The Transfer of Wealth
Gasoline in Southern California is rolling towards $4 a gallon as the price of crude oil rolls towards $100 a barrel. That means transportation costs are hitting Californians hard, not only at the gas pump, but also at the grocery store and at the mall. The results extend beyond just car-crazy Los Angeles, however, as this article in today's Washington Post demonstrates.
High oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone. ...
In the United States, the rising bill for imported petroleum lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance its competing goals of fighting inflation and sustaining growth. ...
The benefits, to the tune of $700 billion a year, are flowing to the world's oil-exporting countries.
And those oil-exporting countries are taking advantage of the windfall. Saudi Arabia is building new cities. Russia is paying off its foreign debt and accumulating gold and cash reserves. Other nations are shoring up their international presence in defiance of the current US administration's foreign policy.
Two of those nations -- Iran and Venezuela -- may be better able to defy the Bush administration because of swelling oil revenue. Venezuela has used its oil wealth to dispense patronage around South America, vying for influence even with longtime U.S. allies. And Iran could be less vulnerable to sanctions designed to pressure it into giving up its nuclear program or opening it to inspection.
Some consumer countries have begun making the hard decision to wean themselves from oil. Others, like the US, eh, not so much:
...Japan has been weaning itself off oil for years. It now imports 16 percent less oil than it did in 1973, although the economy has more than doubled. Billions of dollars were invested to convert oil-reliant electricity-generation systems into ones powered by natural gas, coal, nuclear energy or alternative fuels. Japan accounts for 48 percent of the globe's solar-power generation -- compared with 15 percent in the United States. The adoption rate for fluorescent light bulbs is 80 percent, compared with 6 percent in the United States.
While the increased use of natural gas, coal, and nuclear energy will cause other problems, the use of solar and other alternative energy sources such as wind can ease the pressure of the rising oil prices, especially since experts don't forsee any real drop in the price per barrel. It wouldn't take much of "that vision thing" to start plans to move away from oil.
Unfortunately, the current administration has shown zero interest in actually leading the country away from oil based energy for some rather obvious reasons. It's easier to drill in Alaska's wilderness than to chance angering the oil companies which write big campaign checks. And, at least in Southern California, the public hasn't yet been pinched enough to get out of their cars and into public transportation. Hell, we can't even be bothered to change our light bulbs to the fluorescent kind.
Sooner or later, however, (and it does look like it's going to much sooner than we expected) the crunch will hit. In an ideal world, somebody in the nation's capital would at least be talking about the alternatives to oil. Or candidates would be.
High oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone. ...
In the United States, the rising bill for imported petroleum lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance its competing goals of fighting inflation and sustaining growth. ...
The benefits, to the tune of $700 billion a year, are flowing to the world's oil-exporting countries.
And those oil-exporting countries are taking advantage of the windfall. Saudi Arabia is building new cities. Russia is paying off its foreign debt and accumulating gold and cash reserves. Other nations are shoring up their international presence in defiance of the current US administration's foreign policy.
Two of those nations -- Iran and Venezuela -- may be better able to defy the Bush administration because of swelling oil revenue. Venezuela has used its oil wealth to dispense patronage around South America, vying for influence even with longtime U.S. allies. And Iran could be less vulnerable to sanctions designed to pressure it into giving up its nuclear program or opening it to inspection.
Some consumer countries have begun making the hard decision to wean themselves from oil. Others, like the US, eh, not so much:
...Japan has been weaning itself off oil for years. It now imports 16 percent less oil than it did in 1973, although the economy has more than doubled. Billions of dollars were invested to convert oil-reliant electricity-generation systems into ones powered by natural gas, coal, nuclear energy or alternative fuels. Japan accounts for 48 percent of the globe's solar-power generation -- compared with 15 percent in the United States. The adoption rate for fluorescent light bulbs is 80 percent, compared with 6 percent in the United States.
While the increased use of natural gas, coal, and nuclear energy will cause other problems, the use of solar and other alternative energy sources such as wind can ease the pressure of the rising oil prices, especially since experts don't forsee any real drop in the price per barrel. It wouldn't take much of "that vision thing" to start plans to move away from oil.
Unfortunately, the current administration has shown zero interest in actually leading the country away from oil based energy for some rather obvious reasons. It's easier to drill in Alaska's wilderness than to chance angering the oil companies which write big campaign checks. And, at least in Southern California, the public hasn't yet been pinched enough to get out of their cars and into public transportation. Hell, we can't even be bothered to change our light bulbs to the fluorescent kind.
Sooner or later, however, (and it does look like it's going to much sooner than we expected) the crunch will hit. In an ideal world, somebody in the nation's capital would at least be talking about the alternatives to oil. Or candidates would be.
Labels: Energy, oil companies
posted by Diane at 4:50 AM
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