Alaska Patriot News

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What most Americans forget is that refined oil products are one of America's Top Five export products.

All we ever hear about from the dumb-them-down media is how much oil Americans import.

Nobody ever talks about why we are importing all that oil and what we do with it. 

We import the oil, plus our own.  We refine it.  We make it into value added products.  We ship it out to the rest of the world.

Now, does that factoid change the view?

Yes, considerably.

When the price for refined oil and gas products goes up, what benefits?

The American export balance sheet.

So, restricting the supply of oil (which Obama is doing) leads to higher prices for our export products.

No matter that it also means higher prices for American consumers:  the government profits and the value of American exports rise, and that is what Obama cares about.

Even his "investment" in Brazil's oil is crazy like a fox.   America needs new, cheap sources of crude oil close to our refinery bases on the Gulf.  Opening up Brazil latches onto that supply. 

Why aren't we developing our own oil, you ask?

Natural Resource Strategic Plan.

It has been in place since 1908.

Our avowed Public Policy is to buy raw materials from other nations, use those materials to make value-added products, and save our own natural resources (including gas and oil) for a rainy day.

At the time the first Alaskan pipeline, TAPS, was built, the Mideast was our major supplier of crude oil.  OPEC now supplies only @ 26% of American crude oil, and with Brazil opening up, that percentage will drop further.

Obama is weaning our crude oil industry off of dependence on the Mideast, while at the same time, keeping the price of one of America's top export products high.

Exports are a real problem for America.  Since World War II, we have depended on about twenty export products.  Look up the list for 2012 for yourselves-----refined oil products, aircraft, vehicles, weapons, telecom equipment.  All our top exports are war-demand products, and without a major war anywhere in the world, we are on idle economically.

America owns the worldwide business when it comes to war-related exports, but has so completely developed its economy around the defense industry that it has a hard time surviving during peace time. 

Refined oil products are one of the few top tier export products we have that bridge the "demand gap" created when our other top tier exports are at low ebb. 

Obama's oil and gas priorities make perfect sense. The investments in South American oil give our refineries access to new crude oil sources closer to our refinery base and cut their dependence on Middle Eastern oil, so that's a no-brainer.  The cutting off of American development and internal supplies is consistent with the Natural Resource Strategic Plan Obama inherited.  Make the other guy develop his limited natural resources, while we sit on ours.

There's just one little fly in that ointment.

When oil and gas products get too expensive, it fuels the drive to develop solar and magnetic generators which are long term replacements for oil and gas.  So all the while that Obama is desperately restricting supply of oil and gas to keep prices for one of our key export products high, he is also creating the economic impetus to leave behind dependence on oil and gas altogether.  It is this realization together with Germany's brilliant advances in solar and China's advances in battery technology that have prompted the rest of his energy policy-----investment in new energy technologies.

Obama is doing his utmost to cash in while the cashing is good, but if America is to survive and thrive in the coming century, we have to gouge the oil prices with one hand and reinvest in new energy technology with the other. 

Set against this backdrop is a need for Alaskans to tap their own resources for their own needs, but to do that efficiently and deliver affordable fuel,requires a large diameter pipeline.  That can only mean exporting a lot of extra gas.  What does that do for the big picture?

We start competing with ourselves on the backhaul:  an Alaskan gas pipeline decreases demand for American refined oil products.

To an oil man's mind, it goes like this: "I can make $8 selling a quart of oil, or I can make $8 selling two gallons of gas.  Which one is easier for me to do?  Oil, because that's what I am already set up for.  Which one is less expensive to transport?  Oil, because it packs more energy in less volume.  Which one requires the least additional investment?  Oil, again.....let's just table that discussion about an Alaskan gas pipeline for another month?"

Unfortunately for Alaskan consumers and politicians that leaves them in the same position they have always been in:  here we are, sitting on some of the world's richest energy resources, and not a drop to burn locally, because we don't have the refinery capacity and market to make use of our own resources.

It's a chicken and egg problem.

We don't have enough population to create a demand large enough to justify large scale and efficient refinery operations in Alaska, which leaves Alaskans paying high prices for energy.  High energy prices then keep the cost of living in Alaska @ 20% higher than the national average and suppresses the development of the overall economy.  So we don't have a vibrant economy or a large population because we don't have access to affordable energy, and it is precisely because we lack the market that a larger population would provide that we don't have affordable energy.

If Alaska wants to develop, it must do so against the grain of the oil industry.

We must also realize that though the worldwide market for both gas and oil will continue for another say, fifty years, the long term horizon of the oil and gas business is not so hot.  The top execs in the oil and gas business read the tea leaves ten years ago.  They know that new innovations and technologies are on the way that will make oil and gas as obsolete as whale oil. 

The clock is ticking. 

From a purely Big Picture economic standpoint, the national politicians and oil execs may be right, except for one thing.  Alaska needs to develop.  To develop, Alaska needs affordable energy.  That means a large diameter gas pipeline, not a straw from the North Slope. 

We may be hitching our wagon to a fading energy star, but a large diameter gas pipeline does more than just provide extra income during the transition to new energy sources worldwide, and represents more than a long term backwater investment for the oil companies, or a glitch for Mr. Obama on the road to the highest refined oil product prices in world history.  It creates the necessity of new market relationships on the Pacific Rim.  It gives Alaskans the key to long-term development.  It ends the Catch-22 that has crippled Alaska since we first started trading beaver pelts.

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