In an event that may spur Washington to take US reliance on foreign oil seriously, former top government officials gathered recently to take part in a simulation on how the US might manage an oil supply crisis, reports Continuity Central.
Dubbed “Oil Shockwave”, the exercise used sophisticated video and computer modeling in a dynamic, unscripted, real-time environment, to demonstrate the impacts of major disruptions in the world’s oil supply. The exercise scenario included a series of events occurring over several months, including unrest in Nigeria, an attack on an Alaskan oil facility, and the emergency evacuation of foreign nationals from Saudi Arabia.
According to the report, these incidents could drive the price of oil to over $150 per barrel; lower expected employment levels by more than 2 million jobs; embolden major oil producers and consumers to pressure the US on key foreign policy concerns; and cause a variety of other significant economic and security challenges. The scenario removed only 3.5 million barrels of oil from a global market of more than 83 million barrels, resulting in a variety consequences, including the following:
· gasoline prices of $5.74 per gallon;
· global oil price of $161 per barrel;
· fall of gross domestic product for two consecutive quarters;
· a drop in consumer confidence by 30 percent;
· a spike in the consumer price index to 12.6 percent;
· ballooning of the current accounts deficit to $1.087 trillion;
· a decline of 28 percent in the S&P 500;
· aggressive pressure on the US from China to end arm sales to Taiwan; and
· demands from Saudi Arabia for changes to US policy regarding the Mid-East peace process.
“This simulation serves as a clear warning that even relatively small reductions in oil supply will result in tremendous national security and economic problems for the country,” said Robbie Diamond, president of Securing America’s Future Energy (SAFE). “This issue deserves immediate attention.”
Current news items can be found on the NGV Global Home Page. Items from past issues can be found via the Article Index page.
Print 
PDF 