10/18/2005

Alexander's Gas & Oil Connections - Simulated oil meltdown shows US economy's vulnerability

I quoted this article before nut now I found the source -- law

Simulated oil meltdown shows US economy's vulnerability

by Kevin G. Hall

24-06-05 Former CIA Director Robert Gates sighs deeply as he pores over reports of growing unrest in Nigeria. Many Americans can't find the African nation on a map, but Gates knows that it's America's fifth-largest oil supplier and one that provides the light, sweet crude that US refiners prefer.
It's 11 days before Christmas 2005, and the turmoil is preventing about 600,000 bpd from reaching the world oil market, which was already drum-tight. Gates, functioning as the top national security adviser to the president, convenes the Cabinet to discuss the implications of Nigeria's spreading religious and ethnic unrest for America's economy.

Should US troops be sent to restore order? Should America draw down its strategic oil reserves to stabilize soaring gasoline prices? Cabinet officials agree that drawing down the reserves might signal weakness. They recommend that the president simply announce his willingness to do so if necessary.
The economic effects of unrest in faraway Nigeria are immediate. Crude oil prices soar above $ 80 a barrel. June's then-record $ 60 a barrel is a distant memory. A gallon of unleaded gas now costs $ 3.31. Americans shell out $ 75 to fill a midsized SUV.

If all this sounds like a Hollywood drama, it's not. These scenarios unfolded in a simulated oil shock wave held in Washington. Two former CIA directors and several other former top policy-makers participated to draw attention to America's need to reduce its dependence on oil, especially foreign oil.
Fast-forward to Jan. 19, 2006. A blast rips through Saudi Arabia's Haradh natural-gas plant. Simultaneously, al Qaeda terrorists seize a tanker at Alaska's Port of Valdez and crash it, igniting a massive fire that sweeps across oil terminals. Crude oil spikes to $ 120 a barrel, and the US economy reels. Gasoline prices hit $ 4.74 a gallon.

Gates convenes the Cabinet again. Members still disagree on whether America should draw down its strategic oil reserves. Homeland Security chief James Woolsey, who ran the CIA from 1993 to 1995, argues that a special energy czar is needed with broad powers to bypass the bureaucracy and impose offshore oil drilling and construction of refineries.
That won't help now, though, or resolve any short-term issues, counters Gene Sperling, who was President Clinton's national economic adviser. The energy secretary suggests that relaxing clean-air standards could help refiners squeeze out every last drop of gas. That makes the interior secretary, former Clinton Environmental Protection Agency chief Carol Browner, bristle. She blames Detroit for the mess because automakers failed to develop hybrids and other fuel-efficient cars.

The Cabinet can't agree on even the simplest short-term solutions. There aren't many options beyond encouraging car pools and lowering thermostats. There's no infrastructure in place to deliver alternative fuels such as ethanol or diesel made from soybeans or waste products.
Fast-forward again, to June 23, 2006. Emboldened Saudi insurgents attack foreign oil workers, killing hundreds. A mass evacuation follows from the world's pivotal oil producer, the one country that could be counted on to boost production during shortages in global supplies.

Alexander's Gas & Oil Connections - Simulated oil meltdown shows US economy's vulnerability

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