FEATURE - Oil - the world's largest addiction
Author: Richard Valdmanis
Elsewhere, countries were topping up their emergency reserves and eyeing safer, more stable sources of crude.
This tumultuous period marked the first time in decades that the world's oil consuming nations showed serious concern about the price and availability of oil. It was a reminder that a wrong turn in the maze of geopolitics can have dire effects on a world economy addicted to crude.
The prolonged loss of a major source of oil due to military conflict, sabotage, or embargo can grind industry to a costly halt. While memories of the last severe oil shock in the 1970s are as distant as flared trousers, the world once again has noticed the beast lurking in the barrel.
Following the Arab oil embargo of 1973, which has etched images of gas lines and panic buying into the memories of an entire generation, nations dependent on Middle Eastern oil reacted by improving fuel efficiency, promoting domestic drilling, and hunting down more reliable foreign sources of petroleum for import.
ENERGY INDUSTRY ASKING NEW QUESIONS
Many of the same themes are visible now as the concerns resurface, but there are new questions many in the energy industry are asking. After a year in which oil prices shot from $25 to nearly $40 a barrel, can the world continue to place band aids over its vulnerability to petroleum? Or is this finally the beginning of the end of the Oil Age altogether?
"There is a robust debate at present on proposals to move away from conventional fuel for either environmental or security and supply reasons," says Kenneth Cohen, vice president of public affairs for ExxonMobil.
Oil is the world's largest addiction and likely to be a tough habit to kick. Every day, 3.4 billion gallons of crude are burned, more than a half a gallon for each person. But producing it is also a dependency. Many of the countries that produce oil rely on their consumer markets for the revenue, just as the consuming countries rely on the oil, making for a sticky relationship.
"The U.S. is one of the most important economic markets for our exporters and, in fact, our producers are more dependent on export revenues than the U.S. is on what it imports," says Sharaf Salamah, president of Saudi Refining.
Shrinking away from buying Middle East oil is a direction "characterised by disengagement, risk of economic stagnation, accompanied by instability in parts of the world", he adds.
Despite the interdependence of oil consumers and oil producers, there are still good reasons for countries to strive for self-sufficiency. Saudi Arabia, the world's largest oil producer, was the biggest supplier of oil to the United States last year, sending more than 1.5 million barrels daily and making up nearly 15 per cent of U.S. imports.
But energy security experts say a well-thought-out terror strike on Saudi oil interests could wreak havoc for U.S. energy needs, particularly since the majority of Saudi exports are processed through a single plant and exported through two Gulf terminals.
Emboldened by the moves in oil prices in the world's largest energy consumer, the U.S. House of Representatives passed a broad energy bill this year that would turn over an Alaskan wildlife refuge to oil with an eye to raising domestic production and offsetting imports.
The bill updates U.S. energy policy but has set off a heated debate on how best to seek out energy security -- increase oil drilling, or reduce oil use and promote alternative sources?
"This measure is a blueprint to burn more fossil fuel, consume more wildlife habitats and stoke more global warming emissions," says the National Wildlife Federation.
Despite assertions by oil firms that modern directional drilling technology would cause only a minimal impact on a very small portion of the refuge, the association between the oil industry and pollution and unrest is one steeped in past terrible experience -- from the Valdez oil spill off Alaska more than a decade ago, to the bunker fuel s