Rep. Kevin Brady (R-TX) goes against the claims that say the world is running out of energy and also criticizes Obama’s administration current policies on the issue. (1:07)

 

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By Michael Combier – Talk Radio News Service

New alternatives of energy needs to be found by the United States to be less dependent on oil and the dictate of political regimes in Venezuela, Russia or in the Middle East. Additionally, US economy will be hit less severely by rising oil prices if other energy options are provided to the population.

The Joint Economic Committee chaired by Rep. Carolyn B. Maloney (D-NY) held a hearing this morning entitled “Oil and the Economy: The Impact of Rising Global Demand on the U.S. Recovery”. The hearing dealt with the impact of last year’s impact of oil prices on U.S. economy.

“Last year’s oil shock showed us that right now it takes a very large increase in gasoline prices to reduce our consumption of oil. Part of the reason is because many consumers have no alternatives to their gasoline powered cars”, Maloney said,adding that “in the long run, energy policies that increase alternatives to using a gas-fueled car – whether they are different modes of transportation or alternative fuels for cars – will help minimize the impact to the economy of a rise in the price of oil.”

To explore policy options and alternative energies, Dr. Daniel Yergin and Dr. James D. Hamilton were invited to testify. Yergin pointed out that “oil prices are among others a barometer of the world economy” while also adding that because the U.S. uses 46 million barrels of oil a day, the country can still face difficulties in four or five years when the economy will be totally recover and oil prices will rise to a level experienced in 2008.

The diversification of the country’s energy with wind mills, solar energy, nuclear and new efficient automobiles will protect the country in the future on high oil prices. By changing the country’s habit on oil and by focusing on domestic productions, “it will create jobs in the U.S. and activity here rather than revenues going to the treasury of other countries,” said Dr. Yergin.

Dr. Daniel Yergin, Chairman of IHS Cambridge Energy Research Associates, testifies before the Joint Economic Committee to explain how oil prices and the economy are linked. (0:31)

 

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By Jonathan Bronstein, Talk Radio News Service

An international oil embargo of America by all major oil exporting nations; a major disruption of oil transportation lines; or the funneling of oil revenue to terrorist organization. Due to its dependance on foreign oil, these hypothetical worst-case scenarios demonstrate the vulnerability of the U.S., which is struggling under a recession, according to many politicians and scholars.

“What we found, which is somewhat to my surprise, is that the big risks tend to be economic and the political risks are much less of a concern,” said Keith Crane, Director of the Environment, Energy and Economic Development Program at the RAND Corporation, a think tank, who was commenting on the findings of his newly published report, which related the effect of imported oil on U.S. National Security.

The largest risk to the economy, Crane said, is a “large and precipitous decline in the amount of oil,” because the demand for oil in the short-run in inelastic, or cannot change. Therefore, economic laws would dictate that since America cannot change its consumption habits quick enough to match the decline in oil supply, oil prices would rise
exponentially, he said.

If oil prices doubled, the United States’ Gross Domestic Product would slow by an estimated one to five percent, Crane said, citing the oil price spike last summer as proof of this assertion.

However, the political risks, like the possibility of an oil embargo, Crane believes, are secondary issues. The reason he is not worried about an embargo from any one nation is because they simply do not work.

Embargoes fail because of the global nature of the oil market, which makes oil transferrable, said Crane. Also, embargoes often cause undesired consequences, as seen through the American embargo of Japan during the late 1930s and how this led to the attack on Pearl Harbor.

“Even if we did not import one drop of oil from the Persian Gulf, we would be just as vulnerable economically to a cut-off in that region as if we imported all our oil from there,” said Crane. As a result, while embargoes do not work, any major supply disruption would have an adverse affect on the entire world’s economy says Crane.

But regardless of what happens, Crane believes that America must begin to move towards energy independence. The main plan he unveiled involved an excise tax to artificially raise the price of oil and make it less reliable.

“The most effective policy instrument is to increase an excise tax on oil, I would like to point here that tax revenues don’t disappear they go someplace, and while this is not a politically popular recommendation, they can be returned to tax payers,” said Crane. He wants to see the tax be a level of 30 percent, or $1, which would reduce consumption by 15 percent.

While such a plan may be unpopular, Crane ardently believes that it is the only way to make America energy independent and protect the economy from a major oil shock.

Ellen Ratner speaks with T. Boone Pickens on his energy plan. Pickens advocates switching to natural gas for many current oil consumers. (5:28)

 

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By Kayleigh Harvey – Talk Radio News Service

At a press conference regarding the bi-partisan Iran Refined Petroleum Sanctions Act, Senator Jon Kyl (R-Ariz) said, “In effect what we are saying to the few companies in the world who provide this refined gasoline to Iran is, ‘You can either do business in our $13 trillion economy with us, or you can do business with Iran with its $250 billion economy, but you can’t do both.’”

The Bill would expand on the Iran Sanctions Act of 1996, giving President Obama the power to “stop companies who continue to sell refined gasoline to Iran or provide refining capacity from doing business in the United States or through the American banking systems,” said Kyl.

 

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After returning from a trip to the Middle East, Senator Jack Reed (D-R.I.) says that there is a dispute about a census between the Kurds, Turks, and Arabs, but “underlying all this is oil,” says Reed. (2:15)

 

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By Michael Ruhl, University of New Mexico – Talk Radio News Service

President Barack Obama has left the U.S. Department of Energy with a difficult task: how spending $150 billion over the next decade will result in 25 percent of Americans using renewable energy sources by 2025.

At the Energy Information Administration’s annual conference in Washington today, Secretary of Energy Steven Chu said that government funding will drive scientific research to make renewable sources of energy more accessible and affordable.

A Nobel Prize-Winning Physicist, Chu said that with aggressive research, adequate government funding and public support, America will spark a technological and scientific revolution in the energy industry, making renewable energies more accessible and less expensive.

President Obama has committed to doubling the funding of basic science in the next ten years, and Chu believes the funds will have significant impacts.

Chu believes that economic prosperity is tied intimately to energy affordability and energy security, and cautioned against being misled into believing that there is any correlation between the amount of energy a country uses and that country’s economic prosperity. Citing numbers from the Human Development Index, Chu displayed that over the past several decades California’s energy consumption has remained consistent while its GDP per capita has nearly doubled.

President Obama has said repeatedly that his energy plan is one that will help the economy by creating green jobs which are not subject to the threat of outsourcing, but opponents criticize the costs involved.

The Energy policy laid out in January’s Stimulus Package allots over $16 billion to energy efficiency and renewable energy, which is part of the broader $32.7 billion that the Department of Energy was given overall.

Dr. Stephen Blank, Professor at the U.S. Army War College, speaks about Russia’s domination of Central Asia’s oil markets through the use of pipelines.

By Michael Ruhl, University of New Mexico – Talk Radio News Service

 

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On Monday the American Foreign Policy Council held a conference on the United States’ foreign policy towards Russia. Steven Pifer of the Brookings Institute said that Russia is engaging in a policy which is meant to keep the West out of the former soviet states, while reasserting its own power and expanding its sphere of influence.

Oil is the principle tool Russia has for accomplishing these goals, according to US Army War College Professor Stephen Blank. Blank called oil a “Swiss army knife” for advancing Russia’s interests, and said that Russia’s protected and subsidized energy market has risen to power because of pipeline control. He continued by saying that Russia’s move to own pipelines and distribution centers is a plan to dominate Europe through “forced dependence” on Russian gas and oil. Dr. Blank recommended that the U.S. and the E.U. reduce their respective dependence on Russian oil, and that the E.U. strive for internal political unity.

By Michael Ruhl, University of New Mexico – Talk Radio News Service