May 15 AOL quoted Phil Flynn, a senior market analyst at Alaron Trading in Chicago as saying, "I think it's going to happen. Unless things change dramatically, I think we're going to see $4 a gallon." Flynn said, “Gasoline stocks have fallen for the past twelve weeks straight and are now at their lowest level for this time of year since 1956.”
In the same article “Peter Beutel, an oil analyst at consulting firm Cameron Hanover, noted in a recent report that refineries have not operated above 95 percent capacity since Hurricanes Rita and Katrina in 2005. Before 2005, the refineries, clustered around the Gulf coast and badly damaged in the storms, routinely operated at over 95 percent capacity.”
However, $4.00 a gallon gasoline doesn’t scare me.
Despite some inflation, a change in life style by some, $4.00 a gallon gasoline can probably be digested by the American economy. It won’t be pleasant, but will probably spur some of us to opt for more flex fuel and/or more efficient fuel consuming vehicles.
What does scare me is the continuing trouble in Nigeria. The United States imports approximately 14% of its oil from that African country.
Today, The NIGERIAN TRIBUNE reported “As at last week, the militants in the Niger Delta put Nigeria oil industry on edge. Eni [Agip] Companies in Nigeria were the worst hit as the attackers paralysed operations at the Brass oil terminal of Agip by sabotaging the pipelines feeding the terminal. Chevron Nigeria Limited also announced that it would begin to withdraw staff from offshore location because of escalating violence in the creeks after six of its workers were kidnapped and it also had to shut in 57,000 barrels of oil.”
What happens if the terrorists continue their endeavors and eventually bring Nigeria’s oil exports to a stop?
All we need to do is look back to the Arab Oil Embargo of 1973. Then the United States was only importing 30% of its oil consumption in more than 60% in 2006.
The Arab oil embargo of 1973 created a 6%-7% percent decline in consumption of oil by the United States, . Yet, the price of oil quadrupled and the NYSE lost $97 billion of value.
Now here is what really scares me.
Imagine if the situation in Nigeria continues to deteriorate to the point where its oil fields are shut down creating a 14% shortfall in oil supplies to the United States. That’s more than double the shortfall that was created in 1973 by the Arab Oil Embargo.
The results of such a shortfall would make the consequences the United States suffered from the Arab Oil Embargo pale in comparison.
It is easy to imagine a nightmare of double digit inflation, a downward spiraling of the standard of living, long lines at gas and even food stations, and possible riots and worse.
That nightmare is what spurs me to urge all who read this to work for U.S. energy independence through:
The development of U.S. fuel resources.
The continuing development of alternative fuel resources , such as ethanol, wind, solar, and even such esoteric sources such as the fusion of Helium3 .
Conservation in vehicle fuel consumption.
The development of and the use of more energy efficient housing, manufacturing and transportation.
Development of new modes of mass transit..
If the United States can achieve near energy independence than the nightmare of severe energy shortages will never occur. Instead the nightmare is replaced greater prosperity throughout the world through the development of new and alternative energy resources. These developments will raise the standard of living of even those in third world nations, without increasing the environmental footprint that such development created in the past.
That’s why USA Energy Independence dot com exists. To provide you our reader a format of news and views of technology and leadership that can prevent a nightmare and create a dream.
