Arab World Unrest Grows, Oil Prices Surge and the USA Has No Energy Plan

It's just a few years shy of the 40th anniversary of the first major oil price shock to hit the USA. And as the stability of the Arab world - based on autocratic disctatorships - teeters, it is disturbing that the USA still has no comprehensive long term energy plan. The GOP in particular has prostituted itself to big oil for decades while the Democrats have lacked the spine and leadership to push for a change of the status quo that equates to zero future planning. Sarah Palin and similar mental midgets "chant drill baby drill" yet that's not a solution. Having worked in the oil industry, I know only too well that it takes YEARS to bring new production online and get it available at the gas pumps and home heating fuel suppliers. And that less than cheery reality doesn't factor in an even bigger problem: the USA lacks sufficient recoverable reserves to meet the nation's huge demand for oil and its derivatives should the Arab world spigot get turned off or significantly reduced. As CNN reports, oil prices are surging even as uninformed soccer moms continue to drive about in their gas guzzling SUV's. Depending on how the revolts in the Middle East and Arab world play out, the USA could find itself in one hell of a mess. A mess that will be in significant part self inflicted. Pretending that oil and gas consumption can continue unchanged is insanity. Yet, no U.S. politician has the balls or honest to tell Americans that a harsh day of reckoning may be in the offing. Here are highlights:
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The gasoline Americans buy is made not just with U.S. supplies but mainly with oil from around the globe, and that fuel is surging in price. Since a protester lit himself on fire in Tunisia at the end of December, sparking revolts across North Africa and the Middle East, global oil prices have jumped. Brent crude, pegged to oil prices in the North Sea, is up over 12%.
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Much of the oil being made into gasoline now actually costs $105 a barrel. For this we can blame a few of the usual suspects – try Middle East unrest and strong overseas economic growth – and one new one, a weak link in the U.S. petroleum supply chain.
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[I]it projected a 1-in-3 chance the gas price will break $3.50 this summer and a 1-in-10 chance it will hit $4. And if anything those estimates may understate how fragile the balance is. . . . Even a smaller rise could slow the snaillike recovery of the U.S. economy.
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A study released last month by IHS Global Economics says a 25-cent rise in the gasoline price, all else equal, will reduce employment by some 600,000 jobs over the following two years. And the steeper the rise, the more jobs that stand to be lost. "Suddenness is very important in determining how much damage is done to the economy," says IHS economist Gregory Daco.
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Pipelines that take oil out of Cushing [Canada fields] are at least two years away, and oil companies that stand to rake in fat refining profits aren't exactly looking to rush that timeline. . . . Prices are likely to rise regardless heading into the summer refining season. If the U.S. recovery gains steam, a replay of the ugly summer of 2008 looks like an unhappily good bet.