Friday, August 19, 2005

Another Blow to Oil Prices

Oil supplies in Ecuador are slowly coming back online today after the military was sent in to quell protests that disrupted oil production. The army has regained control of a number of sites, however oil production in the 5th largest South American producer remains low. (BBC: Ecuador's army tackles protesters).

The disruption in service means that Ecuador is not able to meet their export quotas and may be forced to request a loan of crude oil from Venezuela. Assistance from Venezuela may be problematic as well since that country's oil production is well below capacity.

Crude Oil closed up .15 today at 65.50 (NYME: New York Mercantile Exchange). The short term news does not look good with oil futures climbing as much as .17 through the end of 2005. Hopes for a post-Labor Day reprieve are diminishing thanks to political unrest in Ecuador, Venezuela and much of the Middle East.

The political outlook in oil producing countries is extremely unstable. Steps are needed now to eliminate our dependence on foreign sources of oil. A number of independent studies estimate that there is a 30-year supply of oil under the permafrost in the Arctic National Wildlife Refuge. Tapping that supply for US needs will buy us sufficient time to research new energy sources that do not depend on petroleum byproducts. Since it will take several years before we are ready to drill in ANWR, we need to approve legislation opening the refuge to oil companies now. The only stipulation I would place on that exemption is a requirement to develop a non-petroleum energy solution. Just as President Kennedy set a target date for putting a man on the moon, so too must President Bush set a target date for the elimination of our dependence on oil. Without that focus, nothing will happen.

We have the oil resources available to us to tide us over until a new energy source is found. All that is blocking us now is partisan politics. Because ANWR is home to the Porcupine Caribou Herd, the left does not want to allow drilling in the arctic. Instead, they would have us remain at the mercy of foreign oil, unstable South American governments, and of course, the good will of our friends in the Middle East. Unfortunately, we cannot afford to maintain the status quo until an alternative source is found. Unless we take control of our own oil supply, the impact on our economy will be dramatic. Put aside partisan politics and start drilling in the arctic. We can't wait any longer.

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1 comment :

Alan Fraser said...

I am specifically not willing to tear up the wilderness just so people can pretend to be rich and famous by driving Escalades and Hummers. America has no divine right to use up as many physical resources as possible. If you want to get control of something, try roping in the swine who are squandering the bounty of the planet.