Hidden Cost of Imported US Crude Oil

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Frank
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Hidden Cost of Imported US Crude Oil

Post by Frank » Tue Mar 27, 2007 11:56 am

While the war in Iraq may have officially been started over Weapons of Mass Destruction, many people in the world believe that it was to protect American interests in Iraqi crude oil. Maybe it was a little of both. I'm going to go out on a limb and link the 2nd Gulf War with crude oil that the USA imports from the middle east.

Now that it's into its 5th year (started on March 20, 2003), it appears that the cost of the Iraq war could surpass $1 trillion. This cost isn't included in the price of gasoline at the pumps for Americans but instead is added to the US national debt. The cost of servicing this debt reduces the amount of money that could be spent on other worthwhile expenditures like infrastructure, education, public health, etc.

While listening to CBC's radio program The Current on March 14, I learned about Private Military Contractors (PMCs), which appear to absorb a significant portion of Gulf War spending. In the old days, private military contractors were known as mercenaries and, back in the Roman empire, they were known as the Praetorian Guard. A major PMC is Blackwater USA which is the subject of Jeremy Scahill's book entitled Blackwater: The Rise of the World's Most Powerful Mercenary Army. You can listen to Anna Maria Tremonti's Interview with Jeremy Scahill. George Stroumboulopoulos interviewed Jeremy Scahill on The Hour as well.

My feeling is that alternative fuels would be a dirt cheap compared to gasoline and diesel if the cost of the war in Iraq were factored into their prices.


alehander
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Post by alehander » Wed Apr 11, 2007 2:05 pm

Whoa, whoa... I get a lot of this at alt-fuel vehicle shows. Less so with regard to LPG and CNG, but the same argument is made over biofuels. The US does not have enough domestic feedstock for alternative fossil fuels (CNG, LPG) to make an energy security argument. The CNG flowing through the West Coast is largely tanked in over seas as LNG and re-gassified in Mexico or offshore CA. The major sources of this stuff are some "different" Middle Eastern nations and.... drum roll... Russia!

The US also cannot produce enough biofuel feedstock to generate appreciable amounts of either biodiesel or ethanol. Your pres has a grand plan to import the latter from Brazil; Europe is using BD the feedstock for which is grown in S. America and the South Pacific. These regions which produce biofeedstock are seeing some pretty ugly environmental and food/fuel consequences from this production.

In short, by using more CNG/LPG and biofuels the US can diversify it's energy supply but the overseas dependency is still very much there. When either the CNG suppliers start playing games or Brazil decides I'd rather preserve it's forests than supply the US with ethanol, the situation will be no different than what you describe in the Middle East today.

My understanding is that the US has plenty of coal, but that's about it as far as alternatives go.

P.S. Don't anyone take this personally, it's what I've found in my research.
Lenin zhil, Lenin zhiv, Lenin budet zhit'

Frank
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Post by Frank » Thu Apr 19, 2007 1:43 pm

The point I was trying to make was that if the war in Iraq is partly (or mainly) related to the US crude oil supply, the actual cost of oil is much higher than what appears at the pumps. I agree that it is simply not practical or realistic to completely switch to alternative fuels at this time.

Using the information in the above news article, let's say that the war cost of $1 trillion over 5 years is accurate so that it's annual cost is $200 billion. According the CIA World Factbook of the USA, the USA consumes 20.73 million bbl/day (2004 est.). This is the equivalent of 318 billion gallons/year of crude oil. Dividing the annual cost of the war with oil consumption results in a hidden cost of $26.43/barrel or 62.9¢/gallon.

Not all of the oil consumed in the USA is in the form of gasoline and diesel fuel but this cost is in addition to the already high cost (relatively speaking) that Americans pay at the pumps. Maybe 62.9¢/gallon added to the cost of every gallon of oil consumed in the USA doesn't quite make alternative fuels dirt cheap but it is significant nonetheless.

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