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  • Morning Bell: Is America Prepared for a Saudi Oil Crisis?

    Think fueling up your car at $4 a gallon is rough? How would you feel about paying more than $6.50? Add on top of that massive job losses and a drastic drop in U.S. economic productivity, and you’ll get the picture of what life in America would be like if oil stopped flowing from Saudi Arabia.

    It’s a scenario that’s not entirely out of the realm of possibility. Over the past year, the world has watched the Arab Spring spread across the Middle East, toppling regimes in Tunisia, Egypt and Libya. Were massive social upheaval to strike Saudi Arabia, the conditions could be ripe for the country’s oil spigot to be shut off to the Western world.

    Heritage Foundation scholars devised a hypothetical scenario of what such an uprising would look like, the consequences the world would suffer, and steps the United States could take to avert an economic catastrophe. But because of America’s dependence on foreign sources of oil, pain cannot be entirely avoided.

    In the Heritage hypothetical, reformers in Saudi Arabia would begin to voice their calls for genuine democracy, transparent government, equal rights for women, and greater political, social and personal freedoms. Their messages would begin in social networks like Facebook and Twitter, and they would grow into grassroots uprisings on the streets. Shi’a and Sunni religious radicals would join in, the crowds of protesters would swell, and ultimately Saudi forces would clamp down, firing on the peaceful protesters in order to quell the uprising. And this is where all hell would break loose.

    Watching from afar, Americans would learn of protesters seizing oil fields and attacking infrastructure. Fighting would damage key energy facilities, Iran would stoke the conflict by providing Saudi Shi’ites with money, arms, propaganda support and training, and ultimately the Saudi dynasty would collapse as a new Islamist regime rises to power. Wahhabi clerics and elements connected to al-Qaeda in the Arabian Peninsula would seize power and expel all non-Muslim foreign workers. With the loss of skilled workers, all Saudi oil production would cease — along with oil exports.

    And here is where the damage to America would begin. Even with tapping the Strategic Petroleum Reserve (SPR), the United States couldn’t compensate for the loss of oil. (And it would be worse off if the SPR were prematurely released for political purposes).

    Gasoline prices would jump to more than $6.50 a gallon at current market levels, petroleum prices would climb from $100 to more than $220 per barrel, more than 1.5 million jobs would be lost, and by the time energy markets recover, America would lose $450 billion in GDP.

    In the event of an economic crisis like this, Heritage experts write that the free market is the best instrument to ride out the storm, and that government’s task is be prepared to support that effort rather than to jump in and try to tell markets what to do. Here at home, the government should tap the SPR while also permitting the development of North American natural resources — that means opening up lands in the Arctic National Wildlife Refuge and offshore in the Pacific, Atlantic and the Eastern Gulf of Mexico. In addition, the government should allow the construction of infrastructure like the Keystone XL pipeline to deliver petroleum to suppliers. And since these resources take years to develop, Heritage’s experts recommend that the U.S. government begin to pursue these policies today so that America can be prepared to absorb a disruption of its energy supply.

    There are other measures, too, that the United States should take. The military must stand ready to ensure that trade through international waters — such as the Strait of Hormuz — can continue. On a diplomatic front, the United States should lead international efforts to mitigate the crisis and work to ensure that allies and friends don’t strike separate deals with other resource-rich countries, such as Iran and Russia. Their demands, in return, would be contrary to U.S. interests.

    Heritage’s experts warn that, “A crisis in Saudi Arabia would have drastic implications for the United States, its economy, and the whole world.” There are steps the U.S. government can take today to help America become less dependent on foreign sources of oil. And in the event of a crisis in which the oil stops flowing from overseas, Washington must prepare for domestic and international efforts to soften the blow to the American people.

    Quick Hits:

    Posted in Energy [slideshow_deploy]

    54 Responses to Morning Bell: Is America Prepared for a Saudi Oil Crisis?

    1. Jeff Dover says:

      The "crisis" isn't in Saudi Arabia. It's right here. And it's not just Democrats. How can you explain all but three Representatives in the Republican-controlled House, voting for HR 347 to abridge political speech wherever people are protected by the Secret Service? How much longer before the "secret service" begins making "secret arrests"?

    2. Mary......WI says:

      I agree!! I'll add it to my political wish list.

    3. ThomNJ says:

      Suffice to say that our self-invoked dependence on Saudi oil was and is plain stupid. We don't need drop one of their oil.

    4. Al Viggiani says:

      Wow, you just put all the pieces of the puzzle out there and they fall right into place all by themselves. A very real picture of what we are in for. Now we have to find ways to survive it because they are on the home stretch. We will NOT submit!!. This is a very sophisticated plan and it is on auto pilot and we will have to live for another day, so we can take back our country. This is Global.

    5. Lee Farquharson says:

      This is why the United States should develop and exploit its own oil and gas reserves, build and update refineries, and start constructing fossil fuel and nuclear electrical power plants. Our coal and natural gas reserves would help us with fuels for electric generation and, with gas, heating fuels. We could also convert vehicles to natural gas fuels.

      Additionally, with our oil and gas reserves, we could actually become a net exporter of energy to our allies.

    6. Jim Uberti says:

      And yet, we have all those "Green" folks applauding Obama's foot-dragging(although HE claims to be using "all of the above") and believing, that, with a snap of the fingers, we will have alternative energy, battery-driven cars, solar panels, etc., that will make oil obsolete.
      We have known for years that the Mideast could erupt at any time, and , yet, we continued to use imported oil while not building new refineries or accessing our own resources. And this was true of both Democrat and Republican Administrations.
      The fears are becoming reality. It may be late in the game but we need to step it up right now.
      Obama lies when he applauds himself for the amount of energy being produced in this country. It's time to stop lying and start doing. He's taken his shot at "green" alternatives and done nothing more than blow a lot of money.We need oil for the forseeable future.

    7. John A says:

      This frightening scenario clearly shows the shallowness of Obama and his weak and lame foreign policy if one can even call it such.
      On top of that, there is no excuse for pushing hybrids and green tech for immediate relief, and ignoring the fact that the consumer does not want them. Right now we need a maximum suppy of crude from reliable sources and not political bullshit.

      • william childress says:

        We know the grave possibilities that are in the horizon for the American people but question is this: What can the American people do when their elected officials blow us of and they will do what ever want. I'm sure BHO would love for this scenario to happen to us and it would not surprise me if the term limits of two terms for the president would change to unlimited terms so that BHO could rule our great nation for ever just like the dictators.

      • Al J says:

        Absolutely right John. The U.S. should be developing our own oil resources on an accelerated pace and there should be a moratorium on all of those crazy EPA regulations that are killing our natural resource development. But, that is all contrary to Obama's plan to shut down our oill and gas industry. There's an election coming in Nov that ought to be a landslide against all of the outrageous Obama policies. All Americans must WAKE UP!

    8. toledofan says:

      At some point, America has to get serious about protecting our national security and developing a comprehensive energy policy that shelters us from the commotions of the middle east. Both partiers have to share the blame but the lions share of the lack of a comprehnsive energy policy has to be shouldered by the Democrats and the far left extremist who would rather save a minnow that heat your house. It is time for America to start taking care of herself, protecting our citizens, our borders and our future.

    9. Rich White says:

      What about Venezuela and Brazil who also have ties to Iran. If they cut us off that would do far more damage.

    10. Inverbrass says:

      This is not rocket science and people with any common sense have understood this for years. The first step in the progression to become less dependent on or independent of foreign oil is to get rid of Obama. Obama poses the most dangerous threat to our nation, our economy, our culture, our way of life than any other individual in the history of our country. Dismantling the EPA or drastically curtailing its powers is crucial. Any organization that puts the well being of a sand lizard above that of citizens is no better than Obama and his cult following. Obama, Holder, Pelosi, Reed, Biden, Clinton and Napolitano are enemies of the United States and should be treated as such before it is too late. These people are dangerous to our way of life.

    11. Gerold says:

      Yes, I hear the 'fear factor' about high oil prices. And yes, if the supply is reduced in the middle east, prices would go up. But what of supply of domestic oil? Clark Howard, the local consumer advocate, has stated the oil usage and supply are almost at an equilibrium here — NOW. We even sell a surplus of gas to outside sources.
      –Can anyone "reduce" gas prices? Not without controlling prices. We found out what price controls produced in the 70s — gas shortage as the companies reduced the supply of gas to match the price at the pumps. Remember the lines at the pumps?
      –But on the brighter side, high gas prices are necessary to make alternative energy cost effective. With $6 gas, you will consider natural gas or electric cars….seriously.

    12. bentonmarder says:

      Therare also the persistent observations that the Saudi oil reserves might not be what is commonly stated. These proven reserves may be much lower than we realise. This could well be the case with the other oil states. Why should the reserves be overstated? It is a matter of political and military alliances. If the oil reserves are much less than stated, the value of the alliances is diminished. Is it worth our while to maintain thse alliances if and when the oil reserves are used up? There is also the 'last man standing' policy of long establishment. We import until we cannot and then use our own resources, having depleted the others. Cynical but practical. We pay in bumfodder and magnetism, which the Fed can conjure out of thin air—not gold or any thing else of intrinsic value. Just fiat currency.e

    13. Godfrey says:

      Cited on my photo blog from the heart of it all.

      Porches of Dayton: Americana in the Midwest http://americanadyt.blogspot.com/

    14. Richard says:

      If it's only about oil and all things related to it the answer is simple.
      Groups and individuals can prepare to be in the position not to consume

    15. john Guy says:

      There is a slight oversight with your analysis. (1) The expulsion of all non-muslim workers would shut down Saudi Arabia. Very few work there and the dictatorship, to appease the masses, gives everything away. By not selling oil to the West, the Saudi economy which is solely oil, would collapse. We may pay $6.50/gal but they would starve.The Saudis need the West, the West doesn't need the Saudis.

    16. Jim Gregory says:

      Maybe it is time to truly explor the massive amounts of oil under our own soil. According to recent surveys we are setting on more oil than all of the middle east combined.

    17. stephen says:

      So Scary, like the boogey man is coming! Drill and Drill now!

    18. Wes Evans says:

      We should be but we are not. Bush the elder stopped the survey of offshore areas, Clinton vetoed the expansion of oil development in Alaska , Bush the junior did not push for increased production and Obama has had an anti fossil fuels- anti oil agenda so the country when combined with Canada is not prepared for an immediate disruption of mid east oil. We could be and we with Canada could be an exporter of petroleum products. We have it in the ground but too many politically powerful and foreign interest have blocked it's development. The current administration beeing the worst. It is worth remembering that Western Europe looks to America to guarantee their petroleum supply and we are loosely tied to their economy. If Europe goes down we Americans will suffer economically.

    19. Paul says:

      We the people of America could help towards overcoming this oil shortage problem by Canada oil, mid/west oil and/or getting oil from South America Brazil which we are too proud to associate with.

    20. Curt Krehbiel says:

      "There are steps the U.S. government can take today to help America become less dependent on foreign sources of oil."

      The U.S. government under the Obama administration would welcome this scenario. It would serve as fitting punishment for those cheating one percenters that hoard all that money that should be given to the "poor".

    21. Keith White says:

      This administration has done all it can to slow oil production in the US. Production is up, not because of Obama, but in spite of Obama but unless there is a change soon we will see all energy costs soar, but that is what Obama wants to make the green stuff look better. This administration has canceled federal leases and most offshore drilling and made drilling for oil or gas on federal land almost impossible. The increases in oil production is because of drilling on state and private land.__If Obama keeps the same energy policy going forward that he has followed the last three years we will be in a very vulnerable position that is dangerous to the security of the United States and taking oil out of the strategic oil reserve now is foolish and make us more dependent on foreign oil. instead of putting our money in Brazil to finance their drilling offshore SO WE CAN BE THEIR BEST CUSTOMER, we should be drilling our own oil so we aren't as dependent on foreign oil.

    22. The Real World says:

      Womens rights and Islam I don't think so. You are out of your minds.

    23. David says:

      Why not start a program to retrofit gasoline engines for natural gas? We have an abundant supply and this would immediately free us from the Saudi problem. This would also stop the need for battery driven vehicles.

      • Bobbie says:

        In the words of satire, because it makes sense and works. But we don't need a "program," just a clear road to do it free from government and their hidden agendas that cost and hinder with intentional overwhelming sacrifice put on the innocent lives of people.

        America had equal opportunity under common law and rule that Obama and the like before and presently with him, has and continues to destroy! Private sector business doesn't have hidden agendas that effect their consumers right to freely choose their business without losing their business. Government and their lack of all good human qualities and decencies, just keeps going and going and going paving their way to power, control and everyone's earned money, that leads to America disabled because they can…

    24. Yes, I hear the 'fear factor' about high oil prices. And yes, if the supply is reduced in the middle east, prices would go up. But what of supply of domestic oil? Clark Howard, the local consumer advocate, has stated the oil usage and supply are almost at an equilibrium here — NOW. We even sell a surplus of gas to outside sources. Can prices be reduced by ANYONE? With global prices going up, only price fixing will hold our pricing down. But that didn't work in the 70s, when the companies rationed gas (set supply according to the price at the pump. But the UP side to this is as prices go up, green energy becomes cost effective. At $6 for gas, I WILL look at natural gas or electric cars.

    25. The situation with Saudi oil and the problems that could develop from the downfall of the Saudi regime is just another warning that will be put on the long list of warnings we have been hearing now for at least the last ten years. The list of catastrophic events that have been predicted to happen in the near future will just get longer until these catastrophic events start happening. People just don't believe catastrophic predictions until the predictions start coming true. Those that do believe they will happen are labeled radicals that believe nothing but gloom and doom. I guess I'll see you all at the bomb shelter that hasn't been built yet.

    26. Lloyd Scallan says:

      Do we not realize Obama is deliberatly attempting to collapse our ecomonical system by not allowing us to tap into the billions of ballels of oil under our soil and seas. We must remember oil does not effect just the price at the pump. Oil price effects every one of our indurtries and every part of our lives. Obama continues to parrot the same distorted lie that we have only 2% of the world's oil. Obama is forcing us to depend on foreign sourses because when we send our dollars overseas, two of Obama's goals are reached. "Wealth redistribution" to third world countries (including Brazil who's leader is a former revolutionis that attempted to overthrow that government) and to drive the price of everything we use in our daily lives to such a high level, the people will scream for relief. Obama will then step in with his final plan of total government control, socialism.

    27. Jeanne Stotler says:

      We have the source in our own country all we need is to drill and refine. We have a president that MUST have a lot of his money invested in in air and solar, we need the oil that is in our ground and free us from OPEC.

    28. Inverbrass says:

      The first step to solving our energy problems is to get rid of Obama.

    29. Mike in NC says:

      Never let a crisis go to waste. What I mean by that is you can do things you couldn't do before. Rahm Emmanuel said that when he was a cheif henchmen of Obama in the White House, and if there's one thing such patently opportunistic, vote-buying, Statist government power and money-grabbing politicians, etc., always have done, continue to do, and always will do, as repeatedly shown by history to this day, it's make a practice of those words, i.e. take advantage of any present and/or possible crisis as it suits their government power-growing, liberty decreasing agenda. The verifiable fact is we (the U.S.) do have within reach enough oil and gas resources to free ourselves from dependence on foreign resources such as Saudi Arabia, and simultaneously use, develope, and invent other sources and technologies to make them equal to and perhaps even replace some older ones, through constructive free market demand instead of destructive government-inflicted pain. However, to expect such as Obama and his accomplices to let that happen is to expect zebras to change their stripes…which is why we must get such as Obama & Co. out of power

    30. Stirling says:

      The administration would like nothing more then to use such an event to force people off oil. Thus our financial pain, is the green movements gain.. If you look at the administrations policies that have been put in place it actually limits our ability to use our own resources. Thus we are being boxed (forced) into a corner with the only choice to be the least desirable one.

      I use the word "Forced" because it's a comon trait of liberal policies, which rather then provide more options they give false choices, or limit choices.

    31. Rick says:

      Doesn't the US export refined oil products today?
      Are the Saudis really our friends? Collectively, No!
      Dump the current POTUS, collar Romney,
      and develop our own resources. Use the
      touted "..all of the above.." energy solutions.
      It's time!

    32. Juan Martinez says:

      Mr. Brownfield — perhaps you omitted the fact that the U.S., as well as the rest of the world as a whole, are less dependent on Saudi oil supplies as a percentage of their total energy consumption than at any time during the past 30 years? Perhaps you might inform your readers that gasoline prices in the U.K. (an oil exporter), Europe, Japan, China and most of the rest of the world already are higher than $6.50 per gallon? Your article is an extraordinary amalgamation of half-baked nonsense masquerading as analysis.

      Are you guys desperate for new subjects to address? Why not take up the Trayvon Martin case – it would be interesting to see how your readership comments on it, no?

      • Bobbie says:

        The question is in regard to the Saudi Arabian oil crisis so why your question about less dependent on saudi oil? What's the sense of comparing outrageous gas prices around the world just to suggest America's isn't there yet? How about getting the free market around the world to price their own? What's really your point Mr. Martinez?

        Something about Heritage you obviously aren't familiar with, they go by facts not everyones personally opinionated accusations but as long as you asked, Mr. Zimmerman should've been held for questioning so the public could come to terms thus then because his gun killed a human life that Mr. Zimmerman had been pursuing. Lots of circumstances though! Lots of game playing disrespects, ignoring the facts of a man Mr. Zimmerman's history shows him to have been.

    33. Al J says:

      Obama is setting us up for an economic disaster by preventing development and production of the billions of barrels of oil that we are sitting on right here within our own borders. We have more oil in our own backyard than anyone else in the world. Americans must wake up!

    34. George Streib says:

      One item overlooked, most of Saudi income comes from oil. If Saudi's stop exporting oil their government would collapse no matter who was running it. Also most of Saudi citiizens get huge governement subsidies from oil revenue. They would become a third world country overnight.

    35. Ron says:

      Sounds like a scare tactic to me. How could oil imports from Saudi Arabia cause so severe a fuel shortage in the U.S. when we import only 11% of our oil from them?

      Why couldn't the U.S. simply import more oil from the other top 4 producers we from whom we import our oil;
      Canada, Mexico, Venezuela and Nigeria?

    36. Bobbie says:

      What happens if Americans ignore the impracticalities of this government controlled crassitude?

    37. Twenty years ago Democrats blocked drilling, said it would take ten years to get the oil. Ten years ago Dems blocked drilling in ANWR, said it would take ten years. Ten years ago Canada started devoloping its reserves and now is a world leader in oil exporting. Independence from the radical environmentalists can be achieved on Nov 6.

    38. It is an outrage. And yes, it is also scary that Obama has put all his eggs (all our eggs) in the basket of one (1) kingdom—yes a “king, a queen, a prince,” etc. etc. to save our current energy needs—this is ludicrous. It sounds like science fiction—but no, we really have an “empty-suit” in the White House. Mr. Obama is an ideologue who does not live in the real world. Obama is still thinking like a radical on a college campus. He cannot transform himself into being a President who protects the interests of the United States, even though a majority of our voters elected him to that job in 2008.

    39. Hugh, Jefferson OR says:

      The solution resides within our borders to make us independent of all foreign sources. Get out of the way of our free market system, terminate stifling regulations and open up more of the unavailable (at least 95%) federally controlled areas for development.

      According to an Institute for Energy Research report (http://energyforamerica.org/wp-content/uploads/2012/01/Energy-InventoryFINAL.pdf), our technically recoverable reserves amount to 1.442 trillion barrels. A separate report by the Congressional Research Service (http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=04212e22-c1b3-41f2-b0ba-0da5eaead952), the U.S. has the largest endowment of recoverable fossil fuels in the world.

      If you research Methane Hydrates (a renewable methane gas) you will soon discover that this resource dwarfs all of our fossil fuels by a factor of two or more and Japan is starting a production program off their coast. There is little media coverage of this resource, except when they reference it in a negative manner such as a fouling agent in the capping device used by BP to plug their oil spill in the Gulf of Mexico or as a major leveraged contributor to global warming – at least 20 times more powerful than CO2. As long as the democrats and environmentalist have blocking powers, we will remain dependent on foreign sources

    40. Tom Drawert says:

      I thought Saudi Arabia was a minor supplier to the U.S. and that most imported oil was from Canada, Mexico, and Venezuela. We are vulnerable to action by OPEC. Am I wrong?

    41. Whicket Williams says:

      If the sheeple don't wake up and fight, the US is DOOMED RON PAUL< hope for america. The only one who is not a crook.

    42. Blair Franconia, NH says:

      North America has MORE oil than Saudi Arabia.

    43. Mike S says:

      When Rahm Emmanuel was one of Obama’s chiefs in the White House he said “Never let a crisis go to waste. What I mean by that is, you can do things you couldn’t do before”, and if there's one thing such politicians and their accomplices do, as repeatedly shown by history to this day, it’s act accordingly, letting neither the people nor any facts get in their way, such as: The verifiable fact is we (the U.S.) do have within reach enough oil, gas, and other resources to free ourselves from dependence on such as Saudi Arabia. However, to expect such as Obama and his accomplices to get out of the way and let that fact be demonstrated, and thus get in their way, is to foolishly expect them to change their government power growing, liberty decreasing ways when they are making it painfully evident and obvious they aren’t about to do that.

    44. Loretta Bates says:

      What is holding us up from using our own oil? And, I like David's suggestion.

    45. MMA1983d says:

      -Approve pipeline
      -Expand Canadian imported oil
      -Help Mexico find new oil fields
      -Once Chavez is out import more oil from Venezuela, and ethanol from Brazil
      -Increase our incentives for electric, hybrid, and natural gas cars!
      -Iraq is increasing output and that will help
      *Increased drilling on our soil will not reduce or even stabilize our prices since this oil will still be traded on the world's open market.
      **A diverse portfolio of energy sources will eventually ween us from being oil dependent; however, BIG OIL may not let this happen for at least 20 years. It will take them that long to develop a new mixture of fuel and infrastructure.

    46. Joe in Ozarka says:

      A crisis of some source will occur. It is the end of the cheap oil age. We have never lived without cheap oil and it is going to be tough. No one can predict how it will all go down but forget commuting 40 or 50 miles to work if, your company is still able to operate. No political strategy will create oil where it aint. Domestic resources are inconsequential overall. Hello GreenWorld like it or not. Think about it.

    47. Wayne Peterkin says:

      We have needed to develop all of our own resources for years now and eliminate our dependence of foreign oil. The resources exist and the only thing blocking the development of them is our own government. This article does little except highlight the national security risks we face from our dependency. The solution is for Americans to demand that the government stop the madness and develop our resources, all of them.

    48. Arrrrt says:

      We would just send troops in like in Iraq or kuwait and that would be the end of that.

    49. Arrrrt says:

      David…because is would shut down the uber greenies. And gawd forbid we do that ??

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