The economy has improved of late, government analysts tell us. And in almost perfect synchronicity with that news oil prices rose, with the likelihood that the cost of almost everything else will rise, even though those same government wizards tell us core inflation is negligible, discounting food and energy.
After all, who spends money on food and energy?
In yet another touch of irony, the U.S., for so long dependent on imported energy, had as its No. 1 export in 2012 gasoline, diesel, and fuel oil. While U.S.-produced petroleum products sail away to China, the EU, and elsewhere, often at the same time U.S. inventories are falling, imports increasing, and pump prices rising.
Ahh, the magical mysteries of capitalism at work.
A lot has happened in the almost 40 years since the Arab oil embargo gave the world its first traumatic experience with the term “energy crisis,” and started the price escalation that has continued off and on since then.
America’s dependence on Mideast oil has been steadily diminishing in recent years — no thanks to Washington leadership, which for four decades has failed to develop a sound, meaningful long term energy policy. Rather, drilling technology, for which America leads the world in innovation, and new methods of finding oil and natural gas have resulted in extensive additional supplies both offshore and onshore. This has not been without controversy, particularly for natural gas and worries of environmental contamination related to the “fracking” process.
In 2012, the U.S. had the largest annual increase in oil production since the first commercial gushed skyward in Pennsylvania in the mid-1800s. The U.S. Energy Information Administration forecasts another record for 2013. Some analysts are predicting that within a few years U.S. oil production could top that of Saudi Arabia and Russia, the world’s two largest producers. Vast new stores of natural gas are being discovered here, enough experts say, to last hundreds of years.
For much of the last 40 years, a large chunk of U.S. oil imports was subject to the political vicissitudes of an increasingly unstable Mideast. By 2012, however, Persian Gulf nations were supplying only 28 percent of our oil, down sharply from almost 50 percent in 2005. Now, more than half our oil comes from western hemisphere nations; Canada is the biggest supplier, at 28 percent in 2012. We now import more oil from Africa than from the Persian Gulf.
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Despite spending hundreds of billions of dollars worldwide on “clean energy,” like it or not the ongoing reality is that petroleum and natural gas are expected to be the dominant and cheapest energy sources for many years to come.
To that end, perhaps we can take some measure of comfort in knowing supplies of both are increasing.