WORLD ENERGY REPORT
Courtesy Gordon B. Moody
Gordon B. Moody is the editor of the excellent Global Energy Outlook, with worldwide circulation. Here are some excerpts from the March 1997 Outlook:
The U.S. has long passed the peril point where oil imports threaten U.S. security, as designated by Congress The peril point was established as when the level of oil imports exceeds fifty percent of the oil used in the U.S. Senator Jesse Helms, Chairman of the Senate Foreign Relations Committee (which tracks oil imports) said, "Politicians had better ponder the economic calamity that would hit (the U.S.) should foreign producers shut down supplies or sharply increase their prices."
More than 84 million Americans now own stocks, double the number of stockholders in the later 1980s. Last year, the U.S. trade deficit was $186 billion, of which crude oil imports accounted for more than $54 billion. The implied threat by the Federal Reserve Chairman, Alan Greenspan, to raise interest rates has some Wall Street economists predicting that the dollar must keep rising in value, since other central banks are unlikely to raise their rates. This is a dangerous illusion. Foreign central banks don't have to raise interest rates to sink the dollar. All they have to do is to stop buying dollars. Sung Won Sohn, Chief Economist for Norwest Corporation of Minneapolis, says a steep 20 percent correction in the stock market could pare consumer spending by $100 billion and trigger a major recession. [As of 31 March 1997, a 7.5 percent drop in the Stock Market has accrued since January. Ed.]
Daniel Yergin, President of Cambridge Energy Research Associates recently said, "In two years, Asia will overtake North American as the world's number-one consumer of oil." When the U.S. oil imports passed 40 percent, President Jimmy Carter called for "The Moral Equivalent of War." "Actually, it has become the moral equivalent of indifference," according to Gordon Moody. Meanwhile, the U.S. oil industry has grossed half a trillion dollars. Now it is forecast that drilling for oil, such as that in the Gulf of Mexico, cannot provide sufficient oil to maintain current prices. "Put simply, the oil industry can no longer keep up with the growth in demand simply by turning on old taps, as it has been doing over the past decade. The oil service industry is operating at full capacity," say Gordon Moody.
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Apr. 27, 1997.