The Middle East, with two-thirds of the world’s oil reserves, is in revolt. Some have blamed President Barack Obama for inciting chaos in Egypt; once an American pillar in the region.
Others have criticized the President for not clamping down on Moammar Gadhafi, the supreme leader of Libya for 42 years, who has created chaos and killed Americans.
The net result is, as the Middle East melts down, oil prices are ablaze: rising from less than $37 per barrel during their 2008 lows to breaking above the $100 per barrel mark. Soaring oil prices impact the cost of all things, from transportation to leisure to foodstuffs.
If Saudi Arabia implodes this will be the world’s worst energy crisis. The House of Saud has bailed out the Western world for four decades. But Saudi Arabia’s ability to ramp-up production is very much in question, as is the nation’s capacity to protect itself from what may be a revolutionary Jihad.
But Obama’s travesty has not only been how he has handled the Middle East but how he has steadfastly refused to develop America’s domestic petroleum production.
Oh Dear! Green Politics Could Mean $10 Per Gallon Gas!
Three years ago, candidate Obama made proclamations on opening up the U.S. to exploratory oil and gas drilling. But the oil executives I have spoken to say Obama has done nothing to increase America’s domestic capabilities.
While Obama has added acreage in Alaska for possible leasing, the best sites have been yanked off the table. Drillers have had to sit on their hands waiting on environmental studies before lease sales are held.
The President’s biggest backers, the Green lobby, have plans to line-up one lawsuit after another to block critical drilling that needs to be done in Alaska and on the Gulf Coast. Environmentalists are blocking millions of barrels of petroleum that would meet America’s long-term needs regardless of what happens in the Middle East.
Last year the National Association of Regulatory Utility Commissioners provided geological evidence that the U.S. has more than 200 billion barrels of oil and 2,000 trillion cubic feet of natural gas that can be recovered affordably with today’s technology. That is roughly two-thirds of Saudi Arabia’s petroleum reserves. Between what oil is in Alaska, the Dakotas and the Gulf, plus what Canada is eager to sell, there is more than enough petroleum to make Middle East oil irrelevant.
Obama and Secretary of State Hillary Clinton openly block domestic petroleum recovery while wringing their hands over the revolt in greater Arabia. The Administration continues to spend billions in aid to Organization of Petroleum Exporting Countries (OPEC) producers like Saudi Arabia, which use some of that money to finance Islamic extremists whose aim is to kill Americans.
Mr. President: Our Future Is In Alaska, Not Arabia
Alaska and its Arctic National Wildlife Refuge (ANWR) hold the key to our energy future. Billions of American barrels of crude lay untouched; locked away by Greens whose extremism matches that of many Muslims.
Thankfully the Greens are facing some opposition. In February, Lisa Murkowski, (R-Alaska), introduced two pieces of legislation to increase domestic oil production.
“Now is the time to develop our domestic oil reserves in the ANWR,” said Murkowski. “For far too long, we’ve kept resources under lock and key that could improve our energy security and create badly-needed jobs. There’s no excuse for continuing to pay foreign countries for resources we have here.”
The American Energy Independence and Security Act would provide the most efficient development of ANWR’s resources by allowing exploration and production within the coastal plain of ANWR.
The new legislation would require the Secretary of the Interior to lease at least 200,000 acres of the 1.5 million-acres within two years of its passage. Infrastructure—including all roads, airfields, drilling pads, pipelines and other facilities—would be restricted to 2,000 acres to minimize environmental impact on the region. Revenue from ANWR oil production would be divided between environmental mitigation and Federal deficit reduction.
The bill will try to make Greens happy. It would dedicate a portion of ANWR revenues to fund renewable and alternative energy development, wildlife and fishery habitat programs, energy conservation and low-income energy subsidies.
My expectation is that it will be flatly rejected, which is a travesty. It makes so much more sense to disturb some wildlife than it does to send our young men and women into combat in the Middle East.
George W. Bush and all of his apologists said we invaded Iraq because Saddam was a bad man. Was he any worse than Moammar Gadhafi? Probably not. Saddam did gas the Kurds, but Gadhafi has turned his tanks and guns on his own people. Saddam’s weapons of mass destruction (WMD) were nonsense.
It turned out Saddam didn’t have any, just as a lot of people in the State Department thought. Finally, if we really wanted to get every “bad guy” with a finger on real WMD, why don’t we invade North Korea? Because they don’t have oil.
Iraq’s invasion was ordered by George W. Bush and not Obama.
The fact is, I didn’t like that President’s Middle East policies either, or the doctrine that came down to the brain trust of Dick Cheney, Donald Rumsfeld and Paul Wolfowitz.
Obama’s Middle East policies are just as wrong-headed. I am in my 50s and I hope to have 20 years ahead of me. In that time solar shingles, electric trains and wind-turbines may revolutionize our way of life. But it won’t happen this decade. What we need is a President that will focus on domestic petroleum production. If he won’t, we will face the same gas lines I saw when I was a kid in college.
With Obama’s recovery already dead on arrival, the nation simply cannot endure a spike in oil prices. Yet the mess in the Middle East and the willful neglect regarding domestic oil drilling makes higher prices assured.
Action To Take
Look for oil prices to top $150 per barrel by autumn. Add to your energy equity positions, including Suncor Energy (NYSE, SU, $47).
Yours in good times and bad,
Myers’ Energy & Gold Report
PS—Finally, to my readers that point out that there are billions of barrels of oil in the Bakken Oil Basin in North Dakota, the truth is yes there are! However, let me caution you on three points:
- Federal and state governments need to encourage exploration with further tax breaks.
- The region will take years to come on-stream.
- While it is a bonanza, the geology of the region will make it expensive to develop and produce using current technology.