Former State Department Ambassador and advisor to Colin Powell, Republican Richard Haas is now President of the prestigious and influential Council on Foreign Relations think tank. This Op-ed piece is a perfect example of how to know the Peak HAS arrived, cheap oil is GONE, the point HAS tipped, the paradigm HAS shifted. Time to get to work.
Let's Not Play The Oil Game
Richard N. Haas, May 15, 2006 (Newsweek International)
- Today’s war games have more to do with the falling supplies and rising price of oil than with tanks and armored personnel carriers rolling across borders. Consider…In a simultaneous three-front strike, terrorists sank a tanker in the Bosporus, blocking the Turkish straits linking the oilfields of the Caspian Sea with the Mediterranean. They also successfully attacked the oil port of Valdez in Alaska. An assault on the critical Ras Tanura complex in Saudi Arabia was rebuffed, but several million barrels a day (roughly 5 percent of world supply) were taken off the oil market for at least four months…Overnight, prices jumped to $120. U.S. gasoline prices shot to $5 a gallon.
- What surprised me is how sanguine the participants seemed about the political and economic consequences of far more costly oil… the players [did not] … a meltdown of the global financial system.
- What can we learn…First: with global demand and supply balanced so closely, and with so little excess production capacity, it doesn’t take much for oil prices to skyrocket…second…waiting to develop a serious energy policy until catastrophe hits only increases the pain.
- The good news is that we know what needs doing. The bad news is that we remain largely unwilling to act. And by not acting, the United States and other oil-consuming nations leave themselves at the mercy of the market, or to individual producers who would manipulate it.
- Energy politics is one thing. Energy policy is fundamentally different. We have too much of the former and not enough of the latter.
- Current high prices largely reflect the fact that demand is rising faster than supply. India and China are growing rapidly, as is their consumption of oil and natural gas. The world cannot drill its way out of this conundrum. The answer mostly lies in using less oil—something that will result from increasing efficiency and accelerating alternatives.
- …the best way to cut back on demand is through much higher gas taxes. Fuel-efficiency standards for new cars, SUVs and light trucks should be raised. There must be new incentives for companies to produce and people to purchase fuel-efficient hybrids and advanced diesel cars. The emergence of substitutes can best be hastened not by government-directed R&D but by guarantees that gas taxes will be kept high enough to discourage wanton consumption and to ensure a decent return on investment in alternatives.
- If this isn’t a crisis, what is?