An Iraq war could bring gas-pump gloom
As US considers action against Saddam Hussein, reliance on imported oil grows.
Waging war means sacrifice. But so far, at least concerning the gas pump, the war on terrorism hasn't asked much sacrifice of America's consumers.
Gasoline is cheap and plentiful, as America's gas-guzzling SUVs, proudly flying the Stars and Stripes, testify. Gas remains inexpensive because the world oil market is stable and relatively well supplied.
But happiness at the pump could change as the United States contemplates taking the war on terrorism to the Gulf region to force a regime change in Iraq.
One fact is worth keeping in mind: Iraq is back as America's sixth-most-important crude-oil supplier - exactly where it was in 1990, before the Gulf War. That conflict took out Iraq as a source of crude, and it sent oil surging to $40 a barrel, about double today's price.
With the world oil market's excess capacity lower than what it was at the time of the Gulf War, any disruption of supplies could "have an important impact on the world economy," says George Perry, an oil-economics analyst at the Brookings Institution in Washington. "A clumsy intervention in the [Gulf] region could end up causing quite a bit of trouble."
President Bush may characterize Iraq as part of an "axis of evil," but its oil is sweet: Iraq is now the fastest-growing source of imported oil to the US, supplying between a half-million and 1 million barrels a day.
As the Bush administration - well-connected in the energy sector - moves toward action against Saddam Hussein, it leads a country that offers a mixed picture in terms of oil. The US is considerably more dependent on imported oil now than it was at the time of the Gulf War - from about 37 percent to more than 52 percent imported today. A greater diversification of sources, on the other hand, means the US is less dependent on one region - the Persian Gulf - than it was a decade ago.
The US today is either importing more of its energy - or gearing up to import more - from sub-Saharan Africa, other points in the Western Hemisphere, and the former Soviet republics around the Caspian Sea.
"Production in the Americas is on the uptick. Production around the Caspian is on the uptick," says George Baker, an oil analyst with Baker & Associates in Houston. Mexico - the fourth-biggest supplier to the US last year, according to the Energy Department - is well ahead of where it was in 1991 in terms of daily production. And it's planning for even more. Noting that one example, Mr. Baker says that global suppliers coming into production "mean we have quite a bit of potential for making up Middle East oil that might be lost."