US energy security official warns of $160 oil

07 November 2007 20:28  [Source: ICIS news]

WASHINGTON (ICIS news)--A leading US national security specialist urged Congress on Wednesday to increase domestic oil production along with alternative energy plans to avoid severe economic consequences from a potential spike in oil prices to $160/bbl.

 

Dennis Blair, former US Navy admiral and president of the US Institute for Defense Analyses, warned a House panel that amid precariously balanced world oil markets and with spare capacity tight, a single major production disruption anywhere in the world could quickly drive oil to $160/bbl.

 

In that scenario, he said, “gasoline prices soar to more than $5 [€3.45] per gallon, double-digit inflation ensues and the US and world economies teeter on the edge of recession”.

 

Testifying before the House Select Committee on Energy Independence and Global Warming, Blair voiced support for alternative energy programmes such as increased bio-ethanol production and higher automotive fuel economy standards, but he cautioned that those actions alone will not give the US energy security.

 

“Despite the promise of alternatives, America cannot hope to grow enough biofuels to obviate the need for improved fuel economy,” he said. “Nor can we expect to derive security from vague promises of leap-ahead technologies.”

 

“Those who oppose further oil exploration in the US must recognize that the failure to press forward with environmentally responsible development of domestic energy resources exacerbates the dangers of oil dependence,” he said.

 

“Refusing to develop secure sources of domestic production leads to an unnecessary over-reliance on imported oil, much of which flows from less stable parts of the globe," he said.

 

Congress has maintained a moratorium on drilling for oil and natural gas in 85% of the resource-rich US outer continental shelf (OCS) regions and in onshore areas as well, fearing environmental damage to shorelines and wildlife areas.

 

Representative Jim Sensenbrenner (Republican-Wisconsin), ranking member of the committee, cited US Interior Department figures of 102bn barrels of untapped domestic oil and 635,000bn cubic feet (bcf) of natural gas reserves that could be developed “to wean ourselves off of oil supplies from foreign countries hostile to the US”.

 

But Representative Edward Markey (Democrat-Massachusetts), chairman of the committee, emphasized increased automotive fuel economy standards and the higher biofuel mandate called for in the Democrats’ energy bill now pending in Congress.

 

($1 = €0.69)

By: Joe Kamalick
+1 713 525 2653

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