Oil dependence creates severe US security and economic risks The exercise scenario included a series of events occurring over several months - unrest in Nigeria, an attack on an Alaskan oil facility, and the emergency evacuation of foreign nationals from Saudi Arabia. These incidents: drive the price of oil to over $150 per barrel; lower expected employment levels by more than 2 million jobs; embolden countries that are major oil producers and consumers to pressure the US on key foreign policy concerns; and cause a variety of other significant economic and security challenges. The scenario removed only 3.5 million barrels of oil from a global market of more than 83 million barrels, resulting in the following consequences: * Gasoline prices of $5.74 per gallon; Other key findings / speculations included: * Once oil supply disruptions occur, there is little that can be done in the short term to protect the US economy from its impacts, including gasoline above $5/gallon and a sharp decline in economic growth potentially leading into a recession. * There are a number of supply and demand-side policy options available that would significantly improve US oil security. Benefits from these measures will take a decade or more to mature, and thus should be enacted as soon as possible. * Supply-side measures include: promoting developing of conventional oil reserves in nations currently off limits to private investment through enhanced US diplomacy; increase research and development into environmentally-benign extraction of unconventional oil reserves such as oil shale and tar sands; and enable siting of new liquid natural gas and other energy facilities. * Demand-side measures include promoting energy efficient passenger vehicles with incentives for hybrid electric vehicles, strengthen fuel economy standards, and increase research and development into plug-in hybrids and hydrogen fuel cell vehicles. * Alternative fuel measures include increased research and development that enables ethanol production from plant materials, fischer-tropsch diesel from domestic coal, and hydrogen from coal and eventually from renewable sources. To ensure Oil Shockwave presented participants with a credible and realistic set of circumstances, the scenario included substantial input from former members of the oil industry, oil analysts and traders, former and current military officials, intelligence and national security experts, and other specialists. "This simulation serves as a clear warning that even relatively small reductions in oil supply will result in tremendous national security and economic problems for the country," said SAFE President Robbie Diamond. "This issue deserves immediate attention." "We can neither drill nor conserve our way out of this problem - we must do both," said Jason Grumet the executive director of the National Commission on Energy Policy. "We must do much more to protect our economy from the risks of oil supply disruptions." http://www.secureenergy.org
•Date: 28th June 2005 • Region: US • Type:
Article •Topic:
Terrorism |
