely on such low oil intensity to protect them. At an
oil price of $13, consumption only
equates to 0.7 per cent of American GDP in 2005. But with oil at $73,
the share rises to 4 per cent and at $150,
without falling consumption, to more than 8
per cent. Because so much American crude is imported the
wealth effects on households would be major.”
Yet even oil above $100 might be sustainable
if households kept spending. If a family spends more on fuel, but the same
amount overall, their consumption does not fall: wealth merely transfers to
the oil producers. In 1973
consumers stopped buying
Detroit gas-guzzlers and traveling abroad:
the result was recession. But the difference in 1973 is that prices rose
suddenly, and rose in response to a fall in oil supply. By contrast, current
rises are driven by rapid growth in demand, primarily from
China, while
supply has risen not fallen. That does not have the same effect on consumer
confidence.
The West could tolerate increased oil prices
approaching $100/bbl resulting from increased demand, but it could not tolerate
another energy shock. Such a shock would lead to hyperinflation and potentially
a depression. This is precisely the risk of energy Interdependence to the West
that must be avoided at all cost.
Energy Interdependence is
Indefensible
In my article, The Origins of
the Next Great War are Visible, I discussed the role of
Leftist/Marxist-Islamist Alliance on security. BenJohnson
in his article: The
Fifth Column's Return to Iraq describes how some of the participants
are linked. This alliance, which includes environmental activist and antiwar
elements, is instrumental in pushing the immediacy of the global warming agenda
over the importance of energy security. Without energy security and financial
solvency, the West cannot defend our freedoms and liberty. This is not to say
that many supporters of initiatives relating to global warming are not for
security of the West, many supporters have not investigated fully the
organizations that they support, the potential results of their actions and
their other agendas and related organizations. I encourage all readers to do
the research themselves.
1.Defending energy interdependence is expensive in both
risks to personnel—my grandchildren and yours (War) and financially to our
economy.
2.Attempting to maintain access to oil reserves
has not improved our position in the developing countries. It has led to such
strategies as attempting to cause “regime change.” The U.S. has not
even been able to gain support from the ‘willing’.
3.With Iran entering the Shanghai Cooperation Organization
(
SCO), which some refer to as a
counter force to NATO, they will control the vast majority of the world's
natural gas reserves, as well as a significant portion of its oil reserves, not
to mention potential control of the Strait of Hormuz.These moves are significant because they amount to an act
of energy encirclement. Central Asia, the
greatest remaining promised land for oil and gas development, is completely
enveloped within the SCO, limiting
hydrocarbon access to non-SCO
nations.
Barely acknowledged by the Western media,
military exercises organized by Russia,
Kazakhstan, Kyrgyzstan and Tajikistan under the Collective
Security Treaty Organization, (CSTO) were launched on the 24th of August.
These war games, officially tagged as part of a counter terrorism program, are
in direct response to US military threats in the region including the planned
attacks against Iran.
The
SCO
has a close relationship to the CSTO. The structure of military alliances
is crucial. In case of an attack on
Iran,
Russiaand its CSTO allies will not remain neutral. In
April,
Iran
was invited to become a full member of the Shanghai Cooperation Organization (
SCO). So far no concrete timetable for
Iran's
accession to the
SCO has been
set. This enlargement of the
SCO,
which also includes observer status for
Iran,
India,
Pakistan and
Mongolia, counters US military and
strategic objectives in the broader region. Moreover,
China and
Russia, which are partners in the
SCO, also have a longstanding bilateral
military cooperation agreement. In August 2005,
China
and
Russia
conducted joint military exercises.
The conduct of the CSTO war games must be
seen as a signal to Washington
that an attack on Iran could
lead to a much broader military conflict in which Russia
and the member states of the CSTO could potentially be involved, siding with Iran and Syria. Also of significance is the
structure of bilateral military cooperation agreements. Russia and China
are the main suppliers of advanced weapons systems of Iran and Syria. Russia
is contemplating the
installation of a Navy base in Syria on the eastern Mediterranean coastline.
In turn, the US and Israel have military cooperation agreements with
Azerbaijan and Georgia.
Just two examples:
In Azerbaijan, U.S.
negotiators held their noses and struck a deal with a corrupt and brutal
government to build a $3.6 billion pipeline that goes through Georgia
to Turkey.
Conventional wisdom has led the U.S.
to be very keen on this pipeline because Russia,
China and Iran can't
touch it—or can they? With the SCO
in place, the future for export may require concessions regarding the
nuclear issue with Iran.
The U.S. is also making energy deals in Turkmenistan,
a country where the leader is enforcing a personality cult that KimJongII would
envy. He's committed a long list of horrific crimes, including boiling at
least one political opponent to death. But that hasn't stopped
International Oil Companies from striking multi-million-dollar deals to
develop Turkmenistan's
rich Burun oil deposit and the Turkmen part of the Caspian
Sea.
4.Interdependence
has led to financing the very regimes that in some cases are funding terror and
do not adhere to the basic concepts of human rights, let alone adhere even to
the basic environmental standards. Attempting to develop energy interdependence
in regions controlled by the SCO,
for example hardly lead to a plan for security. The violations of human rights
are overlooked in the name of ‘reality politics’ and the need for oil. For
every $5 increase in the price of oil, Iran gains $85 million a day for
support of Hezbollah.
Foreign Trade Balance, the Federal
Budget and the California
Global Warming Bill
Foreigners continue to mop up the ‘Red Ink’ resulting from
the twin deficits in both the trade balance and the federal budget. In my
article Structural
Changes–Destruction Of The U.S. Dollarthis subject is discussed in depth. In the
BusinessWeek article September 4 Less Red Ink For Foreigners To Mop Up:“But for now, recent Treasury Dept. data show
that foreigners boosted their purchases of U.S. securities for the second month
in a row in June led by a surge in net purchases of Treasury bonds and notes.
In June alone foreigners increased
their buying of long-term Treasuries by some $27 billion. Over the past year,
foreigners have ponied up $242 billion for Treasury bonds and notes, enough to
finance 88% of Washington's
smaller-than-expected pool of red ink.”
Compounding the problem, as the Financial Times in their
article: California
agrees on global warming bill“Businesses in California
began to grapple with the need to reduce their greenhouse gases on Thursday
following a deal on legislation that would mean mandatory caps on emissions for
energy-intensive industries in the state.”
The California
Chamber of Commerce said businesses would suffer from the proposed laws. AllanZaremberg,
the chief executive of the California Chamber of Commerce, said: “[The
proposal, known as] AB32 will have a severely negative effect on the
affordability and reliability of California’s
energy supply, jeopardising California’s
economy and our global competitiveness.” The manufacturing companies may make a
dash for the borders, not only of California
but potentially the United
States.
He said the proposals would do little good for the
environment: “Climate change is a global problem that requires a global
solution, not a punitive cap on energy supplies in California. Being the only state to have
absolute caps on carbon emissions puts California
at a competitive disadvantage.”
As ScottDukeHarris has commented in the article The top tech hub—for now,
California is already at
a disadvantage when it comes to recruiting. Anecdotal evidence abounds on the burden of
housing costs. One CEO, Guardino said, recently told him of having 17 out of 20
applicants reject job offers in part because of the Bay Area's high costs.
The various costs associated with doing
business in
Silicon Valley, Guardino said,
rarely prompt companies to relocate to other regions. But it can have profound
effects on where companies choose to expand their workforce. ``What happens
most often is just a quiet decision that, as jobs are added, they're not added
here,'' Guardino said.
On a positive note, the leadership group,
which includes the Mercury News as a member, said California's environmental
policies, such as a new effort to limit greenhouse gases, will help stimulate
``clean tech'' development in the years to come. SVLG member
Barry
Cinnamon,
founder of Akeena Solar in
Los
Gatos,
says the incentives encouraging solar production could also spur a new wave of
manufacturing.
Although
Green
appears to be the color choice of the year, environmental taxes are appetizing
but not a free lunch. Green taxes cause distortions, like any other taxes. A
tax on carbon will reduce carbon emissions locally, but it will raise the price
of goods and services and reduce real wages. Environmental taxes are not the
equivalent of a perpetual motion machine, except for potentially the venture
capital groups investing in “clean tech.” California, with the valley leading the way, is
a magnet for “clean tech” investments such as alternative energy technologies
including solar and biodiesel. According to the Cleantech Venture Network, California companies
received $484 million of the $1.6 billion invested nationwide in clean tech.
“The valley ranked dead last in a comparison
of 12 U.S. tech hubs on a matrix that gave equal weight to six ‘critical
issues’: unemployment rate, housing costs, traffic congestion costs, 8th-grade
math achievement, electricity costs and state tax rates.” The CO2 cap
legislation will do nothing to improve the ranking of Silicon Valley and the quality of life for the average person.
Such actions as the cap on CO2 potentially reduce the
ability of refiners to produce gasoline in the U.S.
and hence increase reliance on foreign sources, thus increasing energy
insecurity for California and the U.S. Such
actions will also move manufacturing jobs offshore.
Perhaps most fundamentally, we must integrate the energy,
environmental and foreign policy tracks of our national security. The actions
may create some jobs but also destroy wealth. It is easy to invent policies
that create lots of jobs—just make delivery trucks illegal and create work for
human porters. Want to create jobs, hire people to shatter windows in homes and
businesses and you would create a boon in the glass making industry. However,
it wastes the skills and services of a labor force that could have produced
things that people really wanted. Exporting our manufacturing, oil production
and refining industries to the cabal of countries—members of the
SCO and OPEC, etc. may reduce domestic CO2
emissions from the
U.S. and the
developed countries, but it will increase our foreign debt and make us more
insecure. Such actions have a direct impact on Foreign Policy.
In the Article by Samantha Young, Associated Press Writer: Schwarzenegger, Democrats reach landmark
global warming deal,August 30, 2006, “We need to have all important
sectors of the economy do their fair share,” said Jim Martson, a senior
attorney with Environmental
Defense, one of the main environmental groups involved in negotiations over the bill. “If
you only do electricity or autos, you're only getting at 70 percent of the
problem.”
Another organization providing funding to the Environmental
Defense is the Open Society Institute. GeorgeSoros is Founder and Chairman of
the
OSI . According to
Discoverthenetworks.org, since establishing the Open Society Institute, Soros
has given away well over a billion dollars to leftwing causes. In an
effort to ensure President Bush's defeat in 2004, he gave $5 million to
MoveOn.org, a Web-based, grassroots political network that organizes
“electronic advocacy groups” of online activists around specific issues; raises
money for Democratic candidates through rock concerts and other entertainment
events; strives to win young recruits through its appeal to the Internet-savvy
MTV subculture; and generates partisan political ads. Prior to the 2004
election, MoveOn produced ads likening President Bush
to AdolfHitler.
Green taxes and imposition of
CO2 caps are not just fiscal policy and environmental policy but foreign policy
and security policy also.
If a single state or
even a country imposes a carbon tax or CO2 caps without being joined by others,
polluters will simply move elsewhere, causing damage to the economy without much
benefit (if any) to the planet. Moving production offshore to countries without
pollution controls increases the damage to the planet and endangers the security
of the country with controls.
Interestingly, the issue of Global Warming
and the Environment is not one of the top issues for mid-tem voters in the
U.S. However,
this has not reduced the pressure to impose draconian measures on the economy.
If the politicians would read the polls, they would find that the economy is
the most important issue, but their actions are most detrimental to a healthy
economy. In the August 31 article by Dana Blanton;Economy,
Iraq and Terrorism Top Issues for Midterm Voters, “A new
FOX
News poll shows that the economy along with the situation in Iraq and terrorism
are the top issues voters will consider in the upcoming midterm election.
Opinion Dynamics Corporation conducted the national telephone poll of 900
registered voters for
FOX News from August 29 to
August 30. The poll has a 3-point error margin.”
“Overall, almost one out of four voters says
the economy (23 percent) will be the most important issue on their mind when
they vote this fall, followed by the situation in Iraq (14 percent) and
terrorism (12 percent). Here’s how the remaining issues rank: health care (11
percent), immigration (9 percent), gas prices (8 percent), Social Security (7
percent) and ethics in
Washington
(6 percent).”
We cannot expect “Money to flow uphill” from the developing
countries to the U.S and for the
U.S. to pay for the oil we import
to sustain our expected way–of-life. When the flow stops, we can expect a giant
thud.
Issues That Need to be Addressed to Attain
Energy Independence
1.A program for energy independence was attempted
following the “oil Embargo.” It was abandoned. The last year the US was
independent of energy imports was 1949. The issue today is whether we can
reduce our energy dependence. This should encourage us to revisit the issue.
2.In
my opinion, the
U.S.
does not have to achieve complete independence to gain security and to
ultimately lower the price of energy. The commitment will have an impact. Saudi
did not wait for
Russia to exceed
their production, the vary threat of overproduction led to their action.
3.As
has been demonstrated above, when faced with the prospect of competition, the
countries take action to solve the problem.
4.Since
either increasing the price or lowering the price can be used as the oil
weapon, we must look at ways to increase production and reduce volatility.
However, it is not enough to lower consumption, we must indicate our
willingness here in the U.S.
to increase production in competition with the National Oil Companies (NOC) producers. We must also increase refinery
capacity to secure supply. Increasing production must be a part of the plan
combined with energy conservation.In fact, the energy industry doesn't need subsidies
and incentives – it needs a moratorium on more regulatory incentives to future
investment.
5.Given
the requirements potentially imposed by Global Warming Solutions Act, AB 32, the refining margins will by necessity
increase thus leading to higher gasoline cost and increased import of refined
product.“Locating refineries in
a region such as Asia is an easy decision,
given its less-onerous construction costs, environmental limits and red tape,
plus its own rapidly growing fuel demand.” See: Giant New Oil Refinery in India WSJ: August
29, 2006; Page A1. “The hefty profits have
spurred many new projects. Scottish oil consultancy Wood MacKenzie counts 500
plans to expand or build refineries worldwide, and figures that maybe half will
actually get done.”
“Few [new refineries] are in the
U.S. despite considerable expansion and
upgrading of existing American refineries, oil companies haven't built a new
refinery from scratch in the
U.S.
in 30 years.
The result is a growing dependence on
foreign-produced fuel. Politicians of all stripes say the
U.S. should
rely less on foreign energy sources. Instead, it has twin addictions—not only
to imported crude to feed its refineries, but to imported gasoline to meet
demand beyond what those refineries can make.
The
U.S.
is importing about 13% of its
gasoline needs this year, up from around 11% in 2005 and less than 8% in 2000,
according to the U.S. Energy Information Administration. In all, American
drivers use almost half of the gasoline burned in the world each day.”
6.The
conventional approach is to have something like a government ‘Manhattan
Project.’I
believe it can be done in the private sector.
7.Increasing tax benefits and incentives to the producers
will not solve the problem; they are also costly.
8.Increasing taxes on the International Oil
Companies—Exxon, Shell, BP, etc. (IOCs) and increasing regulations,
nationalization, etc., will not increase production.
9.A
government-managed program has generally proved inefficient and leads to
bureaucracy.
10.A primary
restraint on company’s decision to invest in new sources of alternative fuels
is that the
NOC producers will
lower price by increasing production, thus making investments unattractive. It
has been the goal of the
NOC
producers to cause volatility in the market combined with threats of increased
production making alternative fuel investment unattractive. The increased
production of
NOC producers has in
the past used low cost to cause addiction to their product. Of course, for the
consumer, lower price and exporting pollution (“not in my backyard”) is what
they want, even if it leads to energy insecurity. Energy interdependence leads
to massive transfers of funds to the cabal of countries—the
SCO,
Venezuela
and indirectly to
Cuba.
This in turn led to weapons transfer to these countries. Many companies benefit
from this funds transfer, such as the money center banks to manage money,
M&A and conduct IPOs, weapons suppliers from such as China, Russia, North
Korea and construction companies.
A Proposal for Seeking Energy Independence
It is suggested that the government
establish a floor price for imported oil. Such a floor price would remove some
of the volatility and increase competition in the alternative fuels industry
and conservation.This can be done with
a tax on oil imports to bring foreign oil only up to the production costs
for domestic production. The tax would apply only when imported oil was
less than a price established by congress. The floor would be set below current
price. The tax would of course set the minimum price of product, and encourage
conservation to start with. The companies would invest because they could be
assured of a reasonable profit on new alternative sources and conservation. The
alternative sources should include natural gas for example for the manufacture
of Urea. The Taxes gained, if any, by the government should be used for
research and development of new and alternative sources and development of
processes for energy conservation and improved efficiency.
Increasing our energy independence will
reduce pollution, increase the competitiveness of the
US, increased
economic activity, and most important our security. And it may lower energy
prices.
Perhaps most fundamentally, we must
integrate the energy, environmental and foreign policy tracks of our national
security.
DavidJ.Jonsson
is the author of Clash
of Ideologies —The Making of the Christian and Islamic Worlds, Xulon
Press 2005. His new book: Islamic
Economics and the Final Jihad: The Muslim Brotherhood to the Leftist/Marxist -
Islamist Alliance (Salem Communications (May 30, 2006). He received his
undergraduate and graduate degrees in physics. He worked for major corporations
in the United States and Japan and with
multilateral agencies that brought him to more that fifteen countries with
significant or majority populations who are Muslim. These exposures provided
insight into the basic tenants of Islam as a political, economic and religious
system. He became proficient in Islamic law (Shariah) through contract
negotiation and personal encounter. David
can be reached at: djonsson2000@yahoo.co.uk
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