America’s Global Oil Problem

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I’m happy to see Tom Lantos is holding a hearing this morning called “Foreign Policy and National Security Implications of Oil Dependence.” Not only is this the right problem for the Foreign Affairs Committee to focus on – it’s the right angle to take, too (insofar as one can judge from the title of the hearing).
Too often, the problem is cast as a “foreign dependence” problem, as if cutting ourselves off from the global energy market were possible or helpful. It is neither. The world’s oil dependence, not just our own, is the problem.
I don’t subscribe to the theory that oil is the main reason we’re in Iraq – I think we have a team of narcissistic neoconservatives with delusions of grandeur to blame for that. But oil does complicate our ability to confront a wide range of national security and human rights issues that should otherwise be at the top of the U.S. agenda.
Even if the U.S. were to generate all of its own energy, we would still be vulnerable to fluctuations in global energy prices so long as the vast majority of the world’s people depend on a few oil-producing states for power. In other words, as long as most of the world is oil-dependent, oil will plague us whether we consume it or not.
Perhaps most importantly, the world’s dependence on oil – not simply America’s – plays a major role in causing climate change and keeping billions in poverty. Plus, oil dependence limits other countries in their foreign policy options more than it limits the U.S., thanks to our ample strategic reserves and some domestic supply. The effects of oil on other states seriously complicate our own geopolitical realities.
The U.S., which consumes about a quarter of the world’s oil, should lead the global transition away from oil – but shutting off the American spigot won’t do the job alone.
I hope this is where Tom Lantos and Co. are heading. This debate desperately needs a respite from the alternating calls for the ideal of “energy independence” and more of the status quo.
— Scott Paul

Comments

20 comments on “America’s Global Oil Problem

  1. JohnH says:

    The new petroleum law doesn’t really solve much. It just kicks the can down the road:
    http://www.csmonitor.com/2007/0305/p17s01-cogn.html
    Nonetheless the Iraqi PM’s job apparently depends on its passage…
    http://www.guardian.co.uk/worldlatest/story/0,,-6478732,00.html

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  2. Jon Stopa says:

    Amazing how much sense several of these analysis make. If the denationalization of oil is the purpose of this war, one might consider the possibility that it won’t end until the hydorcarbon law is passed. Democrats note. Wow! Suddenly we will want to get up and leave!
    Ahem. Naturally, we would have to keep a force there to insure that al Sadr doesn’t nationalize the wells again.

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  3. rich says:

    Scott,
    “Oil” vs. “Control of Oil” is a false distinction. It was used by neocons /AEI staff as a rhetorical ploy and as a rationale for going to war. “It’s not about oil,” they said.
    But it is about oil–about the control of oil, which is the same thing.
    If you control the flow rate of oil going to burgeoning economies of Asia, China specifically, it’s a chokehold that counters any political power and economic clout that threatens our own.
    When you force Iraq to pass PSAs (Petroleum Service Agreements) mandating that 75% of profits go to foreign corporations, rather than to Iraq–then hooo boy, yeah, it’s about oil.
    When switching the Iraqi oil bourse from dollars to Euros immediately precedes war, then there’s a good chance it’s about oil. And money, of course. Because aren’t oil, money, and power the same thing here, just in different currencies/forms?
    IF you’re TRYING to say, Scott, that America is somehow more efficient, or more sustainable in its energy policy than the rest of the world, it won’t wash.
    OF course other countries face the same problems. Of course globalized production and the prevailing industrial systems affect everybody.
    NONE of that is a reason for the America to eliminate its dependence on foreign oil. NONE of that answers the greater economic gain to be had by relying on renewable energy and retrofiting production systems. That should have been America’s first priority–in 1973–for the sake of US power, national security, and continued economic viability.
    Scott, your post distracts from the one thing America can do to improve its situation. It’s those other guys again, according to you. They’re NOT the problem.
    Our willingness to clean up our own house is the problem. Let’s not pretend the housekeeping of other nations is our job–or even a priority–when our own house (our own energy act) is filthy. Many other countries surpass the US in terms of moving to sustainable energy. We lag on multiple fronts.
    One example: Turkey, Mexico, & Vietnam are building high-speed rail. Top speed 150-200mph. The US MAY upgrade–to a top speed of 110mph–by 2030 at the soonest.
    Let’s not put the oil/energy problem off on other countries. We went to war for oil AND to control oil; let’s have the maturity to take responsibility for that. Not indulge in rhetorical games.

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  4. Michael Kahn says:

    In “Crimes Against Nature,” the book on this administration ‘s economic disasters, Robert Kennedy, Jr. says if we mandated 40 miles to the gallon in the U.S., it would end our dependence on foreign oil. That leaves a lot of the discussed problems still looming, but it would be helpful step.

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  5. Pissed Off American says:

    http://www.harpers.org/BaghdadYearZero.html
    Klein should have got as Pulitzer for this Harper’s piece. Although that asshole Bremer didn’t get the job done, the Bush Administration has finally managed to get the privatization wagon back on track. It was the privatization of the oil assets that was the goal. I heartily disagree with Steve. I think the radical ideology of the neo-cons was a secondary motivation, tacked on to Cheney’s vision of looted Iraqi oilfields, feeding the coffers of Haliburton and all his big oil cronies. Then, of course, you can add Israel’s “security” interests, and you end up with a three-way clusterfuck. Perhaps the differing motivations between the three factions is what derailed the whole thing. Maybe with one goal things could have turned out differently. Its ironic that it appears the privatization goal may pan out, but the hard core neo-cons and the racist warmongering Israeli right is ending up with a Shiite theocracy, closely allied with Iran, right smack next door to Israel. Its a kind of poetic justice, I guess. Now, I would love to see these corporate pricks on Cheney’s gravy train, like Haliburton, sink billions into their investment in the Iraqi oil fields, only to have thier investment “nationalized” by the Iraqi Shiite government. Of course, it would be nice believing that Cheney will watch the whole thing unfold from a cell in a federal prison, but obviously these bastards aren’t subject to the same laws we peons are.

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  6. Ernie Fazio says:

    There is a perspective that Big Oil has controlled the world for a century since BP and Standard divided the Middle East through a number of secret memoranda. Their goal? To maintain the price structure of a commodity that was too abundant to control. Their methods? Until the 70’s it was to maintain a level of production that enabled new consumers to come on line and new producing countries (Lybia, Mexico, etc.)while maintaining price levels.
    I will never forget the conversation I had with an oil executive in the early ’70s who revealed that Big Oil (big energy) was tired of providing cheap gas to the USA ($.25/gallon at the time). I remarked that they were profitable, but he replied–not profitable enough, and guaranteed to me that the price of a gallon would triple overnight.
    I scoffed until OPEC came along. Overnight gas was .$50,.$75–and in time $1.00. Iran’s revolution provided problems for the world in the ’80’s, but Big Oil just got bigger profits–production from Iran was reduced, price went up. The 90’s saw the real commoditization of oil with the Oil Shill–the Lundsford Report (pere now fille)–with its explanations of the random increases in price from weather, to refineries off line, to international problems. Cut to Iraq, Big Oil doesn’t want the Iraqi oil, it can sell it whenever. It wants the Iraqi production to reduce from 4 million barrels to 2 million barrels a day. Voila’ the price skyrockets.
    The issue for the new millenium is the price of gasoline per mile. I think Big Oil has reached its super status quo. Japanese gas is twice as expensive, Japanese CAFE standards are twice those of the USA. The price per mile is the same for a 50 mile per gallon car using $6.00 per gallon gas as it is for a 25 MPG car running on $3.00 per gallon gas. Sure China and India are new consumers, but the real reserves are almost unlimited (every company has billions of barrells let alone the billions of producing countries). New consumers, no problems with reserves or production. The price per mile is becoming standardized around the world. That is it would be if Chavez wouldn’t sell his gas at a “fair price” instead of the “dictates of the market.” Now if we could just get Iran’s oil production down…..

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  7. Chris Brown says:

    I don’t disagree with your thesis; but, really, isn’t one of the major reasons for the Iraqi adventure is that the neo-fascist (you call them neo-cons) Likudniks, whom Cheney as chief of transition sprinkled in important war, intelligence, and foreign policy positions throughout the administration, are more interests in promoting the interests of Israel than those of the USA. Other than Iran which country benefits more from a denuded Iraq?

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  8. Matthew says:

    Energy dependence is our national security strategy. I guess Lantos et al justs wants America, but not the world, to move away from fossil fuels. The world, you see, has to stay addicted to oil. We are in ME to control the flow of oil to Europe and Asia–thereby giving us the ability to cut off that supply should Japan or the EU “threaten” us.
    I am all in favor of alternative energy. It will be the un-doing of the Empire.

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  9. JohnH says:

    Yes, alternative fuels would be nice. One of the most promising solutions is wind–but it’s fickle. Bio-fuels are also promising–but at what cost? http://www.energytribune.com/articles.cfm?aid=412
    “Clean” coal rips apart entire states like West Virginia and depends on unproven carbon dioxide storage facilities to implement sequestration.
    Folks, we’ve got an energy consumption problem, or perhaps a consumption problem: http://www.alternet.org/envirohealth/49593/

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  10. Sammy says:

    It is clear that the fundamental problem is the world’s dependance on oil, as Scott says.
    And from a practical sense, declaring that independence from oil is good for the world will probably move us closer to that goal. But if we lead everyone to think that energy indpendence is good for defeating terrorism and national security, we’ll get there faster. Remember that the space race of the 60’s was very much made possible by a somewhat irrational concern that if we couldn’t get to the moon before the Russians, it probably meant they could vaporize us (or something). Also note that much of the innovative research that happens in this country, namely that which takes place at national labs, is performed under the auspices of national security.
    In short, there’s nothing like a national security crisis to inspire a technology makeover.
    But, it also doesn’t seem clear that the US doesn’t make it’s self less vulnerable to threat should it have complete control over its energy resources. Right now the US is vulnerable to both (1) energy prices and (2)energy availability. Independence would get rid of the latter consideration. After all, Jim Woolsey drives a hybrid, and it’s not because he’s worried about climate change.

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  11. Carroll says:

    Alternative energy would be nice…after all other people and groups have been promoting it for how long now before Lantos?
    So, two things..
    1) There is no law that says the invasion of Iraq wasn’t about the Neo delusions, Oil and Israel. So the arguement doesn’t have to be chose one, it’s all of the above.
    2) We should have passed the point by now of giving kudos to politicans like Lantos without pointing out the reason for their “sudden” interest in energy independence. Lantos took no interest in this until it became part of the AJC’s mission statement. When someone like Lantos takes up a subject you would do well to look behind the curtin… cause it’s gonna cost you double what it would if it were just based on world energy concerns alone.
    http://www.ajcongress.org/site/PageServer?pagename=energy_indep_tf
    Petrodollars finance terrorism and pay for the purchase of the weapons of war by America’s and Israel’s enemies. That’s why reducing America’s dependence on imported oil must be one of our nation’s highest priorities, why energy independence is such an important Jewish issue and why, since 2001, the American Jewish Congress has been the preeminent Jewish group fighting in the halls of Congress for energy independence. Without the power that oil buys, Hezbollah would not have been able to build its multi-billion dollar network of tunnels, Iran would be but another petty state in the region without the prospect of acquiring a nuclear weapon, and the political power of Israel’s enemies would be a fraction of what it is today.
    That’s why we have done more than just talk about energy independence; we have taken action. Among our proudest achievements is the U.S.-Israel Energy Cooperation Act (USIECA) which gained special attention when Prime Minister Olmert highlighted it during his address to a joint session of the U.S. Congress. USIECA would provide $20 million in grants for a total of $140 million over 7 years, give a jump start to the establishment of an alternative energy industry in Israel, and apply Israeli technological prowess to helping the U.S. free ourselves from the addiction to imported oil.

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  12. asdf says:

    Perhaps most importantly, the world’s dependence on oil – not simply America’s – plays a major role in causing climate change and keeping billions in poverty. Plus, oil dependence limits other countries in their foreign policy options more than it limits the U.S., thanks to our ample strategic reserves and some domestic supply. The effects of oil on other states seriously complicate our own geopolitical realities.
    * Plus there will be less and less oil (And then less still)
    * Plus a bigger and bigger chunk will be in the middle east and Russia
    * Plus China and India want more…okay, but it turns out they want more than previously estimated
    * Plus oil and energy are the current or potential weapons of choice for states besides the western ones. (Russia after lots of messing with gas is rumored to messing with Uranium supplies. I would rather not have learned where the straight of hormuz is the way I did)
    * Plus oil and energy are a weapon of choice of terrorist. (Iraq, attempts in Saudi Arabia, clumsy attempts against powerlines in the US)
    * Plus oil and energy are big corrupting forces in pretty much all politics (Big oil makes aipac look like legal-marijuana, but thats just the US, Iraqis just kill for the stuff)
    * Plus modern armies have to walk, if there is no oil (Vietnam would have been problematic if Saudi Arabia didn`t go trough with a secret deal during the oil crisis, the US military is said to need about 300,000 barrels a day http://www.defensetech.org/archives/003318.html)
    * Plus oil and energy are more profitable with less reliability, something oil companies, Enron and terrorists all understand
    * Everything in an economy gets way less profitable with messy energy reliability/prices
    (How much do Iraqi shopkeepers spend on their generators? Could Vegas one day smell and sound like Baghdad?)
    * Plus in lots of western societies the roads are jammed, more cars wont fit… period
    Meanwhile it has been said full cell research and the funding of such research is taboo in the high-tech/defence sphere in the US. This would be because hydrogen fuel cells allow for submarines as silent and undetectable as the US nuclear ones, but at a price the rest of the world could afford. All this while Germany already builds such submarines.
    Has anyone spotted the beginnings of an energy strategy among the presidential wannabes? The current oilman/lineman ideas are a bit of a disappointment.
    Anyway, there is always tactical bad news as well:
    http://www.guardian.co.uk/turkey/story/0,,2040626,00.html

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  13. JohnH says:

    Great post, Scott! I do disagree, however, with your opinion that “a team of narcissistic neoconservatives with delusions of grandeur [are] to blame” for invading Iraq. Yes, delusions of grandeur, helping Israel, and demonstrating ‘shock and awe’ were all part of the calculus. However, there is little doubt in my mind that the key problem was very simple–they were hiding our oil under their sand.
    The former oil executives who occupy the WH were fully aware in 2001 that oil was getting scare and we needed to “convince OPEC to open the spigots,” as Bush put it. From their perspective, Iraq and Iran held the last two major pools of cheap oil, and THEY HAD NO SENSE OF URGENCY ABOUT PRODUCING MORE. Market incentives weren’t working. They could not be cajoled, and they could not be forced into producing what the industrialized world desperately needed. The only way to make them meet our insatiable and rising demand was to take over the oil fields and put people in charge who would produce.
    In the end the industrialized world lucked out, because rising prices, a dramatic and unexpected increase in Russian supply, and other supply increases from Saudi Arabia and a few others managed to keep supply and demand in balance, despite the Iraqi debacle, which represented the third largest cumulative oil disruption since WWII.
    Now we are back to ‘square one.’ The IEA’s last report is saying that OPEC will have to increase its supply this year, if demand is to be met. Can that happen, particularly if Saudi output is on the down slope? And if OPEC can meet demand this year, can they meet it next year without major increases in supply from Iraq and Iran.
    If not, we will soon see the national security implications of dependence on oil in terms of spiraling oil prices, inflation and recession.
    Stay tuned–we’ll know the answers shortly.

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  14. Linda says:

    A lot of the neocons had connections to oil industry–not just Cheney, but Khalilzad in late 1990s was consulting for Unocal (along with Harmid Karzai)and talking to the Taliban about a pipeline across Afghanistan. Condi Rice was on the Board of Chevron and helping them with deals with one of the former Soviet -istans. And the new Iraqi constitution oil deal surely lets foreign oil companies get a piece of the action. So I think oil is part of the reason.
    It also would be a very different geo-political situation if oil happened to be evenly distributed throughout the Middle East, i.e., if Israel and others without it had oil.
    BTW, some have responded to Steve on this post, but it was by Scott. I think Steve all along has proposed that Iraq should put into place a plan where every citizen of Iraq gets a share of oil profits.

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  15. Minnesotachuck says:

    I guess I’m a bit more cynical than you are Steve. If and when the proceedings of Cheney’s 2001 Energy Task Force are ever made public (assuming that records were even kept) I suspect they will show that the hand-over of Iraqi oil and gas to American-based companies on concessionary terms by a Chalabi-led puppet government was at the heart of the strategic justification. Of course they couldn’t go with that publicly so they came up with the WMD justification. When that dissolved in their hands they segued right into their subsequent justification-of-the-month program. Even if they hadn’t based their occupation plans on such fantastically optimistic assumptions, and thus botched it so badly, it was plain stupid of them to think that such an arrangement could last long given the fractious Iraqi society and modern communications. In short, I’m with you, Marcia.

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  16. DonS says:

    Even WERE the U.S. “energy independent”, I would not expect an epidemic of concern for the poor of this world to break out. That would require a whole different mindset from the prevailing one which involves only the profit motive for the controllers of the economy, and seeking to protect the diminishing standards for the rest of us, or the perception of critical diminishment.
    But given that the economy is really globalized at this point, which may be a good deal owned by American wealth, this does not translate into protection for the U.S. consumer.
    To the contrary, since the U.S. “economy” is largely propped up by consumerism — the geejaws of which are increasingly supplied from overseas — we are all the more vulnerable. There is just so much that can be outsourced to China before losing the benefit of cheap labor.
    And as the U.S. economy goes down the tubes in the lawful backlash of global capitalism/ologopolism gone mad, our politicians with their safe and cushy perks — not to mention the captains of industry and finance — will be peddling the “helpless in the face of world economic forces” line to the masses.
    Oil may be a leading indicator of the evolving disaster, but the problems run a lot deeper. I doubt Lantos is on that page.

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  17. Marcia says:

    I think the problem is even vaster. Our entire industrial civilization, which itself was a total break from all the civilizations that preceded it, is energy dependant. It is precisely this dependency that distinguishes it. Industrialization and capitalization rose together, then after WWII another factor was added, expansion, continued expansion, without which the system risked collapse. There are not enough raw products in the world to ensure a standard of living equal to the post war middle class one enjoyed by the US, yet this is the carrot dangled in front of everyone’s nose. As our own middle class dwindles, joining the working poor, as more fall into poverty a small percent of the population now CONTROLS the financial system, government and access to raw products.
    There is no idea of managing the world’s natural resources, which are limited and non renewable, other than for profit. There is not a thought for future inhabitants of the planet, it is truly “after us the flood.”
    Contrary to you I think Control of oil played an important part in the invasion and occupation of Iraq. The gigantic embassy, the oversized permanent bases were planned and talked about well before the invasion. The fact that this administration believes only in the use of force led to confrontational relationships world-wide, their intent being CONTROL, POWER. and the oil corporations will certainly do everything in their power to sell us the last drop of oil at the highest price regardless of the consequences.
    I too, hope some will come to their senses but looking at history makes it doubtful.

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  18. Matthew says:

    I’m sceptical of any inquiry headed up by Lantos. He really is odious.

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  19. lugbolt says:

    To get a sense of how wrong headed was the invasion of Iraq, think about where we would be now if, instead of burning up wealth in Iraq, we had invested in renewable energy.

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  20. eCAHNomics says:

    So did you ever wonder why the world is STILL so dependent on hydrocarbons? Where is technology when you need it? This is one area where I am a conspiracy theorist–think the oil companies have bought up all technologies to reduce consumption & ditched them.

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