February 28, 2011 | 36
How many wars, deaths, recessions and environmental disasters will it take before Americans, and their Congress, finally make a decisive move to reduce the country’s dependence on oil? We are in a decade-long war in Iraq because of oil. We are still reeling from the worst recession in 80 years because of oil. Last summer the worst environmental disaster of our time took place in the Gulf of Mexico because of oil. Now, after two and a half years of trying to dig out of the recession, oil price hikes threaten to knock us right back down into that hole. And I haven’t even mentioned the air pollution and climate change caused by burning oil.
Crude oil prices have jumped to roughly $100 a barrel because of serious political uprisings in northern Africa and the Middle East. The success of protestors in Egypt fanned the flames of unrest in Bahrain, an oil exporter, and in Libya, an oil exporter. International leaders are concerned about unrest in Saudi Arabia, which in essence controls the flow of oil through OPEC, which controls world oil prices, which heavily affect the U.S. economy. Even if an uprising is not likely in Saudi Arabia, the unrest in the region increases the possibility of terrorist acts against oil infrastructure there. In 2008, Al Qaeda attacked the Abqaiq oil processing facility in Saudi Arabia, sending world oil prices climbing, at least for a while.
Eight of the top nine oil exporters are dictatorships or autocratic kingdoms, a control structure funded by our own dollars that is suddenly being shaken. And new leaders may be just as risky as the old ones. As R. James Woolsey, a former CIA director (and member of our advisory board) points out, a likely successor to Saudi Arabia’s King Abdullah is his half-brother and interior minister, Prince Nayef, a devout Wahhabi. It is Wahhabi institutions that train suicide bombers in Pakistan. U.S. leaders might have much more difficulty dealing with Nayef, who might also be less reluctant to restrict oil supply.
To be clear, the goal is to break U.S. addiction to oil, not just foreign oil. Oil prices are global, and as Woolsey points out, the U.S. has no domestic leverage. Greatly increasing our own offshore oil drilling could lower imports a little, but it won’t lower world prices; it is too easy for OPEC to manipulate production to offset the effects of any new U.S. supply.
The payoff of significantly reducing oil consumption would reach far beyond the economy and the environment, by the way. A study by Boyden Gray and Andrew Varcoe noted that oil companies are permitted under a waiver of the Clean Air Act to include known carcinogens such as benzene, toluene and xylene in gasoline, which raise octane (power output). The study showed that the added cost to healthcare and shortened lives in the U.S. comes to more than $100 billion a year.
The U.S. can take a number of steps to reduce oil consumption and to create liquid fuels that can substitute for oil.
Gasoline tax. The most direct way to reduce oil consumption is to raise its price. A gasoline tax keeps price high regardless of OPEC actions. In a recent New York Times column, Thomas Friedman proposed a $1-a-gallon gasoline tax, which would be phased in at five cents a month beginning in 2012. Announcing a delayed start, yet defining the phase-in, would give producers and consumers time to change their buying and investment habits before the tax kicks in. Friedman advocates that the money be used to reduce the deficit. Others say some of the money could be used to develop alternative liquid fuels, and some could be used to assist low-income families to offset rising home heating oil prices. The chief argument against a tax is higher prices, but as we saw in the 1970s, in the 2008 recession, and right now, oil prices are higher anyway. And tax money stays in the U.S., instead of higher crude payments that go overseas.
Crude oil tax. Some economists argue for a crude oil tax, rather than a gasoline tax. In February the RAND Corporation released a white paper in favor of a tax on crude oil (as well as imported, refined petroleum products). Taxing crude, at the refinery, spreads the burden across all taxpayers, not just motorists and truckers. RAND suggests linking the tax to price. For example, the tax rate would be 10 percent if crude were $120 a barrel, but 17 percent at $72 a barrel. This would keep prices high, and generate the same amount of tax revenue, regardless of OPEC attempts to reduce world prices to encourage greater consumption. Although critics say "now is not the time" to impose any kind of tax, there is never a good time; RAND notes that the federal gasoline tax, alone, has not risen in 18 years. The study also suggests that the money be used to maintain roads and bridges. If so, that could free up stimulus money or other infrastructure funding to support development of alternative fuels-or the tax could do that directly.
End oil subsidies. Economists and politicians claim that subsidies for renewable energy cloud those sources’ ability to compete on price alone. Well, U.S. oil companies receive billions of dollars each year in subsidies and tax breaks.
Raise fuel efficiency requirements. The Obama administration has succeeded in raising "mileage standards" a modest amount, but existing technology sitting on car-company research shelves is capable of doing much more. The standards can be raised further.
Encourage new hybrid vehicles. The new "extended range" hybrids like the Chevy Volt can cover up to 40 miles on batteries alone, without using their onboard gasoline engines, unlike traditional hybrids such as the Prius. Many, many people drive less than 40 miles a day. Putting millions of these hybrids on the road would switch the fuel source from oil to electricity. A valid concern is that the electricity would be generated by coal-fired power plants, but the technology to capture carbon dioxide emissions exists; it is far easier to control emissions from a few thousand power plants than from millions of tailpipes. And nuclear power and renewables can replace coal plants; they can’t replace gasoline engines.
Require gasoline vehicles to be "flexible fuel." Changing the materials used in a few minor car parts such as fuel lines allows them to run on nongasoline fuels such as ethanol and methanol. In a few short years Brazil has essentially changed over its entire inventory of commercial and consumer vehicles to flex fuel.
Switch fleet vehicles to natural gas. Converting hundreds of thousands of cars, vans and buses to natural gas is technically not difficult, and because they operate from central hubs, they can easily fill up on natural gas there; there would be no need for a nationwide network of natural gas stations. Furthermore, many short and even long-haul trucks could operate in the same manner if only a small number of natural gas stations were built along major interstate highways.
Fund more research. A number of "radical" energy technologies are being advanced that could directly replace liquid petroleum with other liquid fuels. Biofuels of all sorts are being attempted. The Energy Department’s ARPA-E program is funding a number of solar fuel projects, in which sunlight converts carbon dioxide and water into hydrogen fuel. Sandia National Laboratories, schools such as the University of Minnesota, and start-up companies such as Sun Catalytix and Liquid Light are all on the task. ARPA-E is also funding unusual but promising automobile engine designs such as wave-disk engines that are smaller and lighter yet double the fuel efficiency of the equivalent internal combustion engine, which could dramatically reduce gasoline consumption.
American men and women die in Middle Eastern oil wars. American families lose their homes and lose their jobs due to oil recessions. Americans of all ages and incomes lose their health because of oil additives. American coastlines are ruined by oil spills. The level of human, economic and environmental harm inflicted by our oil dependence is absurd. Our unwillingness to act is even more absurd. How many more wars, deaths, recessions and disasters will it take before we make a move?
Image credit: © Henrik Jonsson Graphic Design