The coming oil crisis?
A few weeks ago a minor news item flashed across our screens, and was then
lost in the electronic noise. But, it could have had major implications.
On Friday Feb 24, a car and a truck rolled up to the gate of the Abqaiq oil
refinery complex, the largest such facility in the world. The alert Saudi
guards were suspicious and fired on them, and they exploded, killing the
occupants and two guards. No damage was done to the refinery, yet in New York
the price of oil jumped $2 per barrel as a result of this unsuccessful attack.
The attack was claimed by al Qaeda on a website often used by them. Industry
experts calculated that had the attack been successful in halting production
at this "jugular" of the world's oil supply, where 7% of the world's
production is located, the price would have risen from ca. $60 to at least $80
per barrel.
A CNN program entitled, "We were warned: tomorrow's energy crisis," had an
interesting scenario: suppose a large storm similar to Katrina hits the Texas
coast around Houston, where a large proportion of the US oil refinery capacity
is located, and knocks out production, and shortly thereafter, al Qaeda mounts
a successful attack at Abqaiq, halting its production, then an energy crisis
would ensue that would result in a doubling of the crude oil price to ca. $150
per barrel. The price of gasoline in the US would triple, trucks would stop
running, airplanes would practically stop flying, and people would stop using
their cars because of the overall energy bill. Life as we know it would be
over!
The reason why this combination of events would have such a drastic effect is
that there is no current alternative that could alleviate the impact of such a
crisis. The US oil reserve would be opened and crude oil would flood the US
market, but without refinery capacity it would be useless. No new refineries
have been built in the US in 30 years, and with the bulk of them around the
Gulf damaged, there would be no spare capacity to process the crude oil
available.
Various alternative energy sources of oil have been proposed. First amongst
these is the oil shales in Western Canada, the main Athabasca deposit in
Alberta, which is the second largest oil deposit in the world after Saudi
Arabia. But production there, while huge, is still in its infancy and
certainly not sufficient by an order of magnitude to cope with such an oil
deficit. It will probably take at least ten years before the production there
reaches that level.
Another alternative is ethanol production that is booming in such places as
Brazil, where huge areas are given over to growing sugar cane that is then
processed to sugar and eventually to ethanol. Many areas of Brazil use a
mixture of gasoline and ethanol. But, even though huge areas of land are
under sugar cane cultivation, it is still nowhere nearly enough to ameliorate
a drastic world downturn in oil supply. Other alternatives, such as wind
mills and tidal energy production are miniscule by comparison and some are
still in the research phase.
So what would we be able to do? In the short term the answer is nothing! We
hope our Governments and their experts are aware of this potential energy/oil
crisis. One well aimed blow at the jugular of oil production in Saudi Arabia
could be al Qaeda's follow-up to 9/11. Not so many people would be killed in
such a dramatic way, but our way of life could be altered forever.
Many of us don't like or trust the Saudis. But, one must admit that on this
score their interests and ours coincide. They certainly don't want to see
their oil production capacity halted, with the consequences for their own
income and investments. Even though they were responsible for indoctrinating
most of the world's Muslims to the extreme Wahhabi version of Islam, they are
definitely the enemies of al Qaeda. Osama bin Laden would like nothing more
than to overthrow the Saudis and throw all Westerners out of Arabia. It is
the American responsibility to see that Saudi Arabia remains stable and intact
and that the world's oil supply flows without restriction. How the situation
in Iraq will impact on the future stability of Saudi Arabia is a major
question for American foreign policy.
lost in the electronic noise. But, it could have had major implications.
On Friday Feb 24, a car and a truck rolled up to the gate of the Abqaiq oil
refinery complex, the largest such facility in the world. The alert Saudi
guards were suspicious and fired on them, and they exploded, killing the
occupants and two guards. No damage was done to the refinery, yet in New York
the price of oil jumped $2 per barrel as a result of this unsuccessful attack.
The attack was claimed by al Qaeda on a website often used by them. Industry
experts calculated that had the attack been successful in halting production
at this "jugular" of the world's oil supply, where 7% of the world's
production is located, the price would have risen from ca. $60 to at least $80
per barrel.
A CNN program entitled, "We were warned: tomorrow's energy crisis," had an
interesting scenario: suppose a large storm similar to Katrina hits the Texas
coast around Houston, where a large proportion of the US oil refinery capacity
is located, and knocks out production, and shortly thereafter, al Qaeda mounts
a successful attack at Abqaiq, halting its production, then an energy crisis
would ensue that would result in a doubling of the crude oil price to ca. $150
per barrel. The price of gasoline in the US would triple, trucks would stop
running, airplanes would practically stop flying, and people would stop using
their cars because of the overall energy bill. Life as we know it would be
over!
The reason why this combination of events would have such a drastic effect is
that there is no current alternative that could alleviate the impact of such a
crisis. The US oil reserve would be opened and crude oil would flood the US
market, but without refinery capacity it would be useless. No new refineries
have been built in the US in 30 years, and with the bulk of them around the
Gulf damaged, there would be no spare capacity to process the crude oil
available.
Various alternative energy sources of oil have been proposed. First amongst
these is the oil shales in Western Canada, the main Athabasca deposit in
Alberta, which is the second largest oil deposit in the world after Saudi
Arabia. But production there, while huge, is still in its infancy and
certainly not sufficient by an order of magnitude to cope with such an oil
deficit. It will probably take at least ten years before the production there
reaches that level.
Another alternative is ethanol production that is booming in such places as
Brazil, where huge areas are given over to growing sugar cane that is then
processed to sugar and eventually to ethanol. Many areas of Brazil use a
mixture of gasoline and ethanol. But, even though huge areas of land are
under sugar cane cultivation, it is still nowhere nearly enough to ameliorate
a drastic world downturn in oil supply. Other alternatives, such as wind
mills and tidal energy production are miniscule by comparison and some are
still in the research phase.
So what would we be able to do? In the short term the answer is nothing! We
hope our Governments and their experts are aware of this potential energy/oil
crisis. One well aimed blow at the jugular of oil production in Saudi Arabia
could be al Qaeda's follow-up to 9/11. Not so many people would be killed in
such a dramatic way, but our way of life could be altered forever.
Many of us don't like or trust the Saudis. But, one must admit that on this
score their interests and ours coincide. They certainly don't want to see
their oil production capacity halted, with the consequences for their own
income and investments. Even though they were responsible for indoctrinating
most of the world's Muslims to the extreme Wahhabi version of Islam, they are
definitely the enemies of al Qaeda. Osama bin Laden would like nothing more
than to overthrow the Saudis and throw all Westerners out of Arabia. It is
the American responsibility to see that Saudi Arabia remains stable and intact
and that the world's oil supply flows without restriction. How the situation
in Iraq will impact on the future stability of Saudi Arabia is a major
question for American foreign policy.
posted by Jack Cohen at 7:26 AM
0 Comments:
Post a Comment
<< Home