Korin: The goal is indeed independence, not in the sense of autarky (not importing any oil) but in the sense of regaining ability to act independently, without need to kowtow or defer to petrodictators chief among them the Saudi royal family, a family which controls a quarter of the world's oil reserves and essentially all swing capacity on the global oil market (the mafia never had it so good.) To regain our independence we must strip oil of its strategic value. Salt presents a compelling historical parallel. Salt was once a strategic commodity, control of which determined geopolitical power and ability to sway world affairs. With the advent of electricity and refrigeration salt lost its strategic status as it was no longer the only option for preserving meat. Oil's strategic value derives from its domination of the transportation sector, which in turn accounts for two thirds of oil consumption - as Gal noted, we essentially no longer use oil to generate electricity (an inconvenient fact that renders bizarre the protestations of many politicians that solar, wind, or nuclear can reduce oil demand.)
Stripping oil of its strategic value will require fuel competition in the transportation sector. Flexible fuel vehicles, as Robert noted, provide a platform on which fuels can compete. For a very modest premium, they enable a driver to choose amongst a variety of liquid fuels, made from a variety of feedstocks, from coal to agricultural material. It costs 50 cents a gallon to make methanol from coal. Methanol has about half the energy of gasoline, so that's one dollar per gasoline equivalent gallon. The US is the Saudi Arabia of coal. China and India also have a lot of coal, and indeed China is rapidly expanding its coal to methanol capacity.
We need to remove the ridiculous 54 cent a gallon import tariff on sugarcane ethanol - we don't tax oil imports, so why are we taxing imports of an alternative fuel? It's not because of the oil industry, it's because of corn ethanol protectionists who'd rather be big fish in a small pond than open the dam and turn the pond into a sea. As Gal notes, it is also critical to get electricity into the transportation fuel market. Flex fuel plug in hybrids will mean the Saudis will need to figure out how to monetize sand. Perhaps they can learn to blow glass.
Gartenstein-Ross: I am of the opinion that energy security is the most pressing challenge we face. It should be the top issue in the current presidential campaigns because our oil dependence is without a doubt our Achilles’ heel, yet no candidate has been seriously pushing the issue. This comes on top of the systemic failure of our political leaders, including the Bush administration and the presidential administrations that preceded it, to curtail our dangerous dependence on oil. (Interestingly, the one real exception was the Carter administration’s Fuel Use Act, which is a major reason that, as Luft and Korin note, only 2 percent of our electricity comes from oil today.) Energy security has a cognizable impact on virtually all the other major issues that our country now faces.
There is the economy. Today, more than three out of four Americans believe that the country is in recession—and it is not difficult to recognize that high energy prices are a primary driver. Oil prices have more than doubled in the past fifteen months, rising from around $50 a barrel in early 2007 to about $110 a barrel today. Such a dramatic rise in energy prices will of course harm the U.S. economy. As Zubrin stated, this equates to a $500 billion per year tax on the U.S. economy, affecting all sectors. We depend on long supply lines to transport agriculture to consumers, as well as the vast majority of products that you can buy off store shelves. All prices—the price of food, the price of consumer goods—are pushed upward by the rising price of oil.
There is terrorism and our international political adversaries. One distinctive characteristic of Islamic terror movements is that they explicitly find religious sanction for their actions. Their interpretation obviously is not shared by all Muslims, as the world would look much different if we were at war with over a billion people. What helps extremist interpretations of Islam gain a foothold? One clear answer is petrodollars. Numerous analysts have connected radicalization in various regions to extremist charities, mosques, and madrasas funded by oil money. Some of the charities funded by petro-dollars are “dual-use,” not only propagating an extreme interpretation of Islam but also directly funding terrorist groups. Venezuelan president Hugo Chavez famously declared in his opening address to an OPEC conference in 2006 that “the American empire will be destroyed.” Do we want to be dependent on political leaders like that because of their oil resources?
The Bush administration has had more than seven years to steer the country’s energy policy, yet its combined policies amount to slapping a few Band-Aids on a hemorrhaging wound. (This is of course not just the Bush administration’s fault: as a country, we have had more than forty years to address this issue since the dangers of our oil dependence became crystal clear.) For example, the primary strategy of the Energy Independence and Security Act of 2007 is a new national mandatory fuel economy standard that, in President Bush’s words, “will save billions of gallons of gasoline.” But as Zubrin shows in his commendable book Energy Victory, conservation-based strategies are not, and will not be, sufficient. If we could duplicate the technical success that Corporate Average Fuel Efficiency (CAFE) standards achieved from 1975 through 1990, Zubrin writes, we would not cut our oil consumption at all. Instead, it would reduce our expected rate of increase of oil usage by only 2.2 million barrels a day, during a period when the world as a whole is likely to raise its consumption another 30 million barrels per day. Whatever demand we eliminate would be replaced fifteen times over.
President Bush has also congratulated himself on the ethanol policies that his administration has undertaken, but they are a far cry from the large market for ethanol that Zubrin’s policy recommendations would spur. (By Bush’s account, we produced 6.4 billion gallons of ethanol in 2007 versus the approximately 200 billion gallons of gasoline and petroleum diesel that we use annually.)
But fortunately, while our oil dependence is currently causing great harm, I don’t think the immediate solutions are mysterious. I agree strongly with the recommendations put forward by Zubrin and Luft in this symposium. Fuel flexibility should be the first major policy we push for because it provides immediate relief from this grave problem, but we should also move toward electrification of the transportation sector. The bottom line is that we are worse off, and our enemies in a better position, for each day that action is delayed.
McFarlane: As the panel has made clear, we have the means at hand to overcome the vulnerability of our economy and the challenge to our very way of life that is posed by our reliance on foreign oil. It starts with mandating that all cars and trucks sold in the US be flex-fuel, and then that we accelerate the production of plug-in hybrid-electric and all-electric cars and trucks, and that we build them out of carbon composite materials as Boeing is doing today in its new 787 Dreamliner.
We cannot consider this as nice-to-have, P-C, green "someday" matter. This is a matter of grave urgency. Today if an attack on any of a dozen very vulnerable Saudi oil processing facilities were successful, we would be facing oil at $200/barrel overnight. That would lead within weeks (not months) to the collapse of the Japanese economy, and before long to those of our European allies and ultimately of our own.
And even if such an attack does not occur, consider the price we are paying for our reliance on foreign oil. Last year we spent over $300 billion on foreign oil. Think for a moment of what $300 billion could buy in terms of better schools, health care, highways and bridges, law enforcement, a partial solution to our sub-prime mortgage problems, and a dozen other domestic priorities. But that's just the beginning.
Think about the half trillion dollars we spend every year -- yes, 'trillion' every year -- on the defense budget, and that doesn't count the supplemental appropriations for the war in Iraq. At least $200 of that $500 billion pays for forces that are deployed in the Middle East or to protect lines of communication between here and there and to our allies in Europe and Japan. Add it up -- $500 billion for defense, another $300 billion to pay for foreign oil, and with the price now above $100/bbl, the total from now on will be at least 1 trillion every year -- yes every year -- until we start changing our ways.
Of course the foregoing costs are just the financial dimension. Far more important are the costs in human lives, families shattered by separation, and the loss of loved ones. This is truly an intolerable condition -- one that is all the more unconscionable considering that we have the means at hand to overcome it.
Zubrin: I would like to make an additional point. As bad as $100 per barrel oil is for us, it is much worse for the poorer nations of the world. It is one thing to pay $100 per barrel for oil when you live in a country where the average person makes $40,000 per year. It is quite another if you live in a country where the average person makes $1,000 per year. To many third world countries, particularly in Africa, the effects of OPEC looting are not merely recessionary, but genocidal. Indeed, the jacked up oil price is nothing else than a huge regressive tax levied by the world’s richest people on the world’s poorest people.
Consider this: This year, Saudi Arabia’s high-priced oil business will reap that nation’s rulers over $300 billion. Much of this bounty will be wasted on a wild assortment of narcissistic luxuries. The rest go towards funding of network of over twenty thousand Wahhabi madrassas worldwide. There, millions of young boys will be instructed that the way to salvation is to kill Christians, Jews, Buddhists, animists, and Hindus, all as part of a global campaign to create reactionary theocratic states that totally degrade women and deny all political, religious, intellectual, scientific, artistic, or personal freedom to everyone.
Simultaneously, Kenya, a nation whose population of 36 million is half again as great as that of Saudi Arabia, will scrape up around $3 billion in export earnings, and use these funds to buy badly needed fuel, farm machinery, and replacement parts for equipment. (Kenya, incidentally, is not one of the world’s fifty poorest nations. There are many others much worse off.)
Distributed elsewhere, the loot garnered by the Saudi terror bankers could triple the foreign exchange of 50 counties comparable to Kenya. Distributed elsewhere, the $1.3 trillion per year taxed out of the world economy by the all the OPEC tyrannies could lift the entire third world out of poverty.
By shifting to alcohol fuels, we can shift a very substantial amount of capital flows in precisely such a direction. Many third world countries are tropical nations with very high agricultural potential. Within a few years of the establishment of a flex fuel mandate, we will have a much larger domestic market for agricultural produce to make ethanol than American farmers can deliver to. That is a very GOOD thing. It means that we will be able to give them all the business they can handle, and still have market share left over, which we could open to Latin American and Caribbean ethanol, but dropping the current tariff. So countries like Haiti, which desperately needs an export income source, will be able to get it by growing sugar ethanol for export to the USA. In the same way, Europe would be able to drop its agricultural trade barriers, and open itself up to ethanol exported from Africa, and Japan likewise from south Asia. Effectively, we would be able to redirect about a trillion dollars a year that is now going to OPEC and send it to the global agricultural sector instead, with about half going to advanced sector farmers and half going to the third world. This would create an enormous engine for world development.
Ethanol has been criticized by certain opponents who have alleged that its production from corn takes away from the food supply, and that large irrigation requirements draw power that exceeds that provided by the ethanol. Such analyses, however, are false. When ethanol is made from corn, all of the protein in the corn is preserved for use as animal feeds, and virtually no ethanol corn grown in the USA is irrigated. In fact, for the expenditure of a given amount of petroleum, nearly ten times as much ethanol can be produced as gasoline.
World food prices have been rising recently, at a rate of 4 percent a year, and oil cartel propaganda organs have been quick to place the blame on bio-fuel programs. But these are false accusations. Despite the corn ethanol program, US corn exports have not declined at all in recent years, and our overall agricultural exports this year are up over 23 percent. So its not corn ethanol that is driving up global food prices, including those for fish, fruit, and every kind of crop. Rather it is high fuel costs, which have risen 40 percent over the past year due to vicious OPEC price rigging. Not only that, these high fuel costs are driving up the cost of not just food, but nearly every product that needs to be transported anywhere in the world. And again, the hardest hit victims are the world's poor.
For the sake of social justice, OPEC must be destroyed.
