Friday, 6 February 2009

Obama’s energy policy sends shockwave across industry.

Washington, January 28: In line with his promised policies on energy, President Barack Obama announced, in the first few days of his Presidency, that he intends to “eliminate current imports from the Middle East and Venezuela within ten years”. The news has sent a shiver of apprehension down the spines of tanker owners; the US is the largest crude oil importer in the world, and the impact of significantly lower demand from that country will be huge for that segment of the industry.

Last year, in the run up to the elections, Obama had declared that “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 ten years, we will eliminate the need for oil from the entire Middle East and Venezuela.” This rhetoric now threatens to become a bitter reality for oil companies and tanker operators.

President Obama has also declared that US States will be able to regulate emission standards for vehicles within their territories. Analysts expect a tightening up of emission standards across the country, especially in forward looking States like California, as a result; Governor Schwarzenegger has hailed the move already. Experts also believe that the President’s plan will weaken the many lobbyists pushing oil company interests in Washington, with obvious financial implications.

Tankerworld quotes a broker as saying that this policy “spells doom for tanker owners; the US is still the world’s largest crude oil consumer, and voyages moving Middle Eastern crude to the US form an important part of global tanker traffic.” Other analysts point out that the implementation of this policy may run into several roadblocks, and that energy guzzling lifestyles in the US will require a paradigm shift before the need for oil imports vanishes.

The shortfall is planned to be met by the White House with a mix of vehicle fuel standards and increased domestic production. Hybrid cars, better fuel efficiency and other energy policies will get a simultaneous boost from the Obama administration; political analysts point out that Global Warming was always high on Obama’s priorities, and that the President is far from finished with his agenda. "It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs," Obama said, unveiling the new policy.

Calling US dependence on foreign oil “one of the most serious threats facing the nation”, the President was blunt while announcing his new policies. "The days of Washington dragging its heels are over," Obama said, reiterating that he intends to encourage fuel efficiency and research into new car engines and plug in hybrids. The administration has also indicated that they would accelerate research in renewable energy resources with the goal of significantly reducing foreign crude oil imports and domestic oil requirements. Other pre election promises include a comprehensive energy plan, with plans for nuclear power generation and clean coal technology. All these will have a significant negative impact on the oil industry in general and the tanker trade in particular.

According to brokers Gibson quoted in Tankerworld, Obama had also vowed to establish a national low carbon fuel standard in the run up to the elections. “These ambitious energy proposals represent a major threat to tanker demand in the long term,” Gibson now says.

One can safely assume that the President’s recent call to the US Congress to pass a stimulus package to “create a new American energy economy” will not have many supporters from the oil industry.


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