It's Not Just the Environment, Stupid
Posted September 8, 2008 in Moving Beyond Oil
Facing generational, interlaced challenges -- oil addiction and global warming -- it's pathetic that the debate among policymakers isn't about solving these issues, but about fringe issues like domestic drilling. I'm grateful that some friends are speaking their minds, laying bare some of the problems with this reductionist debate. At NRDC we are of course concerned about the environment, but we know that's not all that's at stake here.
First, what about future generations? As my friend Gal Luft points out in a Baltimore Sun op ed yesterday, we're in a rush to drill now, but our kids will pay for our rash actions later. Here is the key passage from his piece:
Upon recent discoveries of oil in the kingdom, King Abdullah ordered that those new finds be left untapped to preserve the nation's oil wealth for future generations. "When there were new finds, I told them, 'No, leave it in the ground, with grace from God, our children need it,'" the king said.
Behind the king's statement lies a plain truth: The Saudis prefer to sit on their oil, while we are rushing to deplete ours. The Saudi reserve-to-production ratio - an indicator of how long proven reserves would last at current production rates - is 70 years; Iran's is 82; the United Arab Emirates' is 90; and Venezuela's is 91. Iraq and Kuwait are at more than 100. How long does the U.S. have left? Eleven years.
The upshot is that the faster we deplete our share of this resource, the more we'll be hostage to other nations later. We should be saving our oil, not burning it as quickly as possible and thereby consigning our kids to a future of greater addiction.
Another friend (Jason Wells) reminded me of the utility of looking back at historical trends in order to gauge possible effects of new policy. Using data from the Department of Energy and inflationdata.com, Jason examined the relationship between real oil prices (i.e., adjusted for inflation) and U.S. production levels. What he found is startling, especially in light of all the "drill drill drill" bluster: There isn't a clear relationship!
Meanwhile, as my colleague Andy Stevenson notes in a recent blog entry, prices have dropped in the past few weeks thanks to reductions in demand as consumers have changed their travel habits and switched to more efficient cars. Cutting domestic demand works. This is especially so given that we are by far the biggest kid on the block on the demand side but have less and less clout as a producer.
The good news is that we're capable of making this a long-term trend, particularly with automakers who are finally hustling to provide high-quality fuel-efficient vehicle choices for us. In fact, over the course of several decades we lowered the oil intensity of our economy (how much oil we use to increase GDP), as shown in the graph below.
However, you will notice that the slope eases toward the right end of the graph. A couple of years ago I crunched some numbers for two key sectors -- transportation and electricity -- to verify this trend. The results are below: Year-to-year reductions in oil intensity have slackened. With vehicles, fuel economy stagnated. With electricity, there just isn't much more we can do to wean that sector off oil: Only about two percent of the oil we use goes there (which means alternatives like wind and nuclear can't help us much with our oil addiction, at least not before we have pluggable vehicles and a lot more electric rail).
But we can and must turn that trend around, slashing the oil intensity of our economy, as my ally Tom Friedman discusses in his new book Hot, Flat and Crowded.
I have just bought the audiobook, and am looking forward to hearing it based in part on the favorable review in the Washington Post, in which Joseph Nye describes how Friedman again lauds "green hawks" who not only value a clean environment, but are also fans of energy security and economic competitiveness. This is the concept underpinning the Set America Free coalition which Tom has reported on in the past. I recommend that everyone check his new book out, since I'm certain it does a superb job of framing the generational challenges ahead, which (as Tom would hasten to add) are really opportunities in disguise.
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Comments
Mike Mihalek — Sep 11 2008 09:34 AM
The seventy percent solution.
Americans are in love with the quick fix. If it sounds good and requires a minimum amount of effort on our part it’s fine by us, and so we have a significant number of citizens supporting the idea of expanding domestic oil production.
Seventy percent, if the polls are correct. I find that interesting, since it’s also been pointed out recently that two thirds of us are overweight. Is it a coincidence that virtually the same number of Americans lacking the character and self discipline to pursue a healthy lifestyle are also unwilling to make the effort and sacrifices necessary to solve our current energy crisis? I’m sure those of you who drive SUV’s because they’re safer, meaning safer for you and more dangerous to the rest of us, fit into at least one of those groups.
And while we’re at it, isn’t this about more than our failed energy policies? Hasn’t it been demonstrated beyond a shadow of a doubt that global warming is real? Its’ effects are being felt even now, to say nothing about how much worse things will get in the future. But let’s not kid ourselves. This isn’t about solving anything other than $4/gallon gas prices. It wasn’t in the hope of saving the planet that we started trading in our gas guzzling SUV’s, it was when gas hit $3.50/gallon that this phenomenon occurred, just as the same scenario played out back in the 70’s. Not surprising, considering those SUV drivers would have been better served with more efficient and intelligently designed vehicles in the first place.
So why do we find ourselves with the problem today? Weren’t the oil shortage and the subsequent crippling of out economy enough of a wakeup call back then? Certainly there was a failure of our political leaders to heed that warning, but ask yourselves this. Would those same seventy percenters’ have elected anyone campaigning on a platform based on increased gas taxes to invest in alternative energy sources, let alone even remotely hinting at the bigger sacrifices needed in order to secure energy independence and a cleaner environment for our future?
When discussing politics with people from other countries, the phrase “Americans deserve the people they elect” often comes up. To paraphrase a famous quote, “no one ever lost money by underestimating the intelligence of the great masses of the plain people.” That quote applies to votes as well, as exemplified by the fact our very own president said recently that increased drilling will have no effect on gas prices in the immediate future and only minimal effect in the long run. He couldn’t help pointing this out just as he was lifting the ban on offshore drilling!
Shouldn’t the absurdity of basing so much of our economic livelihood on a finite source of energy also be mentioned in this discussion, as well as the fact that increased drilling will only increase the chances of adding yet another environmental disaster to the one we’re trying to solve? Maybe we should look on the bright side. The more we drill the quicker we’ll run out. The world’s such a wonderful place now, just think how much better it’ll be when we’re all fighting over that last drop of oil!
But hey, arguing about drilling these days is like discussing religion. At some point a person just believes what they want to, and nothing anyone says is going to change that. Too bad believing something doesn’t necessarily make it true. Too bad you can’t teach common sense. The bottom line is, our politicians will continue to insult the intelligence of the rest of us while the seventy percenters’ worry about their petty self interests, and while that’s happening the situation will just keep getting worse.
Here’s one thing I know to be true, America. There is no quick fix, and when it comes to saving our environment and securing a future for later generations, you’re either part of the solution or you’re part of the problem. Maybe it’s time we stop listening to “the great masses of the plain people” and start making decisions that make sense, regardless of the personal sacrifices involved.