A wise person once defined insanity as doing the same thing over and over again and expecting different results. In the wake of civil unrest mounting in the Middle East and skyrocketing energy prices, it’s safe to say that our nation’s backward energy policy continues along the path of lunacy.

For decades now, our nation’s energy policy has brought about significant economic hardship that otherwise could have been avoided. From the oil embargo of the 1970′s to constant price fluctuations dictated by OPEC nations, the U.S. remains handcuffed by energy dependency from unfriendly and unstable countries. The drumbeat has always remained, “Relieve our nation’s dependency on foreign oil.” But today’s problems bring more importance to another familiar mantra, “Ensure our nation’s energy security.”

The political turmoil sweeping across countries like Egypt, Libya, Bahrain, and Tunisia have resulted in rising oil and gasoline prices, increased inflation, devalued currencies, and diminishing stock values. According to the AAA, American consumers are now paying an average of $3.17 a gallon for regular gasoline and prices could easily top $3.50 by the summer driving season. The two-year high of oil and gasoline prices should be significant warning signs for the Administration and policy makers in Washington. Unfortunately for U.S. consumers, no one is taking action to alleviate the strain on their pocketbook.

Earlier this week, Saudi Arabia’s oil minister sought to reassure us all that OPEC was ready to pump more oil to compensate for any oil supply decline. Whether or not Saudi production being dumped into the market will alleviate short- term price increases, the issue of continual market fluctuation is still a long-term and serious issue to our nation’s security.

Like all previous decades, the Administration and U.S. policy makers are doing nothing to solve this perpetual issue. In fact, the President and his cabinet are supporting and continuing the same faulty energy policy. At a White House Council on Jobs and Competitiveness meeting, U.S. Treasury Secretary Timothy Geithner noted that there are substantial reserves across world economies, and that this excess capacity would help economies cope with disruptions. President Obama echoed his remarks by saying, “We actually think that weâ•˙ll be able to ride out the Libya situation and it will stabilize.”

Instead of protecting ourselves from economic disaster and increasing energy production, the Administration continues to prohibit access to nearly 99.9% of our nation’s energy reserves. With the continued de facto moratorium in the Gulf of Mexico and federal policies limiting development on most federal lands, our country now has the largest prohibition to natural resource exploration in the world.

The only way to solidify our energy security and break the chains of foreign energy dependency is to expand and increase our domestic oil and gas production. Echoing the words of Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, “Every single additional barrel of oil produced in America is one barrel fewer that we need to import — and as we produce more at home, we employ American workers and produce revenues for all Americans.”

Louisiana Oil & Gas Association – Don Briggs -

While the United States continues its moratorium policy of locking up 85% of its natural resources from exploration and development, the Red Dragon is continuing her desperate quest for oil, locking up every oil deal it can get hold of.

China is now “Big Oil”, knowing full well the world economic downturn provides economic opportunity. China is investing heavily to secure oil and natural gas concessions for their growing economy, which is growing at the rate of 2% in a time the world is in an economic recession.

The Red Dragon’s oil demand has grown from 4.8 million barrels of oil per day in 2000 to 8 million barrels today, a whopping 67% growth. In comparison, the U.S. growth for that same period is basically flat. China imports 50% of their crude oil demand. Growth in Chinese oil consumption has accelerated mainly because of a large-scale transition away from bicycles and mass transit toward private automobiles. It is estimated that by year 2010 China will have 90 times more cars than in 1990. With automobile numbers growing at 19% a year, projections show that China could surpass the total number of cars in the U.S. by 2030.

With China’s crude oil demand growing at 20% a year, there is great concern over the growing dependence on outside sources for energy. China knows for her economy to continue as the world’s new industrial giant, she must secure oil reserves for the future. China is also aware of the economic reality of taking advantage of today’s economic crisis.

With a $2.3 trillion pile of cash, the Red Dragon is well positioned to wheel and deal in the world energy market. China imports 58% if its crude oil from the Middle East. A report by the International Energy Agency predicted that by the year 2030, Chinese oil imports will equal imports by the U.S. today.

In the past seven months:

· China signed a contract with Russia to construct an oil pipeline from Russia directly into China, supplying China with a 20-year oil contract. The contract is estimated to be worth trillions of dollars.

· In Africa, China is working to purchase a $1.3 billion interest in an Angolan offshore development from U.S. Marathon Oil.

· In Iraq, China is rumored to be buying an interest in Iraq’s Rumaila oilfield from BP. The Rumaila oilfield is Iraq’s largest oilfield, producing one million barrels of oil per day.

· In Brazil, China is rumored to be working with Brazil’s Petrobras in developing Brazil’s recently discover monster field offshore Brazil.

Closer to home, rumors were abound this year that China would soon be drilling off the southern tip of Florida in Cuban waters.

While China is locking up oil supplies that will provide her with energy for decades, Western oil companies are on the outside looking in. As the world’s largest crude oil consumer, the U.S. is falling behind in the world oil game.

Is that as bad as it seems on the surface? Maybe not. Seventy six percent of our domestic oil consumption is used for transportation. Why not ease the pressure of growing oil imports by using our own home grown natural gas to power the engines of our trucks and automobiles. Now that is a good idea.

By Don G. Briggs, President – LOGA (Louisiana Oil & Gas Association)

Who do you believe? Today the United States imports 70% of the oil needed to run the engines of our country. For the most part these countries do not like us. Seventy-five percent of our nation’s oil consumption is use for transportation. Do you believe our national security is at risk with such an arrangement?

On January 7th, just two weeks ago, Russia closed the valves of the pipelines providing the transportation of natural gas to the EU (European Union) and Ukraine. Russia claims that Ukraine is stealing gas as it passes through Ukraine to European Countries.

Today ask the people of the 27 member countries of the EU or the 15 former Soviet and Soviet satellite countries if they believe Russia is will open the valves and start pumping the natural gas needed to heat their homes, and run their factories? Do they believe Russia will honor contracts that are vital to their energy needs?

Twenty-five percent of the EU’s natural gas is imported from Russia. Eighty percent of that is transported to the EU countries through Ukraine, via pipeline. Germany imports 39% of its natural gas consumption from Russia, Turkey 65%, Greece 82% and Italy 31%. Bulgaria imports 92% of its natural gas from Russian, via Ukraine, and is the hardest hit by the shut down.

“When you look at an iceberg, are you seeing the whole iceberg or is it actually much larger,” said Paul Hilliard in a discussion about this issue. “Here’s the other side of the story” as Paul Harvey would say.

Ukraine was part of the Former Soviet Union and unlike most of the former Russian satellite countries Ukraine has developed a friendly foreign policy toward their EU neighbors to the west. Ukraine has joined the World Trade Organization, to Russia’s aversion and is working to be a member of NATO and possibly the EU.

More of the iceberg; Gazprom, Russia’s 51% state-run natural gas company is finding itself in severe financial difficulties after squandering the massive profits from the past years’ high gas prices, which imperils the energy dependent Russian economy. How do you fix low gas prices? Close the valve and then raise prices, which you will see Gazprom do.

One more piece of the iceberg; Russia is sending a message of a more aggressive foreign policy to the EU and the West, saying they carry a big club and it could be used on them as it is on Ukraine if they continue to give support to Ukraine and recently to Georgia. Russia, in the past years, has made it clear they want to regain their place as a world power.

In the meantime, while Russia and Ukraine negotiate a settlement, factories are shut down and tens of thousand of people are left in the cold of their homes. When a settlement is made it will take weeks to get the gas system back on line. Natural gas storage facilities located throughout the EU are rationing gas. However, inventories are running dangerously low.

With turmoil throughout the world you cannot help but ask yourself, “Who do you believe? Do you believe politicians? Do you believe Wall Street? Do you believe the bailouts? Do you believe our energy security is at risk?

Oct. 4, 2008 | By Don G. Briggs, President – LOGA

While the United States and European countries are struggling for economic survival, the Big Bear has awakened and is roaring into the 21st century. Russia has emerged from its collapse of the 1980s and has positioned itself as a leading power. The big difference this time around is that Russia is not flexing its military muscle, but using its vast oil and gas reserves to influence politics and economics of countries in Europe, South America, the Middle East and yes, the United States.

The USSR (Soviet Union) collapsed and broke apart in the mid eighties when oil prices dropped delivering financial chaos to their oil income dependent economy. Russia’s economic collapse ended the Cold War with the United States. Twenty years later the pendulum has swung to the other side.

Russia is the largest crude oil producer in the world with production at ten million barrels per day or 12% of global production, and has the largest natural gas reserves in the world. Through Russia’s vast oil and natural gas pipeline infrastructure Russia provides close to 30% of the EU’s (European Union) natural gas supply and 25% of the EU’s crude oil supply. More than 6,000 miles of pipeline projects supplying oil and natural gas to the CEE (Central and Eastern European) region are currently in progress.

Russia’s economy is experiencing unprecedented growth, with real gross domestic product (GDP) of 8.1 percent in 2007. Russia has better than $800 billion in reserves.

Russia has positioned itself to be able to control the flow of oil and gas into Europe, and in doing so, can control Europe’s financial markets, economies and transportation. “Gazprom (Russia’s Natural Gas Company) and by extension, the Russian government, are already beginning to enjoy a power over their European neighbors far beyond the dreams of the Romanov czars or the Communist Party general secretaries.” said Mr. Goldman, professor emeritus at Wellesley College.

Having the power and using the power are not always the same, but Russia has already demonstrated its desire to wield its axe. In recent years Russia has cut off oil and natural gas exports to countries it supplies on more than 40 occasions, always sighting flawed reasons. Moscow denies it uses energy as a political tool.

Russian influence in the energy markets and industry is expanding far beyond its boundaries. On September 26, 2008 “Russia and Venezuelan officials signed agreements meant to bolster cooperation in the oil and gas industry, playing up energy ties between two nations trying to decrease U.S. influence around the world.” Said Steve Gutterman.

At the same time Russia’s Prime Minister Putin vowed to make relations with Chavez and Latin America a top Russian foreign and economic policy priority offering to discuss arms sales and possibly help Venezuela develop nuclear energy. Since 2005 Russia has signed contracts worth more than $4 billion to supply Venezuela with fighter jets, helicopters, and assault rifles.

“Russia needs to take an active position on influencing the current market price of oil. There needs to be a Russian Factor,” said Russia’s Oil Minister, Sergei Shmatko. Shmatko went on to say, “We keep talking about OPEC….but we believe that we occupy such a high place in the world’s oil community that Russia should emerge as an active factor.”

Have you ever heard of “Lukoil”? “Lukoil” is Russian – owned oil company with better than 3,000 service stations on the US Eastern seaboard. Lukoil now has 24% of the market in New Jersey and Pennsylvania and is expanding elsewhere.

Is this all getting “cold” again?

By Don G. Briggs, President – LOGA (Louisiana Oil & Gas Association)

Mexico’s oil production is in a dangerously steep decline. Why should that matter to the United States? Because Mexico exports 1.2 million barrels of oil per day to the United States which is 8% of the U.S. supplies. Mexico ranks third behind Canada and Saudi Arabia in exports to the United States. In an already tight oil market it would be difficult for the United States to find another million plus barrels. And if we could, it would likely come from a shakier supplier.

In a recent televised address, Mexico’s President Felipe Calderon warned “We must act now, because time, and oil, is running out on us.” Analysts estimate at the current rate of consumption Mexico’s oil production could last 9.2 years and exporting will end in less time. “Unless something is done quickly to allow Pemex (Petroleos Mexicanos) to operate more as a real oil company, and not as a bureaucratic state-run firm, it will become a marginal exporter in the very short run”, says David shields, a Mexico City-based energy analyst and author of two books on Pemex. This would be a national disaster.

Mexico’s oil revenues account for 40% of their federal budget. For decades Pemex has been the cash cow for each president, providing the revenues for social programs, operating expenses, and government salaries. The majority of the Pemex revenues go first to union corruption, then to the federal budget and what is left over goes to operate Pemex. Even with revenues from almost $100 oil, Pemex went into the red in 2007, while oil companies around the world reaped record profits.

Mexico nationalized its oil industry in 1938. Taking the oil fields from foreign companies and standing up against foreign businesses, was more than just nationalizing the oil industry; it was an historic event in Mexico’s history. “In the rest of the world, oil is a commodity, in Mexico it is a symbol of sovereignty and nationalism”, said Hermenegildo Castro, a Senate aide.

The short story is, Pemex is broke and in debt; and since nationalizing the oil fields in 1938, has not been allowed to partner with foreign companies to develop potential oil fields. Mexico’s constitution declares that all oil belongs to the state and bars Pemex from conventional contracts with international oil companies. Mexico’s largest oil field Cantarell, which is the second largest oil field in the world, is in an annual decline rate of 15%. Mexico’s congress has known for several years the fate they are now facing and have done nothing to prepare for it. The continued rise of high oil prices has disguised the decline in production.

The good news is Mexico’s largest potential reserves are believed to be in the deep waters of the Gulf of Mexico. The bad news is Mexico does not have the technology, money or trained personnel to explore in deepwater and Mexico’s constitution bars Pemex from partnering with foreign oil companies.

Mexico’s President, Calderon recently introduced legislation that will give Pemex the ability to contract work out to private companies, manage its own revenues and raise cash by issuing bonds that only Mexicans could buy. Oil expert David Shields said Calderon’s energy reform bill is a good start, but falls short of making the seeping changes necessary to set Mexico’s ailing state oil company back on track. The bill does not allow companies to share in oil revenues and is not currently generating enthusiasm from international oil companies.

Deepwater exploration takes 5 to 10 years from the start to the gasoline pump. “We must act now, because time, and oil, is running out on us”, warned President Calderon.