Garry

An Oil Habit America Cannot Break
Robert J. Samuelson
971 words
18 October 2006
The Washington Post
FINAL
A21
English
Copyright 2006, The Washington Post Co. All Rights Reserved

"Americans can always be counted on to do the right thing . . . after they have exhausted all other possibilities."

-- widely attributed to

Winston Churchill

On energy, we're disproving even this cynical axiom. Our main energy problem is our huge dependence on imported oil. For years, some remedies have been obvious: Tax oil heavily to spur Americans to buy more fuel-efficient vehicles and to drive a bit less, raise sharply the government's fuel economy standards so those vehicles are available, and allow more oil and gas drilling. In recent years, we've done none of these things. It's doubtful we will anytime soon. "Other possibilities" seem inexhaustible.

Under present policies, U.S. oil demand will expand 34 percent by 2030, the Energy Department projects. There will be more people, cars, planes and travel. Imports would satisfy all of the increase. We should try to prevent or minimize that. With China and India's oil demand increasing, American restraint would relax pressure on prices and reduce oil's usefulness as a political weapon. Consuming 25 percent of world oil, we're hardly powerless. But instead of doing what we might, we're awash in delusions.

Item: As gasoline prices have receded from $3 a gallon, many Americans attribute the decline to politics. In one Gallup poll, 42 percent of respondents said the Bush administration had manipulated prices to improve Republican prospects in congressional elections. Gee, if the White House could fix prices so easily, why let them rise in the first place? (The drop reflects small shifts in supply and demand: an end to summer driving, high oil inventories and fading fears that Iran will cut supplies.) Item: We're still enthralled by energy "independence" even though -- as a new report from the Council on Foreign Relations makes clear -- it's impossible for "at least several decades." In 1973, President Richard Nixon announced Project Independence, which was to eliminate oil imports by 1980. In 1973, the United States had net oil imports of 6 million barrels a day, 35 percent of our consumption. In 2006, net imports average 12.4 million barrels a day, or 60 percent of use. Nixon's advisers warned him that his goal was unattainable. In the foreseeable future, it still is. Anyone suggesting otherwise is misinformed or dishonest.

No plausible combination of alternative fuels or "conservation" can soon substitute for all that imported oil. Even if that weren't true, many other countries -- most of the world economy to which we are tightly tied -- would remain dependent on oil imports. So we'd be hostage indirectly.

The problem is not that the world will soon run out of oil. Global oil use now totals 31 billion barrels annually. Proven oil reserves are about 1.3 trillion barrels, reports Oil & Gas Journal. That's 42 years of supply at present consumption rates. Yes, consumption is rising -- but more oil will be found. Even when it's all gone, other hydrocarbon deposits can be, at higher prices, converted into oil. John Hofmeister, president of Shell Oil, claims that the oil shale in Colorado amounts to another 1 trillion barrels and that Canada's oil sands total 1.3 trillion barrels. Indeed, the oil sands are already producing.

The problem is not even imports. It is that most imports come from countries that are potentially insecure, unstable or hostile. More than 700 billion barrels of reserves, slightly more than half, lie in the Persian Gulf; 80 billion are in Venezuela, 76 billion in the former Soviet Union, 39 billion in Libya. New exploration in these countries is difficult; supply interruptions are an ever-present threat.

Unfortunately, the steps we should take involve immediate political costs -- they'd be unpopular -- while the benefits would emerge slowly and seem modest. Suppose, for example, we opened coastal areas and parts of Alaska, including the Arctic National Wildlife Refuge, to drilling. U.S. oil and natural gas production would rise. But the increases would occur only after five or 10 years, and they might merely offset declines in existing U.S. fields. To a casual observer, the benefit would be barely visible.

Or imagine we raised the government's fuel economy standards for new vehicles -- say, from 27.5 miles per gallon for cars to 40 mpg. Because factories can't be converted instantly, the shift would be spread over 10 to 20 years. Replacing today's more than 225 million cars and light trucks would also be gradual and hardly perceptible. We'd also need a tax on fuel of at least $1 to $2 a gallon. Without mandated higher fuel prices, many Americans wouldn't buy more efficient vehicles. They'd recondition bigger sport-utility vehicles and sedans to keep them running. Or more driving would offset potential fuel savings. With low fuel prices in the 1990s, average annual driving per car rose about 1,500 miles, to almost 12,000.

So we probably won't do much about our oil habit. Any realistic proposal would ignite a firestorm of protest. Environmentalists would denounce more drilling. Auto companies would protest new fuel economy standards. Most important, the public would denounce a steep energy tax, even if it were introduced gradually with most proceeds rebated by lowering other taxes (as is desirable). And these unpleasant steps would merely reduce our dependence from what it would otherwise be. It's a hard case to make.

Because Americans want painless salvation, our politicians proffer visions that promise just that: a shift to hydrogen fuel or a surge in ethanol. The first may be futuristic wishful thinking; the second is mainly a costly giveaway to farmers. Both are deceptions, new excuses not to do the "right thing."

gunnut

I say we let the market decide how much gasoline costs. If it's to the point of making alternative form of fuel economical, then we'll switch. Until then, let's burn some more gasoline.

__________________
"Only Nixon can go to China." -- Old Vulcan proverb.

astralis

oil is too important to be treated solely as a free-market resource. i say the faster we can switch out of oil, the sooner we can screw over- or at least have the ability to screw over- the oil oligarchs of the world, instead of the other way around.

and the faster we start researching on alternative fuels, the less of a bump there will be down the line. after all, alternative technology and infrastructure do not appear overnight.

__________________
Never let the future disturb you. You will meet it, if you have to, with the same weapons of reason which today arm you against the present.

-Marcus Aurelius, Meditations

gunnut

I have a different appoach, but the same opinion as you.

I think we should use even more foreign oil. Use up as much as possible, as quickly as possible, and then guess what? Open up the tab on our soil. We can royally screw over just about everyone who laughs at our dependence on foreign oil right now.

mcdelroy

I often wonder if the price of oil would continue to rise dramatically if engineers would then have much more incentive to develop a viable alternative automobile engine. I'm not a Liberal conspiracy theorist, however, I do wonder if the US auto industry hasn't been buying and killing promising projects for alternative engines throughout the years. The US auto companies know they can make very good profits using cheap fossil fuel engines.

Marc

Shek

Would you pay extra money for a car with an alternative engine? Not me. Whatever is the cheapest. It's not a conspiracy, it's just the free market at work.

__________________
"So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

bonehead

Alternative, ie hybrid, cars are all the rage and they do cost a bit more than their traditional cousins. Hybrid cars may be our near future. The American auto companies have been whining, belly acheing, lying, and foot dragging for years when it comes to making well made higher mpg vehicles and that is why they are declining while imports are making money. either the executives at GM and Ford are really stupid by ignoring the free market, or something is up.

Shek

Bonehead,

You are correct in that I was not clear. I factor in both the cost of the car as well as the cost of gasoline that I expect over the lifetime of that car. That's why I didn't buy a SUV and went with a minivan for the kidmobile, but wouldn't be willing right now to buy a hybrid version. That's the same equation that most customers take into account, and it was the high cost of gasoline that made hybrids seem cheaper, which is why they are the rage (not because they have some inherently cool value). My guess is that hybrid sales have probably been tapering off some due to the recent declining gas prices.

As far as GM and Ford go, they haven't reacted well to the free market, which is one reason why sales just aren't what they used to be four decades ago. Coupled with dumb decisions in employee structuring two decades ago, they are both in a hurt box. However, the decision to not market hybrid engines a decade or so ago was smart. Gas prices wouldn't have supported the successful introduction of a hybrid engine.

bonehead

I agree. The sooner the middle East runs dry the sooner those people in the desert will be broke and can't fund their terrorist activities. They will once again be reduced to a footnote in history unless they change their ways which I do not see happening.

gunnut

I know this guy (supposedly he's not the only one) who absolutely believes the auto companies bought and killed a patent that allows an internal combustion engine to run on WATER!

No joke. Some people actually believe an engine can run on water.

gunnut

Shhh...you're letting out the secret...

bonehead

I am feeling the heat to trade my Bronco for a kidmobile as well. Fortunately oftentimes the roads are undrivable for a car/minivan so a 4X4 gives me much better odds of getting me to where I need to be in such situations. The offroadability also comes in handy for fishing and hunting trips and the ability to tow a heavy trailer comes in handy as well.

I would not be surprised to see gasoline creeping up again in the future so the long term viability of hybrids looks good. The ulralow/zero emission standards also point in the favor of hybrids. I see the hybrid market is where GM and Ford can get back some of their market share. The problem is that they have to lure their old customers back and that will take more than a slick marketing campaign. They need to make a superior product.

glyn

Well, theoretically they should be able to as water consists of Hydrogen and Oxygen. The teensy-weeny problem has been in separating them. However there have been at least 2 inventors in the US who have managed this, and one of them made a small lightweight engine in a vehicle about the size of a go-cart. A TV show in the UK showed him driving along in it, not speeding, to be sure, but moving - which was all that was necessary for a proof-of-concept vehicle to do. I was fascinated but could find no other details. That was about 15 years ago. Not a cheep since - which should play into the hands of the conspiracy theorists.

Major_Armstrong

If you've been awake for the last couple of decades you may have seen that as soon as a lot of alternative fuel technologies get going, OPEC increases production to lower oil prices.

gunnut

I don't buy this "burning water" technology as it violates the conservation of energy principle. You simply cannot produce energy without putting in more. The difference is the lost efficiency in the form of heat (usually).

It takes energy to seperate water into hydrogen and oxygen. That energy is higher than the energy you can get out of recombining hydrogen and oxygen into water. Inefficiency makes up the difference.

If we have a perfectly efficient system, the best we can do is pull even. There won't be enough left over to drive a car.