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There was an interesting article in the St. Paul Pioneer-Press earlier this week about an oil crisis simulation conducted by the National Security Council:

Unrest in Nigeria?

Former CIA director Robert Gates sighs deeply as he pores over reports of growing unrest in Nigeria. Many Americans can't find the African nation on a map, but Gates knows that it's America's fifth-largest oil supplier and one that provides the light, sweet crude that U.S. refiners prefer.

It's 11 days before Christmas 2005, and the turmoil is preventing about 600,000 barrels of oil per day from reaching the world oil market, which was already drum-tight. . . .

Should U.S. troops be sent to restore order? Should America draw down its strategic oil reserves to stabilize soaring gasoline prices? . . .

The economic effects of unrest in faraway Nigeria are immediate. Crude oil prices soar above $80 a barrel. June's then-record $60 a barrel is a distant memory. A gallon of unleaded gas now costs $3.31. Americans shell out $75 to fill a midsize SUV.

Terror attacks in Saudi Arabia and/or Alaska?

Fast-forward to Jan. 19, 2006. A blast rips through Saudi Arabia's Haradh natural-gas plant. Simultaneously, al-Qaida terrorists seize a tanker at Alaska's Port of Valdez and crash it, igniting a massive fire that sweeps across oil terminals. Crude oil spikes to $120 a barrel, and the U.S. economy reels. Gasoline prices hit $4.74 a gallon.

. . . The Cabinet can't agree on even the simplest short-term solutions. There aren't many options . . .  There's no infrastructure in place to deliver alternative fuels such as ethanol or diesel made from soybeans or waste products.

Fast-forward again, to June 23, 2006. Emboldened Saudi insurgents attack foreign oil workers, killing hundreds. A mass evacuation follows from the world's pivotal oil producer, the one country that could be counted on to boost production during shortages in global supplies. . . . Without foreign oil workers, how will Saudi Arabia meet its production targets and quench the oil thirst of America, China and India?

Oil prices have reached an unthinkable $150 a barrel. In Philadelphia, Miami and Kansas City, gas prices reach $5.74 a gallon. Now it takes $121 to fill that midsized SUV.

Are such scenarios realistic?

"A million or a million and a half barrels of oil a day off the market is a very realistic kind of scenario. You can think of a dozen different countries around the world ... where you can see that happening. Or even a natural disaster could do that," Gates said.

Former CIA chief [James] Woolsey described the scenarios that the National Commission on Energy Policy and the advocacy group Securing America's Future Energy simulated as "relatively mild." . . .

"It was striking that by taking such small amounts off the market, you could have such dramatic impact" on world oil prices, said Robbie Diamond, the president of Securing America's Future Energy.

What can be done?

Richard Haass was a top adviser to former Secretary of State Colin Powell until 2003. The simulation taught him how little influence policymakers would have in reversing an oil shock wave.

"I think where most of the work has to happen now, both intellectually and politically, is on (the reduction of) demand," Haass said.

by TGeraghty on Fri Jul 1st, 2005 at 01:46:42 AM EST
It hate to say this (so early in the morning, and all)...but they have us over a barrel (sorry!). They can raise prices and what are we going to do about it? At some point people will slow down on driving, and be more aware in general of conservation, but so much is dependent on oil now...so unless people make a radical change, I see prices continuing to rise <sigh>

Half the population is under the age of 18. Tanzania's future is NOW...join the 50% campaign!
by whataboutbob on Fri Jul 1st, 2005 at 02:57:01 AM EST
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Actually, the rising prices are what will bring about the radical changes that are needed in energy, transportation, metropolitan planning. It will be costly and painful at first, but I think history is pretty clear that we won't act until it's absolutely necessary. Quite a bit was accomplished during the 1970s and early 1980s in terms of making the US economy less energy-intensive and less dependent on imported oil, but progress stopped after the price of oil crashed in the mid-1980s.
by TGeraghty on Fri Jul 1st, 2005 at 03:24:51 AM EST
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