Here is a great article by Boone Pickens about the Oil Wars and why we have to stay focused on moving away our dependence on foreign oil.
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Oil Price Wars
We have to stay on offense! We can’t let the new Congress and the new Administration shove our dependence on foreign oil to the back burner.
Here’s why.
When we started the Pickens Plan last July, oil was at about $147 per barrel, gasoline at the pump was $4.11, and we were importing about 70 percent of the oil we use. Today oil is $100 per barrel less, but we are still importing about 70 percent of our oil.
Why is this important? Because we are still at the mercy of foreign governments and unstable areas of the world for our oil supply.
It is still a crisis, but it’s also an opportunity for us to fix it.
Look at the headlines from just the past couple of days.
- Oil up $5 on OPEC cuts.
- Russia cut off natural gas supplies to Ukraine.
- Iran calls for oil embargo for supporters of Israel.
Just before the holidays, OPEC met to try to raise oil prices. OPEC delivers 40 percent of the daily oil supply. They decided to cut their output by 2.2 million barrels per day to try and get the price back in the $70 range.
You’ve heard me tell you before that if consumption runs short of supply, then the only way to balance the books is by raising the price. What have we seen? Gasoline at the pump has jumped back over $2 per gallon in many areas and is moving back up.
Next headline: On New Year’s Day, Russia cut off natural gas supplies to Ukraine in a dispute over prices and payments.
According to Reuters news service, “That has hit natural gas supplies to countries in eastern and southern Europe facing freezing temperatures and has worried European countries, which get one fifth of their gas through pipelines that cross Ukraine.”
Think about that: The Russian government is willing to force its customers to pay whatever price it sets by cutting off supplies; not threatening to cut off supplies, but by actually doing it in the coldest part of winter.
We don’t rely on Russia for our natural gas. We don’t import any of it, and we have plenty of our own natural gas supply.
The problem comes from that second headline – what happens if Iran and other Mideast and African countries decide to use oil as a weapon against us like Russia is using natural gas as a weapon against Ukraine?
I’m not making this up. Here is what the Iranian News Agency reported over the weekend:
"Pointing at Westerners' dependence on the Islamic countries' oil and energy resources, [Iranian leaders] called for cutting the export of crude oil to the Zionist regime's supporters the world over.”
Iran understands how to leverage our over-dependence on foreign oil. OPEC understands how to manage output. We are left without any weapons in this price war.
We have to remind our leaders in Washington that whether oil is a $50 a barrel or $150 a barrel it is the level of our dependence on foreign oil, not just the price, which puts us all at the mercy of unfriendly foreign governments and you don’t know when they will move against us.
-- Boone
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