Economists’ View – Fossil Fuels Pose Major Threats to the U.S. Economy
With all the controversy surrounding the scientific community’s proclamation that man’s combustion of fossil fuels is a major contributor to climate change, now comes another view by economists that has nothing to do with oil and global warming.
Almost from the onset, the political motivation to reduce oil consumption had less to do with greenhouse gas emission than it did with energy independence and national security. Two noble goals that are irrefutable. Similar concerns were raised in my August 2010 discussion, “Forget Politics, Think Economics” – Oil Independency Is Not Only About Climate Change and Global Warming.”
In a July 5, 2011 article “The scariest risks to the economy,” Chris Isidore, CNNMoney, reporting on the results of a “survey of 27 economists asked to choose from a list of possible threats facing the economy- What scares them most?, reported:
• “A European debt default in a country like Greece or a new oil price spike are the biggest risks to the U.S. economy, according to economists.”
• “Another oil price shock, which most likely would come from further political turmoil in the Middle East and North Africa, is their next biggest worry.”
• “….. economists blame the spike in oil earlier this year for the slowdown in economic growth, as it raised costs for businesses and cut into consumer spending. And though oil and gas prices have come off their highs of a couple of months ago, the threat they pose to the economy has not vanished.”
• ”Oil prices sustained above $125 a barrel for six months or longer would guarantee another recession in 2012,” said James Smith, chief economist for Parsec Financial Management.”
• “After tumbling on the news that the U.S. was releasing 30 million barrels of oil from the Strategic Petroleum Reserve, oil prices are on the rise again, currently hovering around $95 a barrel.”
Interestingly enough the report did not directly blame “oil imports” as a problem. It does cite the overall price of oil as the threat, whether imported from Canada, Mexico, Saudi Arabia or Russia. Though unrest in the Mid East and Africa is mentioned as a likely cause to for future skyrocketing oil and petroleum prices.
To refute or dispute this conclusion by the economists, the U.S. Energy Information Administration (EIA) arm of the Department of Energy (DOE) reported that as of April 2011, the makeup of U.S. oil imports by country or of origin is:
• 61.1% from Non OPEC countries
• 38.9% from OPEC Countries
• 22.6% from Canada
• 14.7% from all Persian Gulf countries
• 9.6% from Saudi Arabia
• 9.3% from Mexico
• 8.0% from Algeria
• 6.1% from Russia
• 4.5% from Iraq
• 4.4 from Colombia
• 4.0% from Algeria
1. OPEC countries includes: Algeria, Angola, Ecuador, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela.
2. Persian Gulf countries: includes Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates.
As a final insult to injury, the DOE reported on June 7, 2011:
“Total U.S. consumption of liquid fuels increased by 270 thousand bbl/d (1.4 percent) during the first quarter 2011 over the same period the year before. Consumption growth during the first quarter was led by distillate fuel oil (160 thousand bbl/d) and liquefied petroleum gas (70 thousand bbl/d). Motor gasoline consumption fell by 50 thousand bbl/d. Consumption growth is expected to slow over the forecast. Projected total U.S. liquid fuels consumption increases by an average 150 thousand bbl/d (0.8 percent) in 2011, and by a further 130 thousand bbl/d (0.7 percent), to 19.4 million bbl/d in 2012, which is still well below the record high 20.8 million bbl/d in 2005.”
“Motor gasoline is the fastest growing consumption category in 2012, reflecting growing population, rising employment and income, and a predicted end to the recent steep run up in retail gasoline prices.”
In closing, regardless of the cause(s) of global warming, anthropogenic vs. non-anthropogenic induced climate change, and imported vs. domestic oil, the potential of an economic disaster of unparalleled proportions raised by an group outside the scientific community is just another reason get off fossil fuels. Possibly, the scientists and economists have finally teamed up to scare us into believing self-serving conclusions.
When will Uncle Sam wake up to the facts and do something? Sorry, forget about the 2011 and 2012 elections.