Friday, October 29, 2010

Stuck On Stupid Energy Policy

More than 127 million gallons of crude spilled into The Gulf of Mexico, thanks to a negligent BP who continued to push the Deepwater Horizon project forward, which was falling further behind schedule, despite some obvious procedural irregularities. Much like the oil soaked birds on the Gulf shores, our energy policy is starting to weight us down into an economic and moral swamp. Instead of just the numbers at the pumps, here's a few statistics to wrap your minds around: $900 billion US taxpayers funds were approved to go to the Iraq war in 2010, $1 billion has gone missing in Iraq and $10 billion was wasted according to a 2007 congressional hearing. More on the Iraq war later.

These statistics on just one oil spill and one war should be enough to motivate us to change energy policy but, it's the intangible things that are most worrisome. What about the cost of a spill to an entire ecosystem or, the fishing families who may possibly suffer an entire cultural identity loss, many of whom have yet to recover from Hurricane Katrina? What about the costs of a war to an entire nation of people who did not have weapons of mass destruction? They are now left with the task of trying to rebuild a secure government, basic social stability and infrastructure. How can we possibly calculate those numbers with the writing of a check?

But those are the things we know about, we hear the numbers on the news at night and some of us even manage to remain aghast, although the numbers are so huge its hard to even imagine what they actually mean. We hear about a stalled energy policy in the Senate and hear about BP as it threatens our government with blackmail on pay outs if we won't give them additional contracts for more drilling. In BP's mind, when you owe someone for damaging their land and livelihoods you should hire them again, or else. I guess we are supposed to hold our breath and hope that nothing else will go wrong while they drill more holes into our offshore sands. They have already had more accidents since The Gulf, one in Alaska and another one off Vermilion Bay. Personally, I won't be holding my breath for common sense drilling practices with BP.

Many of us know these things and we also know that something has got to change and we like to bicker among partisan lines about carbon credits, or potential job loss, or whether global warming is real, or a possible conspiracy and meanwhile nothing changes. We like to think that nothing changes because of our partisan debates, or maybe because Big Oil has some heavy hitting lobbyists and they dole out huge sums of cash for campaigns and they stop meaningful reform. To a certain degree these issues are relevant but, what we never hear about is how oil backs our money.

In 2000, Saddam Hussein threatened to no longer support the US dollar before our attack on Iraq. He issued a serious threat, one which could not be ignored by us. He no longer wanted to support the money of his 'enemy' and wanted to accept payment for Iraqi oil with the EURO. What exactly does this mean to the dollar?

All nations protect the value of their money by keeping foreign currencies in a central bank. This is done so that if your money becomes attacked by speculators, you can intervene to support the foreign exchange rates. For example, speculators start to dump your greenbacks, you can use foreign currency to buy up dollars and drive the value back up. Foreign countries tend to save in dollars, because oil is sold in dollars. In other words, the reason foreign countries save US dollars the most, is because of oil. Any oil producing nation which threatens to sell their oil in any other currency literally is threatening to devalue our money.

And now we get to the actual issue at hand; if our dollar's value is based upon oil, how can we possibly stop using it? We would devalue our own money. How are we ever going to get the oily albatross from around our necks? We can continue to bicker amongst ourselves about partisan 'green policy' but, until we get our currency dilemma figured out, we will have to keep running on high octane until the gas runs out, or a new global currency is born.

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