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Another reason to "drill here, drill now"
Posted by: McQ on Monday, September 15, 2008

The first, of course, is Hugo Chavez and Venezuela. As soon as Hugo finds a new market for his high sulfer crude, you can bet he'll manufacture a reason to cut the US off.

Of course that points out the simple fact that some of our foreign oil supplies come from unstable or unfriendly nations. Chavez, of course, epitomizes the "unfriendly" among them. Nigeria represents the "unstable".

Yesterday, a group described as "capable of very ambitious attacks" declared an "oil war" in the oil rich Niger delta.

Nigeria is the 12th largest oil producer (2.44 mbd) and 8th largest exporter (2.12 mbd) of crude in the world. Nigeria and Venezuela each supply 11% of our crude oil. Obviously problems there won't have the effect on world markets like say a stoppage in Saudi Arabia. However, with consumption at all time highs it certainly will have some effect on price.

The point obviously is that with our own reserves we can make a significant dent at the margins in the 60% foreign oil we import. Obviously our two largest foreign suppliers, Mexico (14%) and Canada (19%), would be considered both friendly and stable. But there is no reason, for instance, we can't replace Nigeria and Venezuela as critical suppliers to the US market.

That's not just a logical position, it's a strategic position that impacts national security. It should be an urgent national priority to replace overtly unfriendly and unstable suppliers with new supplies of our own crude.

Obviously this should be part of a comprehensive energy plan which exploits our own petroleum and gas reserves (if, for no other reason than that which I've outlined), stresses more nuclear power, and looks for viable alternatives that can be brought on-line relatively quickly and cheaply.

To me, the fact that Venezuela and Nigeria could cut our supply of strategically critical oil supplies by about 22% is, in and of itself, enough reason to "drill here and drill now" and it is a reason the Republicans should be stressing this very moment while a presidential campaign is going on and Congress is talking about energy.
 
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It seems to me that we’ve had two wake-up calls this week. First was Ike: a relatively short interruption in the output of the Gulf Coast refineries was enough to cause gas to skyrocket around here, going in some cases from $3.80 to $4.40 in the space of a couple of hours. What would happen if Ike had seriously damaged or even destroyed some of the refineries? Correct me if I’m wrong, but aren’t most of the refineries on either the California coast (earthquakes) or the Gulf Coast (hurricanes)? How smart is that? Will government at all levels wake up to the problem and allow / encourage the building of more refineries around the country, especially in areas that AREN’T prone to natural disasters?

The second wake-up call is the troubles with Nigeria and Venezuela that you have discussed. We’ve got a few options:

1. Ignore the problem (paging Nancy Pelosi!)

2. Start drilling for our own oil. Yeah, it will be sold on the world market so it won’t be OUR oil, but it should push prices down which will deny at least some money to Chavez and islamofascist terrorists as well as provide a safety net in the event that oil supplies from other parts of the world are cut off for any reason. It seems to me that the Euros might be a little more strong against a resurgent Russia if they knew that, in the event that Putin shut off his oil shipments to them, they could get the black gold from American oil fields

3. Figure out some way - PDQ! - to reduce or eliminate our dependence on oil at all. Easier said than done, of course. Not only is oil a very good energy source (it is easy to transport and provides lots of energy per unit of mass), it is also provides the raw materials for various types of polymers and plastics that are used in all sorts of consumer goods.

The problem with (3), of course, is that it’s really a pipe dream. I’m a big believer in technology, but the idea that some kind of replacement for petroleum power will just appear as if by magic is absolutely loopy. The only "pixie dust" solution we currently have in-hand is nuke power. Even if we could get past the enviromental whackos and fraidy cats who imagine Chernobyl if the word "nuclear" is even mentioned, it will take years to build all the new plants we need. Further, nuke power will only take the place of coal- and oil-fired powerplants; nuke plants will not operate cars, trucks, or aircraft (though very cheap electricity would help make a hydrogen economy more feasible).

The really sad thing is that, given increasing levels of government interference in if not outright control of our economy, we are placing these important decisions in the hands of the Congress, arguably the stupidest body of people on the planet.

God help us.
 
Written By: docjim505
URL: http://
As soon as Hugo finds a new market for his high sulfer crude, you can bet he’ll manufacture a reason to cut the US off.
In what way would Chavez "cut off" the US from the global oil market? The only way to cut the US off from "his" oil would be to stop selling it altogether. Which, one, won’t happen, and two, would simply raise the price. Allow me to refer you to this excellent take on global oil markets from this very blog.
 
Written By: Retief
URL: http://
Start drilling for our own oil. Yeah, it will be sold on the world market so it won’t be OUR oil ...
From a national security standpoint it will be our oil even if it is sold on the world market (and in reality, it most likely will stay here anyway). So while price will be determined by the world market, the oil will most likely stay here. That means we can lessen our imports and choose not to take oil from unfriendly and unstable suppliers.
 
Written By: McQ
URL: http://www.QandO.net
In what way would Chavez "cut off" the US from the global oil market? The only way to cut the US off from "his" oil would be to stop selling it altogether. Which, one, won’t happen, and two, would simply raise the price. Allow me to refer you to this excellent take on global oil markets from this very blog.
And allow me to point out that others are building refineries, right now, to be able to take Venezuelan crude.

As I pointed out, his "cut off" threat is rather hollow right now, but won’t be when those refineries come on line. And that too was covered in this very blog.
 
Written By: McQ
URL: http://www.QandO.net
Assuming Chavez can sell to other countries and cut us off, I would think that the price here would rise, so why wouldn’t those other refineries sell to us, where the price is higher? Besides, oil is more or less fungible; if Chavez ships it someplace else, they will have probably cut back their purchases from another party, which will put that oil on the market, where we can buy it to replace Venezuelan oil. The price may go up a bit until the market turmoil settles down, but a new equilibrium will be reached.
 
Written By: timactual
URL: http://
Doubling down on drilling more oil - which has a substitution effect, in that every dollar we spend on drilling is a dollar that can’t be spent on alternatives in a set of very crowded budgets - serves exactly to prop up Hugo Chavez and those other folks you hate.

Whether or not we can raise our domestic oil output by a percent or two over twenty years, it’s the global market that keeps Chavez afloat. Making alternative energy as cheap as oil is what will put oil tyrants out of business. Drilling for oil instead of investing in that stuff just keeps Chavez’ black gold relevant.

As timactual points out, the "oil" weapon is a joke. Venezuela has no power whatsoever to effect our supply of oil. If they stop selling to us, they have to sell that surplus to other people, who then stop buying it from a different supplier, who then sells that excess to... us. The only way they can affect our supply of oil is to refuse to sell it to anyone.. which will drive the price up, but we’ll still get all we want, because we’re the richest country in the world and can pay the most for it. Meanwhile, Hugo Chavez goes bankrupt.

PS: Didn’t get to it in the Ayers thread, but I loved your line about how it’s a waste of time to try and explain things to me. The irony was hilarious. Welcome to my world. There’s no hope whatsoever of you backing off this flawed logic train. And even in the unimaginable case that you did - say, for example, if I got Jon Henke to put up an academic case explaining why your theory of cause and effect is false.. you would never admit it or publicly acknowledge it, or correct your posts. My theory, which I can relate to, is that you just find me too personally irritating to make it worth it to reconsider your own arguments, regardless of the logic or accuracy of what’s coming out of my mouth.

Yeah. Same to you, buddy.
 
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