Tuesday, September 8, 2009

Good Show Mr. President.

This should become a tradition for all future POTUS

Saudi pushers, and funding both sides of the GWOT. What to do about it?

An interesting discussion is going on at the always provocative Harvard Middle East Strategy Blog. They are discussing our dependency on foreign oil and its impact on our national security. The original post and the two most recent posts are below my reactions. (You cannot comment on the site unless you are a member,so I'll put my two cents in rightcheer):

The point of the original post is well taken: Oil revenue goes to Saudi interests which fund terror and Wahabi propoganda efforts at mosques worldwide, including in the U.S. In addition, Venezuela and other unsavories get a piece of the pie. So our purchase of oil from these sources is essentially supporting and financially aiding, the very people we are fighting, or that seek to harm us. We know all this. So what should we do?

Well, when pump prices soared to near 4 clams a gallon, there was much talk of "drill here, drill now, pay less." This roused good Prince Faisal over in Saudi to indulge in a good deal of handwaving and ad-hominum.

This behavior would seem to be a good indicator of just how dependent that particular regime is upon our market. Once you stop chuckling at his antics you can take away a positive: We can weild a great deal of power and better our security situation without having to raise a hand. We need merely to spend our money elsewhere.

The post and commenters all concur in suggesting the best way to bring about a permanent crippling of the powers of our enemies..er..friends..er..Janus faced bretheren, is the development of alternative sources of energy, specifically for transportation. The post touts electric cars, and flex fuel cars for instance.

I think it tends to downplay the challenges of such a changeover, as well as the genuine possibility of attaining independence whilst persisting in a largely petroleum based transportation technology. In fact, the post is, if not hostile to the possibility, dismissive of it. But, the fact is, we have the infrastrucure in place to pull this off in a short period of time, something that isn't the case with the "alternatives" approach.

Corn based fuels, for instance, require that we give over larger tracts of farmable land to corn production aimed at that end. Land is a finite resource, so this would seem to run the risk of lessening the food supply, and probably would cause corn prices to rise. It takes a lot of corn to produce a gallon of gasoline substitute, not to mention, that the increased corn production would at least in the short term, require increased use of petroleum to run the combines, tractors, trucks etc., involved in the process of growing the maze and getting it to market.

Something similar can be said about electric cars. The post makes things sound deceptively easy in that regard. Go out, get your Chevy Volt, just plug the sucker in, wait a few hours and you can drive off blessedly free of the internal combustion engine, and be worry free.

But, evidence that is at least anecdotal shows it takes a while for that charge to finish, and electric cars are not very useful for long treks, and introduce logistical difficulties during those treks. It's not always easy to find a place to plug 'er in.

Now, perhaps, with widespread use, this would change. But, with widespread use, come questions: Increased loads on the electrical grid will require expensive overhaul (which are indeed overdue by the way), AND the generators that will provide said electrical power will have to run on something other than electricity themselves. At least for now, that may involve petroleum, if not coal (something I have no problem with, but the green movement does). So, costs will not be cheap. If there is a solution that does not entail the same costs, it should be adopted, all else being equal.

Solar power is not a realistic alternative on large scale. Nuclear is a proven commodity, but a political parriah. So, bending to political reality, I think the best short-term, and perhaps long-term solution IS to increase domestic production and refining of good old-fashioned oil. The NIMBY's will just have to suck it up.

Come to think of it, I think the NIMBYs might be less averse to sucking this particular option up than they would be to the "increase the taxes" option that the commentors are unanimously advocating. Looking at things from the demand side they essentially say, let's tax the hell out of gas at the pump, and people will simply choose to drive less. Demand will lessen, then we can have the alternatives kick in, replacing the oil. Then, we can give the two fingered salute to the bad guys.

I look at it from the supply side. Let's combine coal, nuclear, and all the various new techs with good old fashioned, but home-grown petroleum, and petroleum from friends, and we won't have to tax our own folks out the wazoo.

The near future looks to be a taxing era anyway, so why pile on? It won't help the economy to do so, and as the poster is wont to mention, it is political suicide. Why, might you ask? It's suicide because it is perceived at the yokel level as being unnecessary and punitive as long as the "all of the above" approach is there smiling and waving and standing by as an obviously viable non-punitive alternative.

Of course people will be ticked if their taxes are unnecessarily raised. Folks work hard for their money, and want to keep as much as is possible, for family. Skepticism about the wisdom of governmental taxation schemes is our birthright as Americans. This Townsend-Act like scheme does not appear to be the only alternative. Either refrain from acting like it is, or make a convicing case that it is indeed the only way to go.

What is more, if we combine coal, nuclear, domestic oil production, and short-term strategic purchasing of oil on the world market, severely curtailing or altogether eliminating purchases from suppliers who do not have our best interest in mind, I think we can get this ball rolling a lot sooner than we can with the solar/biofuel/whatever else might be out there/greenhope alternative. (Yes I am aware of the price hit that may occur with suddenly refusing to buy from the bad guys, but I do think people would take that hit with a bit less resentment, seeing the long term interest and the poke in the eye to the bad guys. I see no such similar scenario in the tax-the-bejezus approach. Who does it hurt, other than us?)

It impresses me, the sanguinity with which all the commenters at MESH agree with the wisdom of the tax-the bejezus-out-of-gas alternative.

So, the original Post by Gal Luft:

Saudi Prince Turki al-Faisal, former ambassador to the United States, has a suggestion for America: drop this nonsense called energy independence. In a strongly-worded essay in Foreign Policy magazine, which coincides with the 150th anniversary of Edwin Drake’s discovery of oil in the United States, Turki lambastes American politicians for invoking energy independence, which “is now as essential as baby-kissing,” accusing them of “demagoguery.” For him, energy independence is “political posturing at its worst—a concept that is unrealistic, misguided, and ultimately harmful to energy-producing and consuming countries alike.” “Like it or not,” Turki concludes, “the fates of the United States and Saudi Arabia are connected and will remain so for decades to come.” (He said much the same in this clip from last May; if you don’t see it, click here.)

We’ve heard these lines before each time the United States made progress toward lessening its dependence on oil. In February, for example, Ali al-Naimi, the Saudi oil minister, warned of a “nightmare scenario” if consuming countries made progress in the development of alternative fuels. A decade ago, his predecessor, Sheikh Ahmed Zaki Yamani, called technology “the real enemy for OPEC.” This is understandable. After all, no pusher wants to see his client circling around a rehab clinic. For Saudi Arabia, a world where oil plays a marginal role is the nightmarish materialization of the Saudi saying, “My father rode a camel, I drive a car, my son flies a jet plane, his son will ride a camel.”

More troubling is the parade of prominent Americans who deride the notion of energy independence, viewing it as jingoistic, unsophisticated, naive and misleading. One cannot doubt the patriotism of former CIA director John Deutch, who said “energy independence is not a constructive idea,” or former secretary of defense and energy James Schlesinger, who called it a “forlorn hope,” or Pulitzer Prize winner Daniel Yergin who referred to it as “pipe dream,” or Andy Grove, former chairman of Intel, who called the concept “a faulty goal,” or even the members of the Council on Foreign Relations energy security task force who went so far as to accuse those promoting energy independence of “doing the nation a disservice.” But just like Prince Turki, all of those distinguished Americans misunderstand what energy independence really is. As a result, they underestimate our ability to get there.

Contrary to popular conception, energy independence does not mean self-sufficiency. It doesn’t mean not importing any oil or walling ourselves off from the global market. Energy independence is not a function of the amount of oil we consume or import. Rather, energy independence means turning oil from a strategic commodity second to none—one that underlies the global economy and determines the course of world affairs—into just another commodity to trade.

Oil’s strategic status stems from its virtual monopoly over fuel for transportation, which in turn underlies our entire way of life. Worldwide, 95 percent of our transportation energy is petroleum-based. Our cars, trucks planes and ships can run on nothing but petroleum. This is why the much-touted policies that aim to either increase oil supply through domestic drilling or decrease its use by boosting fuel efficiency, while helpful, are insufficient as they do not address the factor that gives oil its strategic status: the petroleum-only vehicle.

Energy independence thus requires breaking the virtual monopoly of oil over transportation fuels, and this can only be done via competition in the transportation fuel sector. (Think about our electricity sector, where a variety of competing energy sources—coal, natural gas, nuclear, solar and wind—can contribute to the grid.) If our cars and trucks were able to run on other fuels in addition to those refined from petroleum, Saudi Arabia’s oil would have to compete over the drivers’ wallet against utility companies, alternative liquid fuels producers and natural gas suppliers. But as long as our cars are gasoline-only, oil remains the only game in town, which is exactly what Saudi Arabia wants.

A few types of vehicle technologies allow us to break oil’s monopoly. The first, and most affordable, is the flex-fuel vehicle that can run on any combination of gasoline and alcohol (alcohol does not mean just ethanol, and ethanol does not mean just corn). It costs an extra $100 per new car to make a regular car flex-fuel. All it takes is a fuel sensor and a corrosion-resistant fuel line. An Open Fuel Standard ensuring that every new car sold in the United States be flex-fuel would not only give rise to an industry of alternative fuels and the associated refueling infrastructure, but it would also drive foreign automakers to add fuel flexibility to all of their models, effectively making it an international standard.

Electricity is another transportation fuel that can compete against oil. It is cheap, largely clean, domestically produced and can be made from multiple sources. Its refueling infrastructure is widely available. All that is needed for an electric car to connect to the grid is an extension cord. Most automakers have already committed to produce models of limited-range pure electric vehicles (EV) or plug-in hybrid electric vehicles (PHEV). The latter allow drivers to travel on stored electric power for the first 20-40 miles, after which the car keeps running on the liquid fuel in the tank, providing the standard 200-400 mile range. For the 50 percent of Americans who drive 25 miles per day or less, shifting from barrels to electrons would make the visit to the local gas station a rarity. If all of those Americans owned PHEVs, a population the size of New York, Florida and Pennsylvania combined would be off oil most days of the year. A PHEV would normally drive 100-150 miles per gallon of gasoline. If it is also made as flex-fuel and fueled with a blend of 80 percent alcohol and 20 percent gasoline, oil economy could reach over 500 miles per gallon of gasoline.

These technologies are either at or few years away from commercialization. If we only understood energy independence properly and took the relevant measures to open the transportation fuel market to competition, oil would be far less central to the world economy than it is today. If we ensure that new cars are platforms on which fuels can compete rather than perpetuate the petroleum standard, then Prince Turki’s descendants, on the 200th anniversary of Drake’s discovery, will be more likely to ride camels than private jets. No wonder he wants us to think otherwise.

Two reactions, by Michael Mandelbaum and Robert J. Lieber, respectively:

Gal Luft’s excellent post prompts two comments. First, the present global pattern of oil production and consumption underlies the most serious foreign policy problems the United States faces. Huge revenues accrue to the autocratic leaders of oil exporting countries—Chavez of Venezuela, Ahmadinejad and the mullahs of Iran, Putin of Russia—who use them to support policies that are consistently unhelpful to, and sometimes extremely dangerous for, the United States. Some of the oil wealth the Gulf sheikhdoms collect finds its way into the coffers of terrorist groups. Thus it is that the United States is waging a war against terrorism and funding both sides. The single measure that would do most to enhance the security of the United States, in my judgement, is to help to reduce substantially the revenues that oil producers collect by reducing substantially the American consumption of imported oil.

Second, an indispensable method for doing so is to raise the price of gasoline in the United States, which would promote both conservation and the expanded use of non-oil-based technologies for transportation, of the kind that Gal Luft describes. Nothing would do more for American foreign policy than a higher gasoline tax. Here the American political system has failed miserably. Elected officials never advocate such taxes, because they believe—alas, probably correctly—that to do so is to commit political suicide. The Western Europeans and Japanese are generally anything but zealous and energetic in their defense of Western values and interests, but, with their much higher gasoline taxes, on this crucial issue they perform far better than the United States does.

Two points are absolutely fundamental here—and have been ever since the first oil shock in 1973-74. Without these, much of the rest of energy security debate is of limited relevance. First, not energy independence, but reduced vulnerability is key. This means reduction in America’s relative dependence on imported oil and greater efficiency in how we consume oil. Alas, whereas the United States imported one-third of its oil in 1973, the figure now is closer to two-thirds. Second, and as Michael Mandelbaum rightly observes, raising the price of gasoline is crucial. Exhortation, incentives, and moral suasion only go so far. Without clear and sustained price signals, fundamental change in oil consumption will be slow and reversible. Without a serious, long term increase in tax policy—or an exceptional act of political courage and leadership—which congress typically sees as the third rail of politics, it may require an unprecedented crisis before this problem is seriously addressed.