Sleepwalking Toward the Oil Precipice

Remember a few week ago, Vice President Dick Cheney paid a visit to the Saudi's? The question du jour was how much longer will Saudi Arabia support the US$?

If the Arab oil kingdoms decide to ditch their dollar pegs to control inflation and diversify their overseas assets to earn higher returns in other currencies or in gold and commodities, the net result could be the loss of the US dollar’s reserve currency status.

Preserving the dwindling value of the petrodollar wasn't the only question on deck, there was also a request that the Saudi's boost supply and finally, there was the issue of Iranian "containment".

Well, a few weeks later, and V.P. Cheney has gotten his answer. Yesterday Dave Cohen presented a detailed and sobering discussion of what we can realistically expect from the Saudi's and from OPEC in general. Bottomline - U.S. expectations when compared and contrasted with the political and material realities on the ground - are increasingly at odds with one another. The money shot from his article;

Unless we take some drastic actions, it will be All OPEC, All the Time after 2010 when you will turn on the radio or switch on the TV to listen to the inevitable stories about whether gasoline will finally hit $5 or $6/gallon. But in 2008, our public discourse on the oil situation is still a joke. We need to stop blathering about the boosting the Strategic Petroleum Reserve, opening up ANWR, taking OPEC to court, cutting federal taxes on gasoline, raising taxes on Big Oil, punishing speculators, counting on imaginary cellulosic ethanol, waiting for mass production of plug-in hybrids, and all the other nonsense we are bombarded with every day.

We are sleepwalking toward the oil precipice. OPEC will not meet the fantastic expectations placed upon it by the "experts." I can only hope that Americans grasp this reality soon, because all we're doing right now is rearranging the deck chairs on the Titanic.

OPEC (read Saudi Arabia) is not going to bail us out any longer. It's reached the end of what it's willing to do on our behalf. Now it's up to us - and in case you haven't noticed - not a single one of the three candidates for POTUS has even begun to seriously and explicitly engage the energy issues in any substantive or meaningful way - so when I say "us" that means a la Hurricane Katrina "us" to make sure we're personally ready for what's beyond that signpost up ahead.