Today, I have only the excerpts from an informative New York Times business article for this entry. You might want to read it if you never lived through the 70s Gas Crisis. No, this IS NOT the 70s, and of course, we don't have a Democrat in office. Nope, this time we have a Republican -- but either way, unpreventable problems loom on the dark horizon.
Alas, I'll allow you to draw your own conclusions from the article or excerpts:
Katrina's Shock to the System
"The refining system is stretched, with no reserves, no excess capacity, no cushion," he said. "The fundamental problem is that we depend on oil companies that dislike the refining business because of historically low returns but whose deficit can produce an economic, social and political crisis."
But Mr. Mabro added: "There is an obligation to supply. For consumers, it's a public utility. If people can't get gas, they become furious, they become violent, they create trouble. Energy is a necessity."
And the end of the article:
Still, with no government control over either prices or supplies - and despite the global emergency coordination, the pledges of rising European imports and the loans from American strategic stocks - the risks to oil markets remain very high, analysts and economists said. The economy may be able to withstand current prices, but energy markets are at the mercy of the slightest glitch anywhere around the globe that can push prices even higher.
"If we had a major disruption in supplies elsewhere on top of that we could definitely go to triple-digit oil prices, no problem," said Vincent Lauerman, the global energy analyst at the Canadian Energy Research Institute, in Calgary, Alberta. "What we have right now is a runaway freight train. There's nothing I can see between it and higher prices."
The idea of $100-a-barrel oil, which was scoffed at as recently as two weeks ago, is now not so far-fetched. And its effect would be substantial.
"If oil hit $100, it would have quite a debilitating effect," said William Hummer, the chief economist at Wayne Hummer Investments. "The economy would slow to a crawl. We'd have a return to stagflation, that cliché from the 1970's. We'd see a huge cutback in driving. The sacrifices would be severe. It would be another blow to the airlines and the whole transportation sector."
The Eurasia Group, a political risk consulting firm in New York, identified potential events in nine countries that could send prices higher - from terrorist attacks in Saudi Arabia, to which it gave a 10 percent probability; to unrest by oil workers in Nigeria, a 30 percent probability; or attacks on Iraq's oil industry, with a 50-50 probability.
In other words, said Mr. Felmy of the American Petroleum Institute: "There is no question that this is a global issue. We're all in this together."