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New Energy Bill: Reducing Our Dependence on Foreign Oil

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The U. S. economy is feeling the encounter of skyrocketing oil prices as the nation’s dependence on foreign oil continues to grow. We need a responsible energy plan to reduce our reliance on foreign oil. President Bush and Senator Kerry come to to be skirting the real issues involved.

Growing transportation requirements accompanying with declining domestic oil production have led to mature oil imports. Rising oil prices are having an in opposition impact on the U.S. economy as evident from recent economic data and stock market performance. We need a responsible energy plan which will keeping our transportation requirements with the necessity to reduce our dependence on foreign oil.

Rising Oil Prices.

Oil prices have been on a roll this year. As of courtly 10, crude oil prices have climbed over 45% since the start of 2004. A plenty of West Texas Intermediate recently recorded its all time high of $45.04 on the New York Mercantile Exchange. And this has happened despite the Organization of Petroleum Exporting Countries increasing its oil output.

Earlier in the year, the run up in oil prices was charged to surging demand for petroleum products due to a strong global economy. Then it was the unrest in Venezuela and Nigeria.

Concerns on security of oil supplies have heightened more recently. else to the pipeline disruptions in Iraq are kidnappings of foreign workers in the Middle East.

Yukos, the Russian oil company’s tax evasion dispute has taken center stage currently. With a production rate of 1.7 million a day (mmbd), Yukos is Russia’s largest oil producer.

While the underlying factors butt the dramatic increase in the price of oil this year are a propinquity of all the above, the impact is hardly comforting.

Weakening Economy.

Higher oil prices that work like an tax have the effect of holding down hiring, consumer spending, and corporate profits.

The July jobs report that was released by the Labor Department on baronial 6 was a disappointment. The U.S. economy farther a mere 32,000 to the non-farm payrolls, the lowest monthly development this year. The rate of employment growth is slowing as specialization confidence appears to be undermined by rising oil prices. High oil prices are also taking the bite out of consumer spending.

By some economists’ estimates, every $10 rise in the price of oil knocks 0.5% off of GDP growth and adds roughly the same the bottom line to inflation. The equity markets have been fixated with the trend in oil prices and have relentlessly spiraled lower since late June. On towering 6, the Dow Jones Industrial par deaf to reason at 9,815.33, its lowest level since Nov. 28 by reason of losing more than 300 points over the last two sessions. The technology heavy Nasdaq Composite Index is down over 11% since the start of the year.

The Root Cause: Transportation Relies on Foreign Oil.

A federation of declining domestic oil production and increasing oil consumption has left the U.S. increasingly dependent on foreign oil.

The U. S. Department of Energy’s Energy Information officialdom states that domestic oil production in 2002 was 5.8 mmbd, somewhere about 36% lower than the 9.0 mmbd produced in 1985. The total use of petroleum products on the other hand has grown from 15.2 mmbd in 1985 to 19.3 mmbd in 2002.

The lion’s share of oil consumption stems from transportation needs. In 2002, the transportation sector accounted for apropos of 68% of total petroleum use with gasoline tallying for two-thirds of the petroleum consumed in the transportation sector.

U.S. net oil imports have grown from 4.3 mmbd in 1985 to 10.4 mmbd in 2002. Net oil imports as a percent of U. S. petroleum product use has risen from 28% in 1985 to 54% in 2002.

Based on Sandia National Laboratories and U. S. DOE/EIA forecast, an appurtenant 7.5 mmbd of oil and petroleum products will have to be imported by 2020 to toll bridge the gap betwixt and between growing consumption and falling domestic oil production. In 2020, U.S. oil production will supply less than 30% of U.S. oil needs.

The Energy Bill: Long-Term Plan for Energy Security.

The picture the current events paint as a preview of the future is guiding star for concern.

On time-honoured 6, Democratic presidential nominee John Kerry outlined a $30-billion, 10-year plan to veer the U. S. towards energy independence. The plan includes tax breaks and incentives for carmakers and buyers, coal producers and temporary fuels research. President Bush responded saying Kerry's proposals mimic much of what Bush had as yet proposed but is stalled in Congress.

It will not be fairish if President Bush and Senator Kerry just reignite the energy debate. To sway naturalness to energy security, we need a comprehensive long-term national energy plan that will reduce our reliance on foreign oil while meeting the nation’s growing transportation needs.

Both supply and demand sides of the transportation issue will have to be addressed to make a meaningful impact in reducing the dependence on foreign oil. Steps to increase the supply of domestic transportation fuels including alternatives to oil will likely be required. So too will efforts to reduce per capita transportation fuel consumption.

Based on what has been outlined to date, neither the Bush proposal nor the Kerry plan appears to fully prowess the critical transportation issue. The House-Senate conferees have an opportunity to deliver a responsible energy bill to the President's desk for his signature. If the dependence on foreign oil is not reduced, the course of the U. S. economy and the stock market may well be shaped more by decisions made in Moscow, Riyadh, and Vienna rather than duck determined by the decisions made at home.

Notes: This report is for information purposes only. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. This report does not have regard to the specific investment objectives, financial situation, and particular needs of any specific person who may receive this report. The information contained in this report is obtained from various sources undisputed to be tactful and is provided without warranties of any kind. AlphaProfit Investments, LLC does not represent that this information, including any third party information, is unerring or complete and it should not be relied upon as such. AlphaProfit Investments, LLC is not responsible for any errors or omissions herein. Past performance is neither an indication of nor a guarantee for future results. No part of this document may be reproduced in any manner without written permission of AlphaProfit Investments, LLC.
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