Sunday, January 28, 2007

Time to use our own energy

From The New York Times:

Saudi Arabia, which benefited immensely from record oil prices last year, has sent signals in the past two weeks that it is committed to keeping oil at around $50 a barrel — down $27 a barrel from the summer peak that shook consumers across the developed world.

The indications came in typically cryptic fashion for the oil-rich kingdom. In Tokyo last week, Ali al-Naimi, the Saudi oil minister, said Saudi Arabia’s policy was to maintain “moderate prices.” The previous week, on a stop in New Delhi, he effectively put his veto on an emergency meeting of the Organization of the Petroleum Exporting Countries to prop up prices after oil briefly dropped below $50 a barrel, the lowest level in nearly two years.

The Saudis know that keeping the price of oil at a reasonable level is in their own interests. However there are pressures which will seek to drive the price of oil back up in the years to come.

Primarily what will drive prices up is the increasing demand of developing economies like India and China. As those two nations become more heavily industrialized and as their citizens become more prosperous their demand for electricity, fuel for automobiles and manufactured goods which require petrochemicals will skyrocket. This cannot help but drive the price of oil up.

There are two things that the United States can do (realistically) to keep the price of oil under control. One is to win the war in Iraq and bring in American specialists to prove and develop the whole of Iraq's oil resources. It is a common belief among oil geologists that Iraq has larger oil reserves than Saudi Arabia, but they remain unproven. That is we have the indications that they are there, but we haven't verified it and located them precisely. Right now Saudi Arabia is the largest oil producer in the world and they are the only nation with surplus capacity. If Iraq's oil producing ability was enlarged beyond the Saudi's supply would at least for a time outstrip demand and price pressures would trend down, rather than up.

This would give the Saudi royal family less petrodollars to spend supporting and spreading the poisonous malignancy of Whabbi Islam and less money with which to bribe terrorists to attack the West rather than the Saudis.

The other thing the US could do is to reduce our dependency on oil through practical measures such as converting our entire electrical generation system to nuclear power. We should develop all of our domestic oil resources wherever they are to be found from the Alaskan tundra to the coast of Florida. These two things alone would allow us to more than eliminate Middle Eastern imports (which amount to only 12% of our total imports).

Another thing we should be doing, and in the long run this could be the most important thing of all, is devoting some serious attention to the processes developed by the Germans in WWII to convert coal to motor fuel and natural gas. Germany ran its tanks and trucks and automobiles and planes on synthetic fuel made from coal. Patton ran his tanks and other vehicles on captured synthetic fuel for a time as well. It was only after allied bombing destroyed the synthetic fuel plants that Hitler's war machine began to grind to a halt.

Petrolium has always been so cheap that persuing the German technology has never made economic sense, however with all the technological advances which have been made since the end of WWII I believe that if serious efforts were directed at developing the German technology that we could perfect it. This would mean a practicle doubling of the world's oil producing capacity and exert massive downward pressure on oil prices.

In addition to lower pump prices and cheaper electricity this would also remove the major source of funding for the Islamofascists global ambitions.