By Paula C. Squires
Continuing political upheaval in the Middle East presents a “huge danger” to the U. S. both in terms of oil prices and for the country’s energy policy going forward, an oil geopolitical expert said Wednesday.
According to Amy Myers Jaffe, director of the Energy Forum for the Baker Institute at Rice University in Houston, nearly 25 percent, or 21 million barrels of the world’s daily consumption of 87 million barrels of oil comes from five countries — Libya, Egypt, Yemen, Bahrain and Saudi Arabia — that are currently unstable or have the potential to be so. “The chances of five countries in turmoil and not one decreasing oil production seems unlikely,” said Jaffe. “The only thing between you and a crisis is the Saudi royal family.”
Typically, political instability disrupts the production of oil in the short-term and the investment in oil in the long term, she noted. A case in point would be Libya, where U.S. and its allies are launching airstrikes after the security forces of Col. Moammar Gadhafi attacked civilians following civil unrest and rioting. “We were getting 1.5 million barrels of oil from Libya, and now we’re not getting any,” said Jaffe.
Meanwhile, prices for oil futures were at their highest level Wednesday in two and a half years at $105.75 dollar a barrel on the New York Mercantile Exchange.
A fellow in energy studies at Rice, Jaffe was in Richmond as the keynote speaker for “Energy Forward,” a program created by Shell Oil Co. to spark dialog about energy policy. Richmond is one of four U. S. cities where Shell is doing research to better understand consumer interest in energy.
The fear of spreading political instability in the Middle East follows a March 11 earthquake and tsunami in Japan. It devastated a nuclear power plant, knocking out backup generators that supply power to cool the plant’s nuclear fuel; a situation Japanese officials are still trying to get under control.
Jaffe says both events show the complexity and sometimes unpredictable nature of energy production, which is why America needs to rely on sources other than Mideast oil, and increase efforts in natural gas, solar and wind. As for nuclear power, she said, “We don’t want to be throwing the baby out with the bath water. We need to know more about what happened in Japan.“
There are no comments for this entry