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Obama and 'tyranny of oil'?
One of the pledges made by Barack Obama during his campaign is that he will end the "tyranny of oil"
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One of the pledges made by Barack Obama during his campaign is that he will end the "tyranny of oil".
He made the promise during a certain period of the campaign when the oil price became nightmarish as it continued to climb, sparking a sharp increase in the prices of all commodities and raising production costs in all industries. The oil price was then considered public enemy No. 1, not only in the United States but also in many other parts of the world, including Indonesia.
Obama made his promise to the American people, but the global community also took it as a promise to them because oil is the most important commodity in the world and any big policy on oil to be taken by the president of the United States, the world's largest economy and consumer of oil, will have a consequential impact on oil prices and thus affect their lives.
Obama said the U.S. addiction to foreign oil is the biggest threat to its economy and security, and the excessive consumption of oil will worsen global warming and thus imperil the future of the planet. He asked, "Will we allow ourselves to be held hostage to the whims of tyrants and dictators who control the world's oil wells?"
The high oil prices that lasted from the beginning to the middle of the year hit the economies of many countries but enriched oil-producing countries, including Middle Eastern countries, Venezuela and Russia, which are not friendly to the United States.
"If I am president, I will immediately direct the full resources of the federal government and the full energy of the private sector to a single, overarching goal -- in 10 years, we will eliminate the need for oil from the Middle East and Venezuela," he said.
Now that Obama has been elected the next president of the United States, people ask: How will Obama end the tyranny of oil?
Obama laid out the plan in a speech delivered at Michigan State University on Aug. 8, 2008. Key to Obama's energy strategy is a reduction in oil consumption and an increase in the use of alternative fuels. The United States is said to still have abundant oil and gas reserves in Alaska that remain untapped but, according to Obama, they are not enough to fulfill the energy needs of the country in the long term. The long-term solution is the reduction of oil consumption and the use of renewable, clean, alternative fuels.
He will push the U.S. auto industry to raise mileage standards and develop battery technology, to produce fuel-efficient plug-in hybrid cars that use less fuel. He will also encourage the production of renewable energy sources such as wind power, solar power and geothermal power and the production of "next-generation biofuels".
Will all these bring the tyranny of oil to an end? Skeptics note that the U.S. presidents since Richard Nixon vowed to gain energy independence but they all failed as the U.S. consumption of oil continued to increase.
Obama, however, is optimistic, while noting that it is not an easy task. He compared the mission of ending the tyranny of oil to President John F. Kennedy's dream of sending an American to the moon. History tells us the United States did it.
What will happen if Obama starts realizing his plan?
The oil price has sharply declined since the global financial crisis took a turn for the worse and battered the stock and commodity markets several months ago. Hedge funds and commodity traders liquidated their oil portfolio as they believed global oil consumption would decline as a result of the crisis. OPEC, which controls two-thirds of the global oil reserves, recently cut its output to stem the decline in prices and even threatened to further cut its output if the prices continued to decline. In the next 10 years, we shall probably see a fierce war in the oil market -- a war pitting a new USA under Obama, who compares oil to tyranny, against oil producers, who insist on their rights to get handsome revenue from their resources. Any decrease in oil demand in the United States will put pressure on oil prices but this will be countered by production cuts by oil producers. OPEC may not need to cut its output in the future as it will naturally decline following a depletion of resources.
Under this scenario, the oil price could climb back and will remain high in the future but the oil producers will get less revenue because of the production decrease and the United States having more alternative fuels.
Indonesia needs to take this scenario into account in devising its energy strategy. As far as oil is concerned, Indonesia and the United States have something in common: Both produce oil but they consume more than they produce. Indonesia's oil consumption is now 40 percent higher than its oil output. The sharp increase in oil price in the middle of this year proved to hurt Indonesia a lot.
The new United States under Obama, which will care more about the environment, will probably lead global efforts to use clean, renewable alternative energy to save the planet from climate change.
Indonesia is lucky enough to have abundant geothermal resources to generate power and agricultural resources to produce biofuels. Indonesia should welcome Obama's mission.
The author is a staff writer at The Jakarta Post. He can be reached at johannes@thejakartapost.com
