Ending the Oil Era
Reliance on oil is a major environmental concern
among industrialized nations, particularly the United States, which uses and
imports more oil than any other country. Oil dependency is emerging as a
major national security issue as well. Last fall, we asked former CIA
director James Woolsey for his take on ending the oil era. The interview is
one of the highlights of THE FUTURISTís
which features two fuel-focused special reports: "Biodieselís Bright Future"
by business futurist Will Thurmond and "The Hybrid Phenomenon" by Norma
Carr-Ruffino and John Acheson. The section also features commentaries by GM
Vice President for environment and energy Beth Lowery and Union of Concerned
Scientists field organizer Scott Nathanson.
Why is U.S. dependency on foreign oil so
dangerous right now?
There are several reasons; itís really overall dependency on oil,
and the fact that much of the infrastructure for oil production and
distribution in the world is outside of the United States. For example,
natural gas is usually distributed within a continent. We get most of
ours from either U.S. or Canadian wells via pipeline. Most other energy
is local. Thereís some international shipment of coal, but not a great
deal, which is more cost-effective.
Oil is different because it has a lot of energy in it per unit
volume. The oil infrastructure that we rely on is in the U.S. but in a
lot of other countries as well, particularly the very volatile Middle
East. So if you have Ahmadinejad deciding to pull 1 million barrels a
day off line because heís unhappy with us pressing him not to develop
nuclear weapons, you can have oil go up to $100 per barrel or so. In
Saudi Arabia, if for example Prince Nayef, the interior minister, should
succeed king Abdullah someday, youíd have a Saudi king who is very close
to the Wahhabi and might adopt policies that would be difficult for the
United States. If you look back to February '06 when al Qaeda attacked
the Abqaiq production facility in Northeastern Saudi Arabia, one has to
realize that had they gotten within mortar range of that facility, they
could have taken out the sulfur clearing towers. Robert McFarlane,
President Reaganís National Security advisor, tells us that would take
six or seven million barrels of oil a day off line for probably over a
year and quite likely send oil up to $200 per barrel.
So we donít have control over the security either of the supply or
the stability of the infrastructure they way we do over our electricity grid.
Now, we have some things we need to fix about our electricity grid, some
vulnerabilities, but itís within our ability to do it. We cannot
re-design the Abqaiq production facility in Saudi Arabia. So that is one
major reason our dependence on foreign oil is a problem.
I think thereís another aspect to this that is difficult; Saudi
Arabia made $160 billion last year  exporting oil; they give
several billion per year to the Wahhabis, an Islamist sect that controls
religion and education in Saudi Arabia, and other Wahhabi institutions
in other parts of the world such as Pakistan. Those madrassas, for
instance in Pakistan, teach Pakistani children to hate Shiites, Jews,
Christians, anyone who can be counted as an infidel. Depending on the
Imam, some of the things they say, particularly about Shites, Jews, and
homosexuals and apostates are essentially genocidal. That is really al
Qaedaís ideology as well. The Wahhabis and al Qaeda disagree about the
legitimacy of the Saudi regime so theyíre bitter enemies. But the
underlying beliefs that are being taught around the world in those
Wahhabi institutions are essentially al Qaeda beliefs. The result of is
that the war on terror is the only war the United States has fought,
with the obvious exception of the civil war, in which we pay for both
sides. This is not a good plan. This current year we will borrow
something on the order of $320 billion dollars, nearly a billion dollars
a day, to import oil. Because a share of that does go to Wahhabi
institutions around the world, I think itís fair to say we are in a
situation similar to the stated in the old comic strip Pogo, "Iíve met
the enemy, and he is us."
Borrowing $320 billion dollars a year, more or less, is not good for
the stability of the dollar. At some point, people are going to start
balking at paying our IOUs, unless we start paying higher interest
rates. And if interest rates go up, that can affect our economic health.
And we havenít gotten to global warming yet and oilís contribution to
that. So when you look at all of these factors together. I think you
have to conclude that we have a serious problem with our oil reliance.
Now, we would not do anything at all useful by stifling our purchases
from Saudi Arabia and buying from Mexico and Canada. That would just
mean somebody else would buy more from Saudi Arabia or the Persian Gulf
and our boycott would have no effect. So you donít do anything by
shifting trade patterns. What you have to do is reduce reliance on oil.
I think alternative liquid fuels such as ethanol and butanol and diesel
from waste products and with electricity, particularly in the form of
plug-in hybrid automobiles, which you charge overnight and then drive
for miles on cheap off-peak electricity, those are all positive steps
that can help substantially.
What obstacles stand in the way of Western
nations, particularly the United States, reducing their dependency
on foreign oil?
If you remember, we got interested in alternative fuel firms like the
Synfuels Corporation in the late seventies and then in 1985, the Saudiís
dropped the oil down to $5 a barrel and bankrupted the Synfuels
Corporation. The good news is that they bankrupted the Soviet Union, too,
but they certainly undercut alternative fuel efforts. People got
interested in alternative fuels again in the early nineties, then in the
late nineties, oil dropped down to $10 a barrel and people lost
interest, again. One of the things that we have to do is make sure that
this rollercoaster effect canít happen again.
Some people think it will be much more difficult in the future
because the Saudi Arabian oil fields could be peaking, if not now then
soon. We will also have huge demand, not only from the West but from
India and China as they start to produce middle classes that drive cars.
So the Saudis might not be able to drop the price to five or ten dollars
a barrel by turning on their excess capacity, but they might be able to
drop it to $20 per barrel. Most of the better of these alternative fuels
are only really viable, (as far as we can see) if oil is say $35 per
barrel or more. The one thatís viable even below that is electricity,
because off peak, overnight electricity in many parts of the United
States sells for between two to four cents per kilowatt hour. That is
the equivalent to about a penny a mile driving where as gasoline is in
the range of ten to 20 cents a mile at today's price. However much
the Saudis might be able to drop the price of oil by turning on excess
capacity, I doubt if they would be able to undercut off peak electricity
But one way to ensure that is to make sure some of these other fuels, such as diesel
from waste and cellulosic ethanol or butanol, have a chance to develop
without the Saudis bankrupting them. We also need a different structure
for subsidies. Today, ethanol is being subsidized even though it doesnít
need to be with oil thatís $60-$70 per barrel. What we might do is say,
no subsidies unless oil drops to say $40 dollars a barrel. You start
with small subsidies and then the subsidies get larger as the price of
oil goes down. Now, most people are not forecasting oil to go below $40
a barrel now, so this might be an easier thing to implement. It would
essentially be an insurance policy against the Saudis doing what they
did in Ď85 and what happened again in the late 1990s.
Let me return to the potential for hybrid technology in cars,
particularly plug-in hybrids. Thereís nothing to keep a car from being
both a hybrid and a flexible-fuel vehicle, sometimes it's driving all
electric, sometimes itís driving as a hybrid, and it may be that instead
of the liquid fuel part of its energy being supplied by gasoline, it
might be supplied by e-85 ethanol whether itís butanol or renewable
diesel. My Prius today gets just under 50 miles per gallon, but if that
were to become a plug-in Prius, with six times the capacity battery, and
I could drive it about twenty miles before it goes into its regular
hybrid mode, then I could get a little over 100 miles per gallon.
Now, if the liquid fuel that Iím using were e-85, because the hybrid
is also a flexible fuel vehicle, I would getting over 500 miles per
gallon of petroleum product. That is not all that far off because we
know how to make e-85. Itís on sale at several hundred stations in the
United States. We know how to make flexible fuel vehicles; weíve got
millions on the road. We know how to make hybrids, and, at least in
California, people are already upgrading hybrids to be plug-in hybrids,
so none of this requires a Manhattan project to invent something entirely
new; itís a matter of getting things into production that we already
essentially understand how to do.
What effect do you think energy independence might have on
other nations, particularly nations that export a great deal of oil,
most specifically Iran and Nigeria?
Well, they will have to get work. The first thing I would do with any
country that says, ĎOh my goodness, our economy is going to be ruined if
we canít sell oil,' is I would take them to visit Israel. Israel now has
a GNP per capita of $18,000 a year even though Israel is on some of the
poorest land in the Middle East and has essentially no oil or gas
whatever. What they do, unlike a lot of these other countries, is allow
women to educate themselves; they pay attention to technology; they
invest. It may well be the case that Iran or Saudi Arabia, or even
countries in other parts of the world like Russia who depend heavily on
exporting expensive oil, would have to get to work the way the Israelis
have, the Japanese have, and other countries with minimal natural
resources have who have built modern societies with highly educated and
Futurist: In his testimony before the Senate Foreign Relations
Committee (March 30, 2006), Milton Copulos remarked, "Without Oil, our
economy could not function, and therefore protecting our sources of oil
is a legitimate defense mission, and the current military operation in
Iraq is part of that mission." To what extent do you agree with that
statement, and to what extent do you think protecting our energy sources
factors into foreign and military policy?
I agree with it a little bit, but if all we needed was the oil the
simple thing to do would have been to buy it from Saddam Hussein, he was
perfectly willing to sell it. If he hadnít been an absolutely terrible
dictator who was responsible for the deaths of close to two million
people over the last two decades, this war would never have been
contemplated. Weíll always have to have substantial armed forces, we
would still need them if the majority of our oil came from domestic
sources. Up until the 1970s, world oil prices were effectively set by
the Texas railroad commission but the United States had a very
substantial armed forces. We didnít start having armed forces when we
started importing a lot of oil.
How high should energy independence rank as a
national security priority?
I donít call it energy independence because thereís nothing wrong
with our importing natural gas from Canada, and we donít import coal, or
hydroelectric power or solar or wind or whatever. It's really an oil
problem. Itís a natural gas problem for Europe because theyíre not
getting their natural gas from a good neighbor like Canada; theyíre
getting it from Russia. Russiaís playing games by giving better deals on
natural gas to dictatorships than to budding democracies like Georgia
and Ukraine. So Europe has an oil and gas dependence problem. For us,
itís pretty much entirely an oil problem. I think this ought to rank
very high on our needs because it constrains other things we can do, for
example, we really would like, as would some other countries, to use the
UN Security Council to authorize us to stop the genocide by Sudan in
Darfur. The reason we canít do that is because China will veto it, the
reason China will veto it is because China has a major oil deal with
Sudan. It would be nice to have the Security Council lean on Iran to
stop the enrichment of uranium, leading to nuclear weapons capability.
But Russia and China are both balking at that, and the reason China is
balking again is principally oil.
Oil tends to concentrate power in a small number of hands, unless it
comes into a democracy such as Canada and Norway. Canada and Norway are
the only two oil exporters in the top dozen or so in the world that are
not dictatorships or autocratic kingdoms. More than 60% of the
governments in the world are democracies, but very few of those actually
export oil. So OPEC is largely composed of dictatorships and kingdoms
and a number of the other big exporters that arenít OPEC like Russia are
increasingly dictatorial as well. This is a foreign policy problem.
Robert James Woolsey Jr. was director of the U.S. Central
Intelligence Agency (CIA) from 1993-1995. He is currently the chairman of
the board of Freedom House, the chairman of the advisory boards of the Clean
Fuels Foundation and the New Uses Council, a Trustee of the Center for
Strategic & International Studies and vice president of Booz Allen Hamilton.
This interview was conducted by Patrick Tucker
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