Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: quehubo who wrote (109613)	8/3/2003 12:06:29 PM
From: KyrosL	Read Replies (1) \| Respond to of 281500

If gasoline was taxed to show the costs involved with supporting the military protection required to ensure its safe supply we would be paying a much higher prices and using much less. Amen. I wonder when US politicians and the US public will wake up and realize that US gasoline and other energy taxes should reflect the enormous costs of protecting ME oil, almost all of which are borne by the US. Far from being market distorting, such taxes will help the markets rationalize energy demand. I have seen estimates that such costs can be covered if US gas and oil taxes are raised by around $2 per gallon, roughly the same as in Europe and Japan. The obvious highly beneficial side effect would be a huge reduction in US demand in the longer term, the elimination of our dependence on Middle East oil and, therefore, a reduction or elimination of the cost of protecting ME oil supplies -- let the Europeans, the Japanese, and the Chinese worry about the ME. Kyros

To: quehubo who wrote (109613)	8/4/2003 8:59:34 AM
From: Noel de Leon	Read Replies (2) \| Respond to of 281500

"Noel, your country is getting cheap energy because the American taxpayer at great expense is ensuring that oil flows freely from the exporting countries. " We pay $4/gal. you pay $1.80. whose gasoline is cheaper? Most of Denmark's oil comes from the Danish oil fields in the North Sea. As to US oil dependence and the ME, about 17% of US imported oil is from SA. The lower price paid by the US for SA oil, $1/brl. less than others is compensated for by the military costs. "Indeed, if oil trading were left to market forces, the kingdom's oil exports to the United States would fall by half. Instead, Saudi Arabia pays a price for its market share, a price that fluctuates each month as market forces change. Saudi Aramco, the state oil company, earns about $1 a barrel less on sales to the United States than on sales to the countries of Europe and East Asia. That discount translates into a subsidy to U.S. consumers of $620 million per year. In return, the United States deploys military forces in the Persian Gulf, which is of course also expensive. And given U.S. sensitivity to Riyadh's policy concerns on an array of issues, from the Arab-Israeli peace process to Kosovo to Central Asia, Washington pays the additional price of being constrained in its own foreign policymaking. One of the hidden aspects of the relationship is the Saudi dependence on the United States for providing an expanding market. Although Asian demand for oil is expected to grow dramatically in coming decades, no other economy rivals that of the United States for the growth of its oil imports. Over the past decade, the increase in the U.S. share of the oil market, in terms of trade, was higher than the total oil consumption in any other country, save Japan and China. The U.S. increase in imports accounts for more than a third of the total increase in oil trade and more than half of the total increase in OPEC's production during the 1990s. This fact, together with the fall in U.S. oil production, means that the United States will remain the single most important force in the oil market. The hope of Saudi Arabia and OPEC for an increased market and for greater market share is uniquely dependent on growth in U.S. demand. Hence it is not for security alone that Riyadh depends on the United States but for the very economic basis of the Saudi regime, which relies almost entirely on oil for revenue. Although the U.S.-Saudi axis is often neglected, it can be blown out of proportion. When the ties between the two countries appeared to fray after September 11, some press reports asserted that this separation of interests was unprecedented. It is true that Riyadh had expressed considerable displeasure with the Bush administration over the U.S. abstention from its former active role in the Arab-Israeli peace process. But even before then, Washington and Riyadh clashed over oil prices; the Clinton administration even pressured other key OPEC countries into increasing oil production. It would be more accurate, in sum, to see the common interests of Washington and Riyadh as the intersection of two large and unwieldy sets of goals. In both countries, the size and value of that connection have been undergoing serious review since September 11. To the degree that Washington decides to take action to reduce the U.S. economy's dependence on oil, it can greatly affect the scale of increased oil production over the next few decades. It is because of that opportunity that the Russian challenge to Saudi Arabia has become tremendously important." BROWNSTONE POLICY INSTITUTE New Ideas for New Realities 141 Amity Street, Suite 3, Brooklyn, NY 11201 institute@brownstone.org The Battle for Energy Dominance By Edward L. Morse and James Richard Edward L. Morse is Executive Adviser at Hess Energy Trading Company and was Deputy Assistant Secretary of State for International Energy Policy in 1979-81. James Richard is a portfolio manager at Firebird Management, an investment fund active in eastern Europe, Russia, and Central Asia. Published by Foreign Affairs, March/April 2002 So there is little pressure to reduce consumption(predicted to increase by 65% by 2020).