Crude oil is an exasperating commodity. It's like broccoli or daily exercise-you don't really like it but you need it. Oil is getting more difficult to find, more expensive to produce and transport-and much more expensive to defend. It doesn't mix with water. It certainly doesn't mix with sane politics. As summer temperatures and political passions heat up, it will be harder to get beyond convenient sound bites and half-truths. Everyone from presidential candidates and commentators to filmmaker Michael Moore has been playing to the crowd for gleeful self-advancement. True insights are about as rare as an iceberg bumping up against a platform in the Gulf of Mexico. Democratic presidential candidate John Kerry says he will propose an energy security and conservation trust fund paid for by federal royalty income. The money will be spent on research for energy-efficient technologies and renewable energy sources such as wind power. Funny, I thought similar proposals were outlined in President Bush's national energy policy published in 2001. Energy research and renewables have been included in the various energy bills Congress repeatedly has failed to pass. Kerry conceded that the U.S. will depend on fossil fuels for many years to come, but he had to blast the current administration's energy plan-it's his duty. He said he worries that the U.S. will remain too dependent on foreign energy suppliers. Indeed, that is one thing we can count on, no matter who is president. In fact, our energy dependency is going to get worse around 2008, when LNG imports begin to transform our cozy continental gas market into a globalized market sharpened by geopolitical intrigue. A bit of homegrown geopolitical risk always lurks around the nation's capital as well. In July, a group called The Center for Public Integrity held a press conference in Washington to reveal the findings of its investigation of the oil and gas industry. Horrors! It found that the industry donates a lot of money to lobbying activities. What industry doesn't? It found that something exists called The National Petroleum Council, "a little-known group that advises the Secretary of Energy on policy." Many of the group's recommendations ended up part of Bush's national energy policy! Imagine that. It found that some U.S. energy firms are saving millions in taxes by reincorporating or locating subsidiaries in tax-free havens abroad. Other industries do not do this as well? All of them should "come back" in order to fairly share the tax load and remove themselves as targets for this all-too-easy criticism. Last month, the Interstate Oil and Gas Compact Commission issued a report on the gradual but inevitable decline in the number of seasoned petroleum employees, and in new engineering and geology graduates to replace them. It urgently called for solutions on the part of industry, universities and governments, and it suggested a plan to make people more aware of the industry's attractive, high-tech jobs that will challenge bright minds. Some sanity came from the industry's Dutch Uncle, Lee Raymond. In a June speech to the Woodrow Wilson International Center for Scholars, the ExxonMobil chairman laid it on the line. Like it or not, he said, the U.S. is but one participant in the global energy marketplace, and not necessarily a favored one that is guaranteed a preferential oil supply. It will have to compete with all other nations, most of which also need to import oil and gas to stoke their economies-and in rapidly increasing quantities. Global oil demand is predicted to rise, although no one can say precisely by how much. A Reuter's survey of 13 analysts found daily demand likely to rise by 1.8 million barrels next year. But it may increase 2.3 million barrels per day this year-the fastest growth rate in 24 years, according to the International Energy Agency's latest estimate. Non-OPEC supplies will go up only 1.2 million barrels per day, so OPEC will remain as important as ever. Raymond said ExxonMobil sees overall global energy use rising 40% by 2020-an increase in absolute terms of 65 million equivalent barrels per day. That amount, he said, is close to eight times Saudi Arabia's current daily output. Rising energy demand runs headlong into a brick wall made up of the problems associated with alternative energy sources such as ethanol, wind or hydrogen, which he outlined in detail. "So, I'd suggest we pull up our socks and understand that for the next several decades, the U.S. and the rest of the world will need increasing amounts of oil and gas." His recommendations? He cited several: continue research to make energy alternatives economically and environmentally feasible. Make conservation part of the plan. Maintain and improve relations with energy supplier nations all around the globe. And of course, pull out all the stops here to increase land access and drilling activity.
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