Reports of escalating violence in Libya, intransigence of its lunatic dictator, Muammar Ghaddafi, and announcements of the evacuation of foreign oil workers has thrown the markets into turmoil. US stock markets were down again today, and Brent Crude hit as high as $111 per barrel
. West Texas Intermediate traded over $100, closing slightly below that mark at the end of trading.
Over 500,000 barrels per day of Libyan production has already been announced as being shut in
, one third of the country’s production and over half of its import volume. BP, Wintershall, Repsol, Shell, and OMV have all announced curtailment
, and all but Libyan nationals are being evacuated. Even the National Iranian Drilling Company is shutting down and bringing their workers home. You know it’s pretty bad when the Iranians leave. Turkey has 25,000 nationals working in Libya
, and many of the 200 Turkish companies are evacuating. With violence spreading, an orderly evacuation has turned into a full blown rout, especially since the Libyan government is AWOL and foreign flights can’t get in to fly people out.
The big problem, here, though, is oil supply. Saudi Arabia has already asserted that it can make up the difference in production lost from Libya, but we know their ability to actually ramp their production, at least for any sustainable period, above the 7 1/2 million barrels that they are exporting today is questionable, especially in light of the diplomatic cables released by WikiLeaks
earlier this month. If they and other OPEC countries can’t step up their production, or more countries fall into chaos, the volatility in the markets could double the price of oil very quickly. This crisis, if nothing else, emphasizes the weakness of world oil supplies and the utter lack of control the US has over its own destiny. Here our country is sitting on huge supplies of natural gas, but burns oil at double the rate per capita of all other industrialized countries, yet, there is no call by our leaders for a comprehensive energy policy (besides drill, baby drill), and no shift toward changes in major transportation or power generation infrastructure. There’s no major push for alternatives, no adult conversations about nuclear power, no major investments in new technology. Hell, we’re not even talking about curtailing even a little of our gluttony for oil.
We’ve apparently learned nothing from the Santa Barbara spill, the oil shock of 1974, the 2 Gulf Wars, upheaval in Lebanon and Israel, the Ixtoc spill, Exxon Valdez spill, the Deepwater Horizon catastrophe, or this building crisis as oil-rich countries sink into civil unrest. Even as the Middle East burns, our ignorant and tone deaf politicians are arguing about ending abortion rights, busting labor unions, making sure everyone has automatic weapons with 30 round clips, and other ridiculous social issues to ramp up to their 2012 re-election rather than actually taking a few minutes to do their goddam jobs.
The threat here is clear. High and volatile oil prices threaten our economic recovery, millions of jobs, and our basic energy security. Once again the balance of power and energy supplies is threatened, and once again, we are utterly and totally unprepared for it.
We never learn.
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