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National Strategic Plan for America--War, Oil and Politics in 2008

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By Frosty Wooldridge

America squirms toward an unprecedented juncture in 2008 with the coming change of leadership in the White House. As citizens, our civilization cannot survive another presidency led by reaction, retort or inept responses. We cannot continue without a “National Strategic Plan” for our future.

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We must raise our voices toward a sustainable future by engaging our next president with a mandate for creating a new energy source. We demand a national energy policy, conservation policy, viable immigration-population policy and water usage policy—before harsh realities pound down around our ears.

The “Age of Oil” as our energy slave--vanishes in the rearview mirrors at the astounding global rate of 84 million barrels burned 24/7, month in and month out, year in and year out. How many barrels does that equal? According to Dr. John Tanton, , one barrel measures 20 inches in diameter. If you place 84 million barrels side by side—they reach around the world at the equator some 25,000 miles. Each day, we light them on fire and burn them up. We repeat that burning every single day of the year! Little wonder historians sharpen their quills with the realization that gasoline cannot last forever.

This week, Brian Williams at NBC reported gas prices in Europe range from $9.00 to $9.50 a gallon. Can the U.S. be far behind? Such prices portend sweeping changes for the American way of life!

“As we go from this happy hydrocarbon bubble we have reached now to a renewable energy resource economy, which we must do in this century, will the “civil” part of civilization survive? As we both know there is no way that alternative energy sources can supply the amount of per capita energy we enjoy now, much less for the 9 billion humans expected by 2050. And energy is what keeps this game going. We are involved in a Faustian bargain—selling our economic souls for the luxurious life of the moment, but sooner or later the price has to be paid.” Walter Youngquist

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With that understanding, I spoke with former U.S. Naval officer Richard McPherson concerning America’s prospects in the coming years.

“America is at war,” McPherson said. “A war we must win. World War I was not won ─ people quit fighting, thereby leading to World War II; it was won! Combined--World War I and World War II took 110 million lives. To win requires a tremendous amount of energy, plus the leadership America needs to prosecute the war and win.

“I rank oil companies in a different way than Wall Street. Oil companies operate globally. They are bound by thousands of conflicting regulations, and a management team wanting to keep their jobs. I look at world oil consumption, production, refining and reserves by country, and what the economics and political reality are of who will get oil, and what oil companies are doing to stay in business--along with each country’s leadership to maintain security and its economy. Oil companies domiciled in the United States or on U.S stock exchanges bear additional burdens. It is amazing that oil companies have continued to function so well this long.

“Oil companies have been buying back shares of stocks with part of their profits. In 2004, Royal Dutch Shell announced a plan to buy back $2 billion of their own shares. Chevron announced recently they were planning to buy back nearly $15 billion worth of their stock. Exxon Mobil and Conoco-Phillips are also buying back shares. These four oil companies booked a combined $57.5 billion in profits in the first half of 2007, and devoted $22.9 billion of their earnings to repurchasing shares ─ around 40 percent of earnings. A stock buy back program essentially drives the price of a company’s stock higher as the company takes stock out of circulation. Profits are what they are supposed to generate for shareholders. Every day I am able to buy fuel is a good day.

“Some pundits say the money should be used for building new refineries or invest in alternative fuels, or used for exploration. Why? Where is the oil? If areas to drill were available, and the risk was acceptable those oil companies would be investing those areas. Evidently buying shares will provide the best return on investment (ROI) for shareholders. Their behavior is a reflection of what has happened over the past few decades. In spite of more taxes, fees and fines, oil companies delivered the goods, all while seeking reserves to refine into the products that keep the major economies of the world operating. When was an American oil company last able to build a new refinery in the United States? Or explore in all the known oil basins in the United States?

“It may take a decade or more to find and open new oil fields for production. Looking forward, oil companies see fewer opportunities, even with oil around $120 a barrel today to earn acceptable rates of return. While we live day-to-day, oil companies have planning horizons that go out decades. Increasing political instability here and abroad is an increasingly difficult risk to evaluate. Here are three recent observations about the state of oil:

* On ABC's Nightline (January 16, 2008), Terry Moran interviewed President Bush in Saudi Arabia, during his trip to the Middle East. When discussing what President Bush might say to the King of Saudi Arabia to lower oil prices, George Bush said: “If they don't have a lot of additional oil to put on the market, it is hard to ask somebody to do something they may not be able to do.”

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* The latest Market Term Oil Market Report (OMR) issues a stern warning in its first sentence. "Despite four years of high oil prices, this report sees increasing market tightness beyond 2010, with OPEC spare capacity declining to minimal levels by 2012."

* January 22, 2008, Jeroen van der Veer, Chief Executive, Shell Oil to Shell employees, on the Shell website: “We are experiencing a step-change in the growth rate of energy demand due to population growth and economic development, and Shell estimates that after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.”

“Nothing is as important as America’s national security and the energy to fuel the economy,” McPherson said. “Almost everything else is just noise. As you finish reading this, ponder the future of a child born today.”

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Frosty Wooldridge Bio: Frosty Wooldridge possesses a unique view of the world, cultures and families in that he has bicycled around the globe 100,000 miles, on six continents and six times across the United States in the past 30 years. His books (more...)

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