http://www.cfr.org/p/pubs/Energy_TaskForce.html

Under the above URL, the Council on Foreign Relations offers this clear, unusually comprehensive and detailed analysis of the energy crisis, which is highly recommendable. In the following, I am posting only a small paragraph to reflect the candor with which the report is written.

STRATEGIC ENERGY POLICY CHALLENGES FOR THE 21ST CENTURY

Report of an Independent Task Force Sponsored by the James A. Baker III Institute for Public Policy of Rice University and the Council on Foreign Relations.

....snip What are the potential effects of the critical energy situation for the United States? As the 21st century opens, the energy sector is in critical condition. A crisis could erupt at any time from any number of factors and would inevitably affect every country in today’s globalized world.

While the origins of a crisis are hard to pinpoint, it is clear that energy disruptions could have a potentially enormous impact on the U.S. and the world economy, and would affect U.S. national security and foreign policy in dramatic ways.

An accident on the Alaska pipeline that brings the bulk of North Slope crude oil to market would have the same impact as a revolution cutting off supplies from a major Middle East oil producer. An attack on the California electric power grid could cripple that state’s economy for years, affecting all of the economies of the Pacific Basin. A revolution in Indonesia would paralyze the liquefied natural gas (LNG) import-dependent economies of South Korea and Japan, affecting domestic politics and all of their trading partners.

While oil is still readily available on international markets, prices have doubled from the levels that helped spur rapid economic growth through much of the 1990s. And with spare capacity scarce and Middle East tensions high, chances are greater than at any point in the last two decades of an oil supply disruption that would even more severely test the nation’s security and prosperity.

The situation is, by analogy, like traveling in a car with broken shock absorbers at very high speeds such as 90 miles an hour. As long as the paving on the highway is perfectly smooth, no injury to the driver will result from the poor decision of not spending the money to fix the car. But if the car confronts a large bump or pothole, the injury to the driver could be quite severe regardless of whether he was wearing a seatbelt.

An energy crisis need not arise abruptly. One can emerge through slower contagions. Electricity outages already have our most populous state in a vice and are threatening to spread from California to other parts of the country. Natural gas is available to heat homes and run power plants in some parts of the United States only because prices soared over the winter to many times previous historic peaks.

Gas markets dealt successfully with a supply shortage, but only at the cost of driving a few lower priority industrial users to close plants and lay off workers, and many to desert gas for fuels that were more polluting. If economic growth continues, price spikes and supply shortages could become widespread recurring events challenging expectations of free energy and making the United States appear more similar to a poor developing country....snip...

-- Swissrose (cellier3@mindspring.com), April 14, 2001