Probably everyone has noticed already but crude oil hit $126 a barrel on Friday, just in time for the summer driving season. The significance of this is deeply reflected in our national trade deficit where according to the US Department of Energy we import 12 to 14 million barrels of oil per day. Foreign oil imports account for over $1.5B per day and are the single largest contributor to our balance of trade deficit.

Importing oil and foreign goods exports local dollars and has contributed to the decline in value of US currency. Iran, the second largest oil producer in OPEC has stopped conducting transactions in US dollars, in favor of euros or the yen, to reduce their reliance on Washington economic and foreign policy.

America once produced enough domestic oil to provide cheap gas and even to export surplus resources and build our economy but those days are over. Exporting our dollars leaves less money available to invest in our infrastructure or even to invest in other sources of wealth. In contrast, China with whom we have a record $233B trade deficit, recently secured control over one of the world’s largest copper mines in Afghanistan.

Copper is a necessary component in the production of electricity along with magnets. China is estimated to hold 98% of the world’s neodymium reserves used in the production of high gauss magnets critical to the production of electricity. It would be fair to speculate that China is heavily vested in energy production.

The US is the largest oil consumer in the world and with domestic production drying up it is no wonder that our trade imbalance is so high. Presently, at an average of 27 gallons per day per soldier, the Pentagon accounts for the largest percentage of oil consumption spending $14M per day or over $5B a year just to stay in Iraq. Estimates indicate that the US military consumes as much oil as it liberates occupying Iraq.

It is worth noting that our defense systems are heavily dependent upon magnets as well as oil. Every fighter jet, weapons and guidance system, humvee and hand held communications device requires magnets, most of which are gotten directly or indirectly from China

So sorry is our dependence upon foreign oil that Russia, which now produces much more power than it consumes, is now outpacing the US on strategic energy alliances. Our dependence has greatly weakened our standing around the globe.

Oil company profits are at record highs, averaging $1,300 per second while consumers are paying record highs at the pump. One consequence of this demand on our pocketbooks is that our consumption has dropped which induced a record 5.7% drop in imports last March. This resulted in a .3% greater than expected increase in economic growth according to the US Department of Commerce.

Certainly .3% is not a lot but it is something and demonstrates the importance of if not having a trade surplus at least balancing imports and exports. Coos County suffers from a trade deficit as well and exporting our dollars instead of localizing them has the county labeled as economically distressed and suffering from high unemployment.

Like the national statistics this impaired spending may force us to consume less or rethink ways of keeping our dollars local. Obviously, one way is to use less energy or start producing energy locally. Small things can make a difference. Last March during Earth Hour communities around the globe participated by turning off lights and appliances for one hour and in Sydney, Australia it amounted to a 10% reduction in energy use across the city. Here in Coquille the only house dark during the hour as we walked around was mine and a friend’s.

Our economy will force us into conservation but we can also voluntarily take daily small steps toward local economic independence and environmental responsibility. Walk or ride a bike whenever possible. Turn off your lights and refrigerator for an hour each day. Buy locally grown produce that isn’t shipped and imported from outside the county. We need to keep our dollars local.

The price of copper is rising due in no small part to the increase in power generation. Foreclosed on homes are being gutted of copper pipes and sold at scrap and then exported to, yup, you guessed it, China.

scrap copper sells for about $3.50 a pound — against 70 cents just three years ago.

He and other scrap traders estimate that more than 80 percent of recycled copper is exported to China and India.

Warren Gelman, president of merchant broker Kataman Metals Inc in St Louis, Missouri, said illegal trade is just a small fraction of the scrap metals business.

Copper and magnets are the new gold rush in this brave new world of energy consumption.

As the developer of a high efficiency wind turbine and high bandwidth direct drive DC generator, I pay close attention to the price of copper and magnets as they are crucial to creating energy. Previously I wrote how China having 98% of the world’s neodymium reserves holds the market on high gauss magnets. The Department of Defense has been tasked with determining whether US reliance on China for crucial components is putting our national security at risk…

China dominates the market for production of certain high performance magnets (primarily rare earth and aluminum-nickel-cobalt magnets) that are important to defense applications such as radar systems, submarine valves, missiles, military aircraft, inertial devices, and precision-guided weapons. Domestic production of these magnets has declined over the past decade. However, DoD demand for these magnets is less than 0.5% of worldwide demand, and the Department is able to access the high performance magnets it requires from domestic sources. The Department is examining whether there is any likely future risk to the domestic high performance magnet industry that would require DoD action.

While the official response from DoD is that the military is able to obtain all magnets from domestic sources, those domestic sources must still obtain those magnets from China, Now China has scored another energy coup with an investment by China Metallurgical Group’s $4 billion investment in one of the world’s largest copper fields in Afghanistan.

The project involves US$4 billion in investment by China Metallurgical Group, which will be by far the biggest foreign investment in Afghanistan and is estimated to provide employment for 10,000 people. Significantly, the project includes the development of a railway system linking Afghanistan to China. (Nepal also has sought the extension of China’s railway system from Lhasa to Kathmandu.)

China’s present and projected power consumption needs can easily explain why they are intent upon maintaining a ready supply of materials necessary to meet those needs. How this effects the US’ equally voracious energy appetite is unclear but this appears to me to be yet another consequence of our foreign policy failures in the Middle East and puts Afghanistan back on the front burner