Thursday, October 07, 2004

Oil withdrawal

Thomas Friedman warns that the Bush administration's energy policies are fueling terrorism. It's not an original argument but a cogent one nonetheless. America's oil dependancy props up corrupt and repressive Middle Eastern regimes. Friedman says the most progressive Arab nations are those with little or no oil to export, such as Bahrain and Dubai.

Mr. Bush says we're in "a global war on terrorism.'' That's right. But that war is rooted in the Arab-Muslim world. That means there is no war on terrorism that doesn't involve helping this region onto a more promising path for its huge population of young people - too many of whom are unemployed or unemployable because their oil-rich regimes are resistant to change and their religious leaders are resisting modernity.

Friedman advocates a gasoline tax, but a more farsighted solution would be to put a stop to our sprawling development practices. Build denser, walkable communities. Eliminate zoning codes that segregate residential and commercial development. Create a reliable funding stream for public transportation.

Of course, not all the blame lies with politicians. Much of it rests with ourselves. Americans have deliberately chosen a way of life that is not only bad for their health and their communities, but for the nation and perhaps the world as well.


Blogger fester said...

I need to develop this series of ideas further, so please bear with me as I spout first thoughts.

1) Let's assume consumer economic rationality, so people will buy equivilant products at the best prices.
2) Let's assume producer economic rationality, so long term, producers will sell their products only if they can make at least normal profits on their investments.
3) Crude oil is relatively fungible.Oil produced in Saudi Arabia is a near substitute for Texas crude and Texas crude is a near substitute for North Sea crude. (Please don't go off on me about sweet v. sour, heavy v. light, this is a quick approximation.)

In the short term, any serious conservation effort, induced either by changes in external pricing such as a serious increase in the gasoline tax or by self-motivated conservation in order to avoid paying the high prices will lead to an increase in the percentage of fuel that the US imports. Domestic US production is relatively expensive while the Saudis can pump out a barrel of oil, and still make a profit at single dollars per barrel levels while the average US producer breaks even relatively close to $20 a barrel. US consumption will shift from expensive (relatively) Texas oil to cheap OPEC oil. Global demand will decrease, all else being equal, bringing down global prices, but the US will be consuming proportionally more foreign oil even if aggregate amounts are the same or less.

Medium term, this shift away from oil will still drive down international prices and decrease OPEC profits, but energy self-sufficiency, if it includes a net enerngy contribution from petroleum, will still need to have foreign oil in the mix. The Saudi government should still be able to afford their devil's bargain with the Wahhabi clerical establishment of paying for their mosques and ideology as long as they keep the unemployed or underemployed diverted from revolting against the Saudi government. The Saudis had a budget plan for this year that assumed oil would be priced at less than $20/bbl, so they can afford a significant drop in prices to maintain this system even before they start drawing down their assets.

Long term, reducing oil will bring the Saudi and other repressive Arab governments to their knees. The relevant question is will the US consumer and voter tolerate the price in the changes to their life styles that this objective would require. I like living in a dense, mutli-use urban environment, but there is a strong ideological and intellectual movement against such an environment. Can we make this adjustment? I don't know.

7:29 PM

Anonymous Anonymous said...

All of which, of course, will take decades. This is a carbon economy, and to radically change that will entail major reforms to the way we live, farm, fight wars and travel.

What has not been noticed has been Bush's fervid drive to de-Saudize our fuelstock purchases (beyond drilling in Alaska, of course).

I could mention a slew of diplomatic, military and trade initiatives in West Africa, South and Central America, the Phillippines, Qatar and the former Soviet repubics to reduce dependence on our traditional Middle Eastern suppliers.

But this will be seen as pandering to the Bushies (What! I haven't read about U.S.-funded exploration in Gabon! I don't believe there's 1.1 billion barrels of proven reserves in Equatorial Guinea! 8 billion in Brazil? 1,660 trillion feet of natural gas that could be delivered out of Vladvistock! My ass!).

I know this doesn't equal 690 billion barrels of reserves in the Middle East, but it's a medium-range solution to a long-range problem.

Of course, PA and WV are the Saudi Arabias of domestic coal. Should we simply switch to burning that?

2:07 PM


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