[somethingtosay]

See SAFE Website


For those that think everything is is going to be OK, you sould read and see what Washington thinks can happen at any time. Washington knows of the seriousness of Oil dependance, but the average person does not. The video is well done.


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SAFE Press Release September 6, 2005

Oil Shockwave Report Finds Severe Economic and National Security Risks From Small Global Oil Supply Disruptions

WASHINGTON, DC (September 6, 2005)--Amid high global oil and U.S. gasoline prices, a report released today by Securing America's Future Energy (SAFE) and the National Commission on Energy Policy (NCEP) demonstrates that the United States is vulnerable to much more severe oil shocks should even relatively small amounts of oil be withdrawn from the global market due to terrorism, political unrest or additional natural disasters.

The report details the findings of Oil Shockwave, an oil crisis simulation conducted earlier this summer, which found that taking less than 4% of oil off the global market due to small incidents of political unrest and terrorism would cause prices to rise dramatically to more than $161 bb. It also showed that once an oil supply disruption occurs there are few short-term options for protecting the U.S. and global economy. The simulation was conducted by former high ranking government officials, experts in the fields of national security and economics, and energy industry specialists.

Today at a Senate Energy and Natural Resources Committee Hearing on Global Oil Demand and Gasoline Prices, John Dowd, a Senior Analyst at Sanford C. Bernstein & Co. who provided expert advice to the simulation, posited “the situation depicted in Oil Shockwave—where a global supply shortfall of less than 4 percent produces a world oil price of $160 per barrel—looks prescient." "The threat is real and urgent, requiring immediate and sustained attention at the highest levels of government" stated Dr. Robert Gates, former Director of Central Intelligence and the Oil ShockWave National Security Advisor. "To protect ourselves, we must transcend the narrow interests that have historically stood in the way of a coherent oil security strategy and implement policies that will meaningfully address both the supply and demand aspects of our current oil dilemma."

The Shockwave scenario included civil unrest in Nigeria, terrorist attacks on energy infrastructure in Alaska and in Saudi Arabia, and unpredictable weather conditions. The scenario created a shortfall of approximately 3 million barrels of oil from a global market of more than 84 million barrels, resulting in gasoline prices of $5.74 per gallon and heating oil prices of $5.57 per gallon, partly due to the lack of spare capacity in global oil production. Copies of the full report are available at www.energycommission.org and www.secureenergy.org

Participants included:
Robert M. Gates, former Director of Central Intelligence;
Richard N. Haass, former Director of Policy Planning at the Department of State;
General P.X. Kelley, USMC (Ret.), former Commandant of the Marine Corps, member of the Joint Chiefs of Staff;
Don Nickles, former U.S. Senator;
Carol Browner, former Administrator of the Environmental Protection Agency;
Gene B. Sperling, former National Economic Advisor;
Linda Stuntz, former Deputy Secretary of Energy;
Frank Kramer, former Assistant Secretary of Defense for International Security Affairs, and;
R. James Woolsey, former Director of Central Intelligence.

Senators Richard Lugar (R-IN) and Joe Lieberman (D-CT) served as co-chairs of the Oil ShockWave event.

While not seeking to reach unanimous conclusions, the following key findings and recommendations were embraced by a majority of participants.


Oil is a fungible global commodity. A change in supply or demand anywhere will affect prices everywhere. Given today's precarious balance between oil supply and demand, taking even a small amount of oil off the market could cause prices to rise dramatically.
Oil price shocks of this magnitude could do significant damage to the U.S. economy. Highlights include falling GDP as a result of decreased consumer spending and crumbling consumer confidence. Automakers, airlines, and the travel and hospitality industry suffer especially tough consequences and there are two million fewer jobs in the U.S. economy relative to baseline forecasts. The S&P 500 experiences an historically significant decline and the current accounts deficit increases dramatically.
Once oil supply disruptions occur, short-term options for protecting the U.S. economy are limited. In addition, these options are generally not sustainable for more than a few months to a year.
Longer term, a number of supply-side and demand side policy options are available that would significantly improve U.S. oil security. Because their benefits will take a decade or more to mature, such policies must be enacted as soon as possible.
U.S. foreign and military policy is influenced and often constrained by our oil dependence. Military options offer little recourse in the event of a supply crisis. Oil ShockWave participants repeatedly found that military intervention was not only unfeasible given existing U.S. commitments, but unlikely to be effective in responding to the scenarios they confronted, even when requested by a host government.
The U.S. is vulnerable to attacks on key energy infrastructure both at home and abroad. Because this energy infrastructure is simply too vast to protect, we must reduce demand, develop petroleum alternatives, and promote fuel diversity.
America's Strategic Petroleum Reserve (SPR) offers some protection against a major supply disruption, but that protection is limited in both scope and duration. Emergency reserves cannot sustain the U.S. through a prolonged crisis. In addition, Oil ShockWave revealed that it is extremely difficult to reach consensus on when it is appropriate to use the SPR.
Global oil markets are currently dependent on Saudi Arabia's ability to serve as supplier of last resort to offset demand increases or supply shortfalls elsewhere. Given existing terrorist threats and political tensions in Saudi Arabia, this situation creates significant and potentially damaging global vulnerabilities.


"Our response to 9/11 and Hurricane Katrina must be to make sure that we anticipate and prepare for the next national crisis by acknowledging the vulnerabilities and addressing them. Few weaknesses demand greater attention than oil security" said SAFE President Robbie Diamond. "This grave economic and national security threat demands a concerted effort in the halls of Washington and boardrooms across the country."

"Amidst this terrible crisis, our nation must summon the bipartisan spirit to adopt an oil policy that meaningfully addresses both global supply and domestic demand," said Jason Grumet, the Executive Director of the National Commission on Energy Policy. "Absent a balanced policy approach, our economy will remain unacceptably vulnerable to an array of entirely predictable events."

SAFE (www.secureenergy.org) is a not-for-profit, nonpartisan organization committed to actively reducing America's dependence on oil with a strategy addressing business and technology, politics and advocacy, and public education and media.

The National Commission on Energy Policy (www.energycommission.org) is a bipartisan group of 16 of the nation's leading energy experts. The Commission's goal is to develop a long-term energy strategy that enhances our national security, strengthens our economy, and protects the global environment and public health.

[Keith_McClary]

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