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The Hidden Costs of Middle East Oil - T. Boone Pickens. (Hint: it's the military)

October 05, 2012

We all know how high gasoline prices have continued to rise, year over year. Higher gasoline prices are largely based on higher crude oil prices – likely to bounce between $90 and $100 per barrel for the foreseeable future – plus refining costs, transportation, labor, taxes and (dare we mention it?) profit.

But there is a hidden cost in what we pay for the oil we import from the Middle East. That is the cost of protecting the well sites, pipelines, and shipping lanes. We currently have two carrier battle groups stationed in and around the Persian Gulf to protect the oil coming through the Strait of Hormuz. According to a report from the Government Accountability Office, the annualized cost of keeping a carrier battle group at sea is $2.93 billion. Two battle groups cost about $5.86 billion per year. And there are discussions about moving a third group on station to deal with potential issues between Iran and Israel.

About 17 million barrels of oil move through the Strait of Hormuz each day. Two million barrels of that comes to the United States. The other 15 million barrels goes to China, India, Europe and elsewhere across the oceans.

We get just over 10 percent of the oil, yet we pay 100 percent of the costs of protecting it.

Oil is a very small player in the production of electricity – about three percent. Most of the oil we import is used as gasoline to run our national fleet of 250 million passenger cars and light trucks. More of it is used as diesel to fuel our eight million heavy-duty trucks.

It is too complicated logistically to try and create a massive base of natural gas-powered cars. However, heavy trucks – those 18-wheelers – tend to run the same routes week in and week out, so it is a relatively simple matter put natural gas refueling stations at enough truck stops along Interstate highways to handle their fueling needs.

If we converted all of our heavy trucks to natural gas we would reduce our need for OPEC oil by 75 percent. Without the need for Middle East oil, we would reduce the cost of protecting it by 100 percent. If the Chinese or French still need it, they can pay to protect it.

We need to get off OPEC oil and onto domestic resources. It can be done in about five years and would have a positive impact on our economy, our environment, and our national security.

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we spend 100% of the cost because

We need to keep the dollar afloat, by perpetuating the petrodollar system


Free the market to find efficient ways to solve needs.

For same energy 1 Million BTU in 2012

Natural Gas is 50mg Au for 1 Million BTU.

Retail Gasoline is 614mg Au for 1 Million BTU.

Crude Oil is 403mg Au for 1 Million BTU.

Electricity is 468mg Au for 1 Million BTU. (292kwhr)

Free includes debt-free!

we pay a 100% of the cost of protecting it

from who?

Ask T. Boone

If he is just upset because his huge taxpayer subsidized windmill farms did not come to fruition. Also, ask him why Alaska sells 80% of it's oil to foreign countries and why has Alaska stopped pumping until the price of oil reaches $150 a barrel? The last I heard, the American citizens PAID for the pipeline to bring that oil to the other states. T Boone is a greedy liar and doesn't care about anyone or anything but himself. He is a "Green" corporatist that wants to make a killing off of green energy.

We sell oil as influence

Japan is a huge recipient. We also buy it to influence.

T. Boone's holdings are in natural gas. He wants everything to run on it. He was going to cover West Texas with wind farms, he pulled out of that.

Is he a self-serving promoter? Yes.

But, his argument that we subsidize Middle East oil with the US military is correct. And that cost never reflects in the market price, it goes on the national debt ledger year after year.

I haven't heard anyone talk about this or do an analysis.

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo

Very good information here.

Really good job.

Military cost not reflected in market cost

If the military cost were factored into the market cost of a barrel of oil we would not be able to afford it and we would also have a number of viable alternatives... in a "pure' market.

Instead the military cost of securing a barrel of oil from the Middle East goes on the national debt ledger. This is the real oil industry subsidy, not the 2.8 billion Willard referred to in the "debate".

"One resists the invasion of armies; one does not resist the invasion of ideas" Victor Hugo