U.S. Senator Dick Lugar (R-IN), today, warned that tight global oil markets continue to threaten economic recovery in the United States.
"Extraordinarily tight oil markets mean that pump prices can easily skyrocket for reasons well beyond our borders. A relatively small disruption could have severe economic consequences for Hoosier families," Lugar said. "President Obama has personally lobbied against our bill to approve the Keystone XL pipeline, even as he places restrictions on new lease sales and permits for domestic oil production. That is a formula for long-term oil vulnerability."
Lugar's warning came in the wake of yesterday's release of data by the International Energy Agency showing that Saudi Arabia had increased oil production to 10 million barrels per day. Although that increase is helpful for short-term market liquidity, it also means that Saudi Arabia has less flexibility to ramp up oil production in case of severe global supply disruptions. Saudi Arabia is the only oil producer thought to have significant spare capacity.
Lugar also elaborated on the precarious market situation in an op-ed he authored in Politico today. He advocated an energy policy with "clear direction in reducing the threats to our economy, and our national security, from potential oil shocks."
In Politico, Lugar renewed his call for approval of the Keystone XL pipeline, saying its construction "would be an important signal to markets of coming supply and our Hoeven-Lugar-Vitter Keystone XL legislation would get the job done."
Lugar also is the author of the Practical Energy Plan Act (S. 1321), which would reduce U.S. foreign oil dependency by 6.3 million barrels per day, roughly two-thirds of what we now import.