‘Simulation shows US held over a barrel,’ reports the Financial Times (a consistently more useful paper than most of what passes for news media in the US).
Terrorists yesterday struck oil facilities in the US and Saudi Arabia, pushing oil prices to a record $120 a barrel and doubling to $5,214 the expected annual petrol bill for the average US household. Economists warned of the imminent collapse of the US’s economic recovery and a loss of more than 2m jobs, the largest drop since 1945.
And they continue:
‘With only 2.2m barrels a day of spare capacity, which is enough capacity to meet a little more than one year of demand growth, the oil markets are at the mercy of political stability in Venezuela, Nigeria and Iraq, as well as potential terrorist acts,’ said John Dowd, analyst at Sanford Bernstein, which prepared the simulation‰s price reactions….
For the scenario, which included the evacuation of foreign workers from Saudi Arabia and unrest in Nigeria, analysts at Sanford Bernstein calculated that a 4 per cent reduction in world oil supply would increase prices by more than 170 per cent….
Oil facilities were too large to guard, the mock cabinet found, and diplomatic solutions were marred by unreasonable (in the eyes of the US) demands by countries such as Saudi Arabia, which among other things had demanded that the US stop putting it under pressure over democratisation.
You’ve just got to follow John Robb’s Global Guerillas site to get a feel for how fragile the whole global house of energy cards could be to assymetrical warfare and what Robb characterizes as the open source emerging bazaar of violence…of the first epochal war of the 21st Century.
So, what’s to be done?
[Robert Gates, former director of the Central Intelligence Agency] concluded that Americans could probably be persuaded to adjust their behaviours to reduce their oil consumption for about a year if they saw the shortage of oil as an issue of national security.
‘The real problem is year two to five. How do you impose that kind of daily pain on Americans for a three- to four-year period before alternatives can be felt?’ he said.
Mr Sperling said after the simulation: ‘What I learned was that when you face an energy crisis, you better have a pound of prevention, because if not, you are left with only an ounce of cure….’
The question now is whether lawmakers in Washington will take the issue as seriously as their retired counterparts who took part the simulation.
Put this together with Joel Makower’s recent piece examining
why Americans aren’t buying clean energy (short and disturbing answer: They just don’t think clean energy works.!), and you’ve got a growing sense of the dimensions of the challenges we face.