Friday, November 02, 2007

Oil ShockWave Underscores Dangers of U.S. Oil Dependence

Oil ShockWave Underscores Dangers of U.S. Oil Dependence

Secretary Rubin: Risks to Economy and Security "Profound"


WASHINGTON, Nov. 1 /PRNewswire-USNewswire/ --

Securing America's Future Energy (SAFE) today conducted Oil ShockWave to simulate a global oil supply crisis and explore economic and strategic options for limiting the damage that could be inflicted by a major interruption of the flow of oil.


Former U.S. Treasury Secretary Robert E. Rubin, who led the simulation, remarked, "Oil ShockWave demonstrates the critical importance of preventative action in mitigating the risks of oil dependence. Once a major supply crisis occurs, the short-term options are extremely limited.


"The profound nature of the risks to our economy and security argue for concerted action to enact a national energy policy designed to reduce oil dependence."


In addition to Rubin, participants included: former Deputy Secretary of State Richard L. Armitage; CENTCOM Commander General John P. Abizaid, U.S. Army (Ret.); former U.S. Secretary of the Navy and 9/11 Commission Member John F. Lehman; 9/11 Commission Executive Director Dr. Philip D. Zelikow; former White House Press Secretary Mike McCurry; former EPA Administrator Carol Browner; and Pulitzer Prize-winning author Daniel Yergin.


In the simulation, unrest in Azerbaijan and Nigeria and souring relations with Iran combined to eliminate approximately 1% of world oil production, causing prices to top $160 per barrel. Designed by finance, energy, and national security experts, the scenario illuminated the fragility of the global oil market. With spare supply capacity almost non-existent and global demand continuing to surge, relatively small disturbances can inflict tremendous damage upon oil consumers.


This critical finding comes as Congress is debating whether to enact legislation that meaningfully reduces U.S. oil dependence.


The consequences of the oil-market disruptions in the simulation included gas prices in excess of $5.00 per gallon, two quarters of negative economic growth, double-digit inflation, and dramatically slower job growth. As the participants grappled with the crises, these economic outcomes severely constrained U.S. foreign policy options.


"We cannot afford to govern reactively or legislate the lowest common denominator. We hope that Oil ShockWave will help this critical policy issue become a critical political priority," said Robbie Diamond, founder and president of SAFE.


SAFE is an action-oriented, nonpartisan organization that aims to reduce America's dependence on oil and improve U.S. energy security in order to bolster national security and strengthen the economy.


Source: Securing America's Future Energy

CONTACT: Jonathan Grella of Securing America's Future Energy,
+1-202-461-2369, jgrella@secureenergy.org


Web Site: http://www.secureenergy.org/

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