NEW YORK (Reuters) - Hurricane Katrina paralyzed the oil industry in the U.S. Gulf of Mexico on Monday, raising fears that damage to offshore platforms and pipelines could trigger a supply crunch in the world's largest energy consumer.
The hurricane, which slammed into New Orleans after plowing through the Gulf, shut at least half of the region's oil production, a quarter of gas operations, and forcedshut eight refineries along the coast -- sending crude oil prices to record highs above $70 per barrel.
$70 per barrel. What does this tell us?
It tells us that we need some solutions. We need a plan.
We need an energy policy.
Anytime a major vital industry market is so volatile that an unexpected storm causes this kind of halt in production and threatens to cripple the supply this much, we have problems.
Now, I am not one to harp for government intervention, unless the need is great and threatens the overall peace and prosperity of the nation. And I am not really saying we are at that point just yet. What I am saying is, some kind of plan for the immediate and distant future is needed in this area, because if we let it get any more out of control, our economy and other free nations' economies are going to tank. Call me a naysayer if you want. But it's the truth.
I support the President in many areas and I am a strong proponent of a free market economy, free from as much government intervention as is realistic. I know and fully understand that Presidents do not set prices, nor would we want them to. But I think the President has been particularly weak in the energy department, not by anything he has done, but by what he hasn't done.
It's no secret that the President's oil connections are extensive. The oil industry looks after its own interests, just like any other. And, I can respect that. But the President, needs to buck the trend here and use his influence to promote and sell the idea of alternative fuel sources. He can use his bully pulpit to persuade and convince those in the energy industry to develop alternative sources that will reduce our dependency on foreign oil. He can do it, he owes no one anything. He does not face re-election. (Please note that I am not asking the President to commit tax dollars, I am asking for him to do the right thing and just plug the idea.)
Look, there are several ways to do this and no one thing can solve this mess, in one shot. But it's going to take people to put aside politics for awhile and give a little, both ways. Leftists are going to have to allow us drill in ANWR and other areas. The oil companies are going to have to relent and stop trying to discredit and/or discourage research in this area. Sure the price may go down on oil, but if they are in on the cutting edge in this new technology, they also stand to make trillions and trillions, by paving the way (keeping the big energy conglomerates happy). Besides that, we can conserve more oil and end up drilling less in the future (keeping the environmentalists happy).
Both sides sacrifice at first, both sides win something in the end. If it happens, America will be the big winner.
UPDATE- Here are others that have posted on this or similar subjects:
Q and O Online magazine
Political Calculations
In the Middle of America
4 comments:
LA, we've got to quit this.... LOL
Good post, more in depth than mine. I dont think the drilling is the immediate thing needed, instead I think its is refinery construction. If we increase our refinery capacity, then we buy ourselves the time to dump major subsidies into R&D for viable alternative fuels.
But more drilling just increases an already abundent supply of unrefined oil that we cant use. The real bottle neck is getting the go juice for our cars made.
We are going to need both, G. We can't have one without the other.
BOHICA
My understanding of the situation is that refined petroleum is the bottleneck. The crude is there but developing countries (mostly China) have accelerated their purchases. Simple problem of demand outstripping the refined supply. Didn't Katrina hit both drilling rigs and refineries? Kind of a double barreled strike.
You are correct in that some sacrifice will be needed to
1. sink more wells
2. build more refineries.
Conservation will help to lessen the demand but that only frees additional supply for China to purchase. A temporary fix at best.
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