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Michael Miller


By Michael Miller
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On the Subject of Oil

In the train wreck that is our national politics, a new generation of candidates and political operatives has decided that “building consensus” means saying whatever will generate immediate applause, followed by checks and online contributions. If it’s outrageous, extreme, unrealistic or contradicted by something that’s said at the next destination, there is no significant public penalty. Four decades ago, Michigan Governor George Romney went from frontrunner to joke because of one poorly worded phrase that today wouldn’t rate a four-second sound bite.

The corrosion of our public standards has oozed down into the local level. The flood of publicly financed mailings continues. I haven’t received one that has expressed a meaningful vision of where we’re supposed to go from here. This is a country and a county loaded with personal talent and a growing craving to be asked to help. We are failed not only by our leaders, but by the people who are supposed to be watching our leaders on our behalf.

If you’re my age, you can remember times of gasoline rationing and alternate day fueling. What would be written or broadcast about a President who asked us to be inconvenienced like that today? That he was coming to take our cars away, that he was politically dead, that he should be impeached.

In the United Kingdom, police are warning businesses to guard trucks because of a rash of diesel fuel thefts. The government has been telling the public since last year that fuel prices were going up. In this country, we get fantasy.

Presidential candidates are competing to name a more ridiculous amount by which they’ll personally reduce the price of gasoline. Mr. Gingrich scored a sound bite last week by claiming that he would get us to $2.50 a gallon. Gasoline prices vary by roughly 2.5 cents per gallon with every change of one dollar in the market price of WTI (“West Texas Intermediate,” a “light sweet” crude oil that is an international oil price benchmark).

To get to $2.50 a gallon, the price of WTI would have to fall roughly in half. That can only happen with a worldwide crash in demand, or massive currency deflation.

Mr. Gingrich also said that when he is president, we will probably be the largest oil-producing country in the world by 2020. The United States produces 5.6 million barrels per day (mbd). To reach the Russians at 9.7 mbd, the U.S. would have to increase production by 73 percent, which is not possible in this time-space continuum. Not at $2.50 a gallon.

As this is being written, WTI is at $108.12 per barrel. Saudi Arabia officials say they want to stabilize petroleum prices at $100 per barrel. A Deutsche Bank analysis says that the Saudis need $92 a barrel to finance the massive spending they started last year to buy support among commoners. Last week, royal security forces killed four and wounded nine protestors in the Eastern Province, home to 90 percent of the oil.

Saudi net exports have fallen from 9.1 mbd in 2005 to about 8 mbd. Their internal consumption is growing (1.6 mbd in 2003 to 2.4 mbd in 2011). At this rate, Saudi Arabia will have to import petroleum by 2025.

OPEC estimates that Venezuela now holds 296.5 billion barrels of petroleum, a greater reserve than Saudi Arabia. Net exports from the two countries combined are down 22 percent since 2005.

Production in Alaska and the North Sea has steadily declined. The Dakota shale oil supply, which some claim will save us, finally hit 0.5 mbd and will never exceed 0.8 mbd. The U.S. now consumes 18.8 mbd a day.

Denmark has a detailed policy to have wind power supply half of the country’s electricity needs in 2020, and to be completely free of fossil fuels by 2050. Would this be possible for us? Desirable?

I’m not sure. But at least it’s a plan.

Building malls and cutting bus service isn’t a plan. Buying expensive hybrid cars which still need lots of gas, electricity and nickel for batteries isn’t a plan. If $5 or $6 a gallon becomes semipermanent, even the big box store distribution systems become too expensive to profitably serve Long Island.

Then what?

Michael Miller is a freelance writer, designer and strategic consultant who has worked in state and local government. Email: