Between A Rock And A Slippery Place

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It’s taken the biggest environmental crisis in American history to drive home a simple point—Washington’s energy policy has been reckless and could yet be the ruination of this once great United States.

The latest polls show that 38 percent of Americans approve of President Obama’s handling of the Gulf oil crisis. Which makes one wonder, what would it take for these people not to support the President?

Of course there is the latest success that appears to be working almost seamlessly above the Deep Horizon oil well 5,000 feet below the Gulf of Mexico. The containment dome is now trapping more than 15,000 barrels per day of spewing oil, up from just 6,000 barrels per day when it was first placed over the ruptured hole. That’s amazing; the Obama administration said that the ruptured well was only leaking 5,000 barrels per day to begin with!

The President has promised that the U.S. will bounce back from this cataclysm. “We will get through this crisis,” said the President, echoing the words of President Carter who declared that he would bring the American hostages home from Iran, even as the daily calendar on that catastrophe clicked forward endlessly. Will this one reach day 100, day 150, perhaps even day 200?

Better Than Ever
Last week Obama said that the people of the Gulf coast "are going to need help from the entire country," but that he is determined to see that the region will be restored to a condition better than it was before the BP well blew up.

Better? That is like saying Vietnam is better after being raked with Agent Orange?

It is estimated that BP is on the hook for $14 billion but that will never make things better. Not for them (The BP brand has been tarnished for decades); not for the wildlife and certainly not for the people along the coast that make their living from those waters. And that is if we don’t get another “incident.”

But wait! The Deepwater Horizon is not the only well spewing oil into the Gulf of Mexico. According to a Federal document a nearby drilling rig, the Ocean Saratoga, has been leaking since at least April 30. While much smaller than the BP spill it has nevertheless produced a 10-mile-long slick that can be seen on satellite images. Diamond Offshore, which owns the drilling rig, said that they could not comment on the ongoing spill but it appears as if a boat is putting dispersants on the slick.

It all adds up to one thing—even after BP antes up billions you can bet the Federal government is going to be on the hook for a substantial part of the tab. The President promises that he is going to squeeze every penny for the cost of this problem out of BP but Obama has a pretty poor record when it comes to holding companies accountable for their mistakes. Just ask bank executives who threw the economy into a tailspin then collected billions in bailouts and then gave themselves millions in bonuses.

Regardless of the cost, the Gulf of Mexico is not the real problem. The 2 million barrels of crude oil that will have spilled into the Gulf of Mexico is a symptom of a much bigger problem; one that is getting progressively worse. I am talking about America’s unrequited addiction to oil which has been drilled dry within our borders.

The U.S. is now pumping less than 5 million barrels of oil per day. We pumped almost twice that much oil 30 years ago during the first Iranian crisis.

That leaves the U.S. dependent on harvesting petroleum wherever it can, including 5,000 feet deep in the Gulf of Mexico. It also leaves the U.S. importing more than two out of every three barrels we burn, much of that from countries that hate us.

Oil discoveries have been declining since 1964

As the graph above shows, the discovery rate for oil in the United States has fallen off a cliff. The U.S. is tapped out and drilled out. You have to go back to the 1920s to find a decade where less oil was discovered in the U.S. than will be discovered this decade. In case you are wondering, in 1920 there were 7.5 million automobiles in the U.S. Today there are about 250 million registered vehicles on the road.

Driven To Disaster
“Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries,” wrote The New York Times.

The Times pointed out that as politicians heatedly debate opening new regions to drilling, corralling energy speculators, or starting an Apollo-like effort to find renewable energy supplies, analysts say the real source of the problem is closer to home. In fact, it’s parked in our driveways.

A whopping 70 percent of the 21 million barrels of oil the U.S. consumes every day goes for transportation, with the bulk of that burned by individual drivers. Americans’ daily use of oil is nearly twice the combined consumption of the Chinese and Indians.

Our nation’s dependence on imported oil has only kept growing in recent years, undermining the trade balance and creating a perfect storm for environmental disasters like the one happening in the Gulf of Mexico.

From Gaza To The Gulf Of Mexico
There has been no summer lull for the Obama administration. Consider:

  • June is turning out to be one of the bloodiest months in the Afghan war.
  • More than seven years after the U.S.-led invasion of the country in March 2003, bombings and shootings still remain common across Iraq.
  • Much of the world is outraged about events in Gaza, which may or may not have been provoked by America’s largest aircraft carrier also known as Israel.

The common denominator between these events and the Gulf spill is oil. If not for oil and America’s strategic need to secure the world’s last rich pools—most of which lay under Arab lands—Washington could pull its armies out of the Middle East, be an honest broker of peace between Israel and her Arab neighbors. That would not only save American lives but also hundreds of billions of dollars that are being spent on a foreign occupation. It would also restore the reputation of the U.S. which would help usher in a new age of prosperity.

But don’t expect peace to break out anytime soon. The President has a lot to say about the need to go Green, but there are two realities:

  • The technologies needed to replace oil are not here nor are they on the horizon.
  • The only Green that this President seems to understand is the kind of green that BP gave him when he was running for office. After all Obama was the largest recipient of BP campaign contributions.

It seems that if you give the President enough mulla, he is willing to let all of us deal with the Mullahs.

Yours for real wealth and good health,

John Myers
Myers’ Energy and Gold Report

Personal Liberty

John Myers

is editor of Myers’ Energy and Gold Report. The son of C.V. Myers, the original publisher of Oilweek Magazine, John has worked with two of the world’s largest investment publishers, Phillips and Agora. He was the original editor for Outstanding Investments and has more than 20 years experience as an investment writer. John is a graduate of the University of Calgary. He has worked for Prudential Securities in Spokane, Wash., as a registered investment advisor. His office location in Calgary, Alberta, is just minutes away from the headquarters of some of the biggest players in today’s energy markets. This gives him personal access to everyone from oil CEOs to roughnecks, where he learns secrets from oil insiders he passes on to his subscribers. Plus, during his years in Spokane he cultivated a network of relationships with mining insiders in Idaho, Oregon and Washington.

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