- The Washington Times - Monday, September 9, 2002

The United States motivations for seeking out new sources of foreign oil are several, including a potential war in Iraq to an unabating Israeli-Palestinian conflict to a mercurial leader in oil-rich Venezuela. Fortunately, President Bush made diversifying foreign oil sources a key part of the energy policy that he unveiled last May. With the anniversary of the September 11 attacks approaching, that has become an even more pressing concern.
The anticipation of potential U.S. war in Iraq has had an impact on oil prices. "There's a fear premium in the price," said Pulitzer Prize winning author Daniel Yergin. The good news is that some of the most promising countries for oil exploration have become close U.S. allies over the years. "The area where most of the buzz has focused on is Russia and the Caspian," said Mr. Yergin.
Thanks to Mr. Bush's outreach to Russian President Vladimir Putin, the U.S.-Russian relationship is on solid footing. And the Caspian's most oil-rich country, Kazakhstan, feels a strong solidarity with the United States, since the United States, under the first President Bush, was among the first countries to recognize Kazakhstan's independence from the Soviets.
But significantly expanding oil production won't happen overnight. "This is an industry governed by long lead times. It doesn't turn on a dime," Mr. Yergin noted. Oil production in the Russian and Caspian region could expand from nine million barrels a day to 13 million barrels a day by 2010, Mr. Yergin said.
Leading geologists echo Mr. Yergin's assessment of promising oil extraction opportunities in the Caspian Sea. Some believe that offshore drilling in the Kazakhstan area of the Caspian may lead to the largest discovery of oil in the past two decades. But the main challenge to drilling in the Caspian Sea is that it is landlocked; it is actually the world's largest lake. Vessels for offshore drilling therefore can't be brought to the Caspian and must be constructed in the region, which is why the Soviets didn't drill there when much of the region was under its control.
West Africa is another hot area for offshore oil exploration. West African countries produce about 4.3 million barrels a day. That number could grow to 6.8 million barrels a day by 2010, Mr. Yergin said. But the governments in the region don't have as close a relationship with the United States, and regional conflict makes investing there riskier.
The impact that newly discovered oil reserves could have on price remains uncertain, though, because it depends in part on how much oil suppliers are willing to bring to market. The world's largest oil cartel, the Organization of Petroleum Exporting Countries, has honed its ability to restrict supplies to affect the price. "None of the producers want to see prices collapse," Mr. Yergin said. "In terms of price-setting, you'll see periods of cooperation and periods of conflict" as oil suppliers weigh their desire to influence prices against a drive to capture greater market share, he added.
In terms of resources, though, there are rich frontiers for oil exploration. Today, with the United States increasingly at odds with countries in the Middle East, Mr. Bush's energy policy seems particularly prescient.


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