So far this year America's dependence on Saudi Arabian oil has increased by 20 percent, according to a front-page article in the New York Times ("U.S. Reliance On Saudi Oil Goes Back Up" 08.17.12). After nearly four years in office, that the United States is even more dependent on Middle East oil is shocking testimony to the failure of the Obama Administration's energy policies.
We are presently importing some 1.45 million barrels of oil per day from the Saudis and at the current U.S. price for crude at $96/bbl, transferring $138 million/day to a regime that treats its women as mere chattel and has transferred billions to Wahhabi madrassas and prayer halls to propagate their poisonous anti-Western fundamentalism -- as but one example, the Times of London had the eye-opening headline "Saudis Fund Balkan Muslims Spreading Hate of the West" (please see "If You See Something Say Something' - The Failed Times Square Bombing and The Price of Oil" 05.13.10).
Ironically, much of our dependence on Saudi oil supply could be eliminated by the completion of the Keystone XL pipeline from Western Canada to the U.S. Gulf. The President, seemingly responsive to strident environmentalist criticism to the sourcing of Athabasca tar sands oil, has withheld approval of the pipeline in spite of the fact that Canada is proceeding with the extraction project and will direct the output to other markets on the Pacific Rim if the US continues to demur. A clear example how this administration has it priorities upside down. But there are many other examples of the comprehensive failure of policies relating to energy these near four years past.
- In February of 2009, a month into the Obama presidency, the price of crude oil touched the mid $30/barrel and gasoline under $2.00/gallon. Today we are choking at prices of $96/bbl oil and near $4.00/gallon gasoline. A misguided performance that speaks for itself, especially in that it has become clear that the U.S. could have been at the cusp of being energy self-reliant.
- Near four years into this Administration, we are still without a coherent policy to access our vast reservoirs of oil and gas offshore, on federal lands and Alaska.
- Instead hundreds of millions, if not billions, have been spent on failed alternative energy projects such as Solyndra and tax holidays for alternative energy sources such as windmills. Alternative energy needs be a focus but not to the detriment of energy independence and rational energy pricing. Consider the enormous benefits that would have accrued to the economy and our national security had even a portion of the funds and focus expended on alternative energy been allocated to developing environmentally safe fracking techniques giving us unfettered access to our vast holdings of shale gas and shale (tight) oil.
- The problematic appointment of Steven Chu as Secretary of the Department of Energy. A brilliant physicist but hardly equipped to deal with the rough and tumble of the oil patch, Chu's leanings were made clear in comments to the Wall Street Journal in 2008: "Somehow we have to boost the price of gasoline to the levels in Europe." That would have meant around $8 a gallon. (please see "Energy Secretary Chu and the Price You Are Paying For Gasoline" 04.16.12). Middle America would have said a heartfelt thanks. Sadly, it is a mindset that has permitted prices to increase nearly threefold during his tenure without challenge or push back.
- No far-seeing policies to harness the extraordinarily huge deposits of shale gas to wean us off our dependency on oil by transforming our gasoline-powered transportation fleet to compressed natural gas Where are the government incentives for consumers, manufacturers and distributors alike to undertake this core transformation? With today's price for natural gas at $2.70 mmbtu, crude oil would have to be priced at $18/bbl to compete with natural gas to deliver the same component of energy, not to speak of gas' significantly lower carbon footprint. For those who question whether it can be done, know that in the distant land of Armenia, some 75% of its automobile and truck fleet is propelled by compressed natural gas. (please see "Aspen Ideas, Natural Gas, Armenia Unheralded" 07.09.12)
- In 2008 the Washington Post reported "A Few Speculators Dominate Vast Market For Oil Trading". It was determined that 81 percent of the NYMEX contracts was held by financial firms speculating for their clients or their own account (Please see "Time to Dismiss the CFTC Chairman and His Commissioners" 12.27.10). Since the inception of the Obama Administration, virtually nothing has been done to mitigate nor corral the wild trading of oil contracts on the exchanges. The CFTC is forever holding hearings or asking for commentary from the field, an elegant way for doing nothing. This while the President who had an awakening moment from his reverie on this issue back in April 2011, when the Justice Department was given the mandate to form the "The Oil and Price Fraud Working Group," from which we have not heard a single peep now one and a half years later. Pointedly and materially the nefarious impact of oil futures trading on the price of oil was highlighted in Congressional testimony in May of last year (please see "Are our Leaders Hearing Exxon Mobil CEO Tillerson?" 05.17.11) of none other than Rex Tillerson, Chairman and CEO of the world's largest publicly held oil company, stating categorically that speculation was adding $30 to $40 to the price of each barrel of oil. Coming from someone of his stature and authority in the field, one would have thought action would be forthcoming. We shouldn't have held our breath.
- Over the past 8 weeks the price of oil quoted on the commodity exchanges has increased some 25 percent or some $20/bbl, costing U.S. consumers alone near half a billion dollars a day (daily US consumption of 19.5 million barrels x $20), a price increase that has gone far beyond issues of supply and demand and far beyond potential flare-ups with Iran. Yet we have over 700 million barrels of oil in our Strategic Petroleum Reserve in which we made a massive investment and which is doing us little good other than having made oil more expensive while it was being filled and taken off the market. It is an asset for which we receive little or no benefit and for whose draw-down there is no coherent policy. There is no realization in this Administration that a broadcast willingness to release some oil from the SPR to counter abnormal price movements such as that which we have seen these past eight weeks -- not necessarily very much -- would send the speculators scrambling to the hills and bring a degree of rationality to the trading floors of the exchanges, instead of the one way bets that invite ever more speculation.
- Lastly, what is sorely missing is a hard negotiating stance with our oil providers, especially those in the Middle East. The American public is laying out literally hundreds of millions of dollars a day keeping a massive naval taskforce in the Persian Gulf and near and about the Strait of Hormuz. The taskforce keeps the shipping lanes open for the Gulf States of Kuwait, Qatar, Bahrain, the U.A.E. and of course Saudi Arabia, all charter members of OPEC, to freely ship their cargoes of oil to a world clientele from China to the U.S. Our armada also keeps them safe from the rapacious ambitions of their Iranian neighbor. We pay while they play. Only we pay twice -- once by the OPEC cartel, induced and manipulated price of oil, and again by the vast sums to keep a large portion of our naval fleet to stand bodyguard. Something is very off base in this equation and it is long past due that our government took the issue in hand and arrived at a more equitable arrangement, or possibly just sail away.
Follow Raymond J. Learsy on Twitter: www.twitter.com/raymondLearsy
Michael Brenner: Saudi Rides the Wave
USAs only salvation is in a matrix of cng filling stations
only mr Pickens seems to get it.
This article is fully biased and blatantly so....we haven't had a comprehensive "energy policy" since Carter was President and yet the author implies that it's solely the failing of the Obama administration. Shameful and completely transparent....
1)when SOMETHING (like higher energy prices) forces a serious approach to energy policy;
2)The Israelis and/or Americans shut down middle east oil exports by attacking Iran (something Raymond has thought would be a good idea)
3)'mericans show any interest whatsoever in moving away from fossil fuel for their energy needs.
4) when Raymond Learsy discovers that oil- like all FOSSIL fuels-is a limited, finite resource and that what he says- "..a hard negotiating stance with our oil providers" is not a winning substitute to a realistic energy policy.
so the whole premise of your arguement is bankrupt
Bring on the electric, flex-fuel, hybrid, CNG, LNG and hydrogen fueled vehicles.
We need a choice at the pump.
A monoply is only good for the monopoly and not good for the consumer.
Crude at Gulf Coast refineries is priced at the Brent crude import price, no matter where it comes from. Refineries in the US interior are typically able to get the vast majority of their crude at or below domestic the WTI [West Texas Intermediary] crude price. Today, a barrel of Brent costs about $121, and a barrel of WTI costs about $106. That $15 difference in feedstock pricing pays dividends at the refinery. ...
To boost margins at Gulf Coast refineries, Valero and the others are exporting more refined products, both gasoline and the higher-priced diesel fuel. ...
The secret to making a profit in refining these days is for refiners to source crude oil domestically and then sell the refined products to US consumers at prices based on imported oil. Valero can't do that, but Marathon, Tesoro, and HollyFrontier can. ...
Despite higher-than-expected oil inventories and less driving by Americans, the price of crude oil finished higher today.
Bloomberg writes that to offset weak U.S. demand, refiners exported 439,000 barrels a day more than were imported the year before. In 2010, daily imports averaged 269,000 barrels, according to the Petroleum Supply Monthly report.
Imports of crude oil and related products fell 11% last year, reaching level not seen since 1995.
News of record gasoline exports comes as pump price rose today for 22nd straight day ($3.78 a gallon average) and the Energy Department reported separately that gasoline inventories fell last week while crude oil inventories and imports rose.
Crude oil inventories swelled by 4.2 million barrels last week, more than four times what analysts expected and eight times the estimate of the American Petroleum Institute, 24/7 Wall St. says, adding, "To say that the increase in imports is counter-intuitive is not an overstatement."
Refineries were running at 83.6% of capacity last week, according to the Energy Information Administration's weekly report on petroleum supplies.
Separately, in a piece headlined "Oil Refiners Look To Exports Growing Profit," 24/7 Wall St. writes: "The rise in imports could be the result of the decline in refined products, but more likely is that the imported crude is being refined and the refined products are being exported."
First off the Keystone Pipeline RAISES gas prices in the US. Not one drop that is piped through it will ever be sold in the US, it ALL goes to China. In fact, it diverts oils that is currently sold here, thus as the company itself admits, prices go up.
Second lets talk about funding green energy. You moan and wail about 500m going to a solar panel company that couldn't compete with a state subsidized Chinese firm, but say nothing about the estimated 80 BILLION dollars a year we give to gas, oil, and coal.
The President has no control over what type of fuel cars run on, that would be the car companies decision. He was more than happy to try and regulate wall street, he was blocked by the GOP. He has also mentioned tapping the Petroleum Reserve, but once again was blocked by the party of can't.
Take your lies somewhere else.
Congress can mandate that:
1. The same tri-fuel engines that GM, Ford, Fiat, VW, etc sell in Brazil also be available in the US.
2. That gasoline retailers sell CNG.
How very partisan. If you changed the name of the president, this statement would be true for every chief executive of the last four decades. The OPEC oil embargo of 1973 should have been a huge wake-up call for both the western powers (and its people) and the world-wide energy industry. Instead, there was no effort of any kind made to formulate an effective alternative to fossil fuels, which Westerners purchase from those that hate the western world. Conservative presidents since '73 focused their attention on the need for national security and yet failed to address the issue of dependency on foreign energy sources in both our defense profile and our economy, which are both vital to the issue of a nation's security. There's plenty of blame to go around, Mr. Learsy.