Oil Without a Plan
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|Christine Young||February 6th 2011|
Cutting Edge Contributor
The report last April by the US Joint Forces Command said vanishing oil surpluses will cause global demand to exceed supply within five years. In fact, Egypt's oil production has declined 27 percent since 1996. In Mexico, production slipped by more than 800,000 barrels a day between 2004 and 2010. In the North Sea, production decreased 25 percent – more than one million barrels a day – between 2008 and 2010.
The revolution in Egypt could disrupt already dwindling global oil supplies at a time when worldwide demand is increasing and output continues to slide, a U.S. Senate energy panel was told during an oversight hearing on February 3.
"Whenever geopolitical events remind us of our vulnerability to world oil supply disruptions, it is a spur for us to consider energy policies that help to reduce that vulnerability,” said Jeff Bingham, D-N.M., chairman of the U.S. Senate Committee on Energy and Natural Resources.
Although Egypt is not a global supplier, the country plays an important role in international oil markets because of its operation of the Suez Canal and Sumed Pipeline, conduits for the export of Persian Gulf oil and liquid natural gas. Fees collected from operation of these two transit points is a significant source of revenue for the Egyptian government.
The 2010 US military report also predicted oil prices would soon top $100 a barrel.
Richard Newell of the US Energy Information Administration declined to say whether President Barack Obama’s proposal to end oil subsidies would have any impact on prices, but he told the Senate panel that U.S. oil demand probably reached its peak in 2005. Jim Burkhard, managing director of Cambridge Energy Research Associates, warned that higher taxes on oil companies could interfere with domestic production.
Sen. Al Franken, D-Minn., said the five oil giants made over $1 trillion in profits in the last decade, noting the industry “doesn’t need tax benefits to survive.”
Cutting Edge contributor Christine Young is a veteran jounnalist.