Whilst all eyes have been on Egypt, with the reactionary regimes in the region pressing Obama to maintain the status quo there lest the revolution spread to them, WikiLeaks has revealed what is probably the biggest story of the moment–that Saudi Arabia has been overestimating its oil reserves by three hundred billion barrels. Not only has Saudi Arabia reached peak production but production will actually decline in the coming years.
Energy and oil analysts have called this dramatic revelation a wake up call. They have denounced American politicians for behaving as though America’s oil- based economy could go on indefinitely and for not coming up with a comprehensive energy policy. Perhaps they have not noticed but this is precisely what Obama has been attempting to do. The Republicans? They have had their heads in the sand and their hands outstretched to the oil companies for contributions. These monies are kicked back to the oil companies in the form of federal subsidies. Dick Cheney notoriously refused to promote an energy policy that was not run by the oil companies themselves, having himself been the CEO of oil giant Halliburton. The Republicans have made it clear they will thwart any effort by Obama to implement an energy policy not dictated by oil interests.
China is racing ahead of America in developing alternative sources of energy, engaging in lucrative contracts with German wind turbine technology companies and developing its wind energy sector while America lags behind in the energy dark ages. The powers that be in America are more concerned with prosecuting Julian Assange than paying attention to the disturbing information WikiLeaks has posted with regard to Saudi Arabia’s oil supply. Until recently, when any member of OPEC was short in its required production, Saudi Arabia would increase its production to make up the difference thus stabilizing world oil prices. In the near future the Saudis will be unable to continue this practice which means that the price of oil is bound to increase. To mitigate this, conservation will become a vitally important part of any comprehensive energy policy along with the development of wind and solar technology.
While some insist that nuclear energy must be part of such a policy, the cost of nuclear power plants is beyond the scope of private enterprise. Because the Tea Party-dominated Republican Party is opposed to further government expenditures, it is difficult to see how America will be capable of expanding its nuclear energy resources.
Were it not for WikiLeaks the Saudis would have been able to perpetrate the myth of their vast oil reserves, something almost certainly known by American oil companies and CIA, most probably in collusion with them to protect the importance of the powerful American oil companies. When the last CEO of EXXON-MOBILE retired, he left with a golden parachute of $250 million dollars, which may explain why the oil interests do not have any sense of emergency with regard to alternative energy sources. Chevron and EXXON keep running ads about how they understand the problem but they have given no clear statement about how much they actually spend on research and development in transforming themselves into comprehensive energy companies.
Not long after Jimmy Carter was elected president, he presciently ordered the Department of Energy to begin developing clean energy sources. This was in the wake of the oil embargo that drove oil prices up dramatically thereby inconveniencing American consumers who were obliged to wait on long lines to get fuel for their cars. I am a man of a certain age; I remember this. Let me assure you, it was not fun. But Ronald Reagan ridiculed Carter for wearing a cardigan under his jacket while addressing the nation from the White House, famously quipping, “We are not going to freeze in the dark.” We were Americans he told us, and this was not something we were obliged to accept.
Instead, Reagan promoted breeder reactor technology at the Department of Energy, a project that never got off the ground because of the cost and serious safety hazards. Instead, he turned back to oil, pronouncing that America would “always protect the House of Saud.” And protect them America did, even though young Saudis increasingly resented the Saudi royal family, staging a serious protest supported by religious leaders who called from the minarets for a demonstration that took place out of sight of the Americans. One of the chief opponents of the Saudi Arabian royal family proved to be Osama Bin Laden, the founder of Al Qaeda, the perpetrator of the 9/11 attacks. Bin Laden’s Saudi handler was Prince Turki, who served as chief of Saudi intelligence and then as the Saudi ambassador to the United States. Wealthy Saudis have contributed to Al Qaeda with money made by American purchases of Saudi oil.
This could all be a blessing in disguise if Obama strongly makes the case that America cannot rely on Saudi oil or oil from other Middle Eastern countries. This is not only because of the political instability but because the oil is starting to run out. The American people need desperately to understand that unless America adopts a comprehensive energy policy, the future will become increasingly perilous.