T. Boone Pickens: We Are Paying To Protect Chinese Oil

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Written by: T. Boone Pickens





The national press corps made a big deal about cybersecurity when President Obama met for two days with Chinese President Xi Jinping. And climate change. And currency manipulation. And even Smithfield Ham.

What did not appear to have been on the agenda was energy and oil, and particularly oil coming from Iraq. Way back in 2008, I met with President George W. Bush, as well as both Sens. Barack Obama and John McCain, warning them all we were paying far too high a price in American blood and treasure to make Iraqi oil available for the world market without the guarantee of anything in return.

I suggested we should have a “call” on Iraqi oil which would have given us, in effect, the first option to purchase that oil. I wasn’t suggesting we treat Iraq like a colony; we would pay world market prices for it if we wanted it, but that “call” would have required the Iraqis offer it to us first.

When Saddam Hussein was inpower, Iraq was under United Nations sanctions and their oil was not generally available for sale. When we toppled Saddam, sanctions were removed and the Iraqis – who have some of the largest oil reserves in the world – began, with our help, to rebuild their oil production. Today they are back to being one of the largest oil producing countries, and a key player in the world oil market.

We first entered Iraq in 1991 – 22 years ago – and who has come out the other end with their oil? The Chinese. According to the New York Times, China is buying about half the oil being produced in Iraq and “is angling for even a bigger share.”

So, including Afghanistan, we have fought wars costing us trillions of dollars and the lives of more than 7,000 American service members to effectively secure affordable oil for China, who sent no troops to help support the coalition. Even Tonga, with a population of 106,000, sent 55 troops.

Oil exported from Iraq is shipped through the Strait of Hormuz, a narrow neck of water at the southern end of the Persian Gulf. It is about 24 miles across in total, but the shipping lanes are only about two miles wide. It is bordered on one side by the country of Oman and on the other by Iran.

About 17 million barrels of oil pass through the Strait every day. Of that, about 1.7 million barrels – ten percent – comes to the U.S. The rest goes to China and other Asian nations, and to Europe.

Yet, Americans pay 100% of the cost of protecting those oil shipments from disruption. The U.S. Navy has kept two full carrier strike groups in the Persian Gulf for over a decade. In January 2012, the U.S. Navy announced a third carrier strike group would be sent to the “region,” though the Department of Defense has recently announced plans to reduce the number of carriers due to sequestration.

The cost to operate a Nimitz class aircraft carrier is about $690 million per year, not including the cost of approximately 70 aircraft per carrier, nor does the price include the cost to support that carrier with cruisers, destroyers, submarines, and other assorted vessels that make up a carrier strike group.

The U.S. has ten aircraft carriers currently in service and two in reserve, meaning a quarter of our naval air and sea power is committed to protecting Middle East oil supplies. China, on the other hand, has only one aircraft carrier which they purchased for $20 million from Ukraine. The vessel had to be towed to China and is currently only usable for training.

With oil above $100 a barrel and gasoline near $4 a gallon, and budget battles in Washington, the American public should be asking Congress: “Why are we paying billions of dollars a year to secure foreign oil supplies that primarily go to other countries?”

The answer the public would get is simple: We are dependent on foreign oil, so we put American lives on the line and pay whatever it costs to secure Middle East oil supplies.

So, what the American public should really be asking is: “How do we make the 1.7 million barrels of oil we get through the Strait of Hormuz unnecessary?”

The answer to that question is also fairly simple, though it requires a level of leadership Washington seems incapable of providing. America has incredible domestic resources and technology, but what we don’t have is a national energy plan for how to use these. Every administration since Richard Nixon’s has promised to reduce dependence on foreign oil and then failed to construct a national energy policy that focuses on domestic resources and energy security.

Seventy percent of the oil we import is used as a transportation fuel. We have 250 million cars and light trucks on American roads. Even if we get a million electric cars in garages across the nation by 2015, or 2018, or 2020, that would only be 0.4 percent of the total fleet. Not nearly enough to change our import requirements.

If our leaders in Washington would look to Governors, they would see that the states are beginning to deal with this issue by making the only alternative to foreign oil – American natural gas – more convenient for heavy-duty trucks.

The United States has the largest reserves of natural gas in the world. Using hydraulic fracturing techniques, we now have access to well over a 100-year supply.

As we’ve seen, we need a lot of cars switching to electricity or hydrogen or natural gas to make a material difference in light-duty vehicles.

However, we can make a real difference in our import needs if we move our 8 million heavy-duty trucks – 18-wheelers, refuse and recycling trucks, among others – from imported diesel to domestic natural gas. That can be done in in just five to seven years.

Trucks that go home to the “barn” every night are already easy to refuel. Over-the-road trucks tend to run the same routes on a regular schedule so putting liquefied natural gas refueling stations along major Interstate routes is a fairly simple logistical problem to solve – and it is being solved by private industry.

By introducing competition into our national transportation fuel system we would go a long way toward improving our own economy. By lowering oil imports we improve our balance-of-trade. By using a domestic fuel we improve the American job market. We will also improve our environment because natural gas is 30 percent cleaner than diesel. And we will be able to reduce our need for all of those military resources on constant high alert.

There are other ways to help. We can begin a measured draw-down of the Strategic Petroleum Reserve (SPR) and develop a North American Energy Alliance with our two largest oil partners, Canada and Mexico.

If the only reason we continue to spend so much money protecting Middle Eastern oil is because we’ve always done it that way, then the time has come to chart a new course.

American natural gas is abundant, cheaper, and cleaner than imported oil and, it doesn’t take a carrier strike group to protect it.

http://craigbushonshow.com/we-are-pa...t-chinese-oil/