Wednesday, February 23, 2011

Conservative Americans want to get off foreign oil

They think our foreign policy and our economy is "held hostage" by foreign oil and the likes of Qaddafi and Ahmedinejad. Joe Scarborough repeated "held hostage" several times throughout his show today. I'm still not quite sure what he means by "held hostage".

I categorize the hosts on Morning Joe as conservatives. On today's show, which included Jim Cramer (the stock guy) and Steven Rattner (a private equity investor), they discussed Thomas Friedman's article "If Not Now, When?". Mika read part of Friedman's article and said "I just wish we would...get off our dependence, so that we can not be in this situation." What situation, Mika? Please elaborate.

The implication is that we're in bed with dictators, and conservative Americans like Mika and Joe don't like that. Steven Rattner said we have no choice, we have no influence with the Saudis because we are so dependent on them. I agree with Rattner that nothing we will do in the foreseeable future will change our dependence on middle east oil. But that doesn't mean we shouldn't reduce our dependence on foreign oil. Also it doesn't mean that we shouldn't (or can't) influence what happens inside KSA and other oil-rich states.

If the US can get the Saudis to do business (ARAMCO being the significant one in history) with us, if we can get them to be nice with Israel, if we can get them to match dollar for dollar in funding the fight against communism in Afghanistan, if we can get them to invite American soldiers (half a million of them) onto their soil and fight a war with them (against another Muslim country), then we should be able to influence them on their human rights and democracy record.

Joe emphasized the need to develop alternative forms of energy, not because it might help reduce greenhouse gases, but because it would reduce our dependence on foreign oil. And we gotta keep up with China. Those are the factors that drive conservative Americans towards energy independence.

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They didn't even mention Israel, except the part in which Mika read Friedman's reference to Israel.

At least conservative Americans are beginning to realize the importance of clean energy. In this clip Joe deserves kudos for giving credit to Jimmy Carter, who started talking about a sensible energy policy in 1977. Why doesn't the US spend more to develop clean sources of energy? Joe asks the question, but there are no answers, not on his show. Jeffrey Sachs, a Columbia University professor, answered that question on The Last Word today, and explains how billionaires are influencing politics in America. If we are being held hostage, we are being held hostage by the Koch brothers.


Maury said...

"I'm still not quite sure what he means by "held hostage".

Look at the jump in oil prices over the last week. Another $20 a barrel, because of concerns over mideast supply. That's an additional $400 million per day US consumers have to spend for oil. That's an economy held hostage.

Natural gas hasn't budged, at least not in the US. That's because we don't depend on imports. Companies spent billions on LNG terminals to import NG. But, new technologies have unlocked massive amounts of NG from the shale deposits. Now, the plan is to use those terminals to export natural gas.

It's long been known that the US had 80% of the world's oil shale. It's also been known that the amount of oil and gas in shale is 2-3 times larger than conventional supplies. The Bakken formation in South Dakota holds twice as much crude as Saudi Arabia. The problem has been getting it out of such a tight formation. New technology is making that possible.

New estimates of recoverable shale gas puts the US in the enviable position of having 50-65% of the world's natural gas reserves. In a few more years, the same might be said for oil. US oil reserve estimates jumped more last year than they have in the 35 years the EIA has been producing records. This new technology is a game changer.

CMAR II said...

Most of the US oil imports come from Canada and Mexico. Even if every drop of oil we used came from US resources, the price would still track with the WORLD oil price.

No conceivable alternative fuel is EVER going to compete with carbon fuels in efficiency (power + low cost). Nor will there be any alternatives to fuel our planes or trains in the next 100 years. It is magical thinking to plan for anything else.

I'd love to see alternative fuels developed, but devoting public funds to their development is just a scheme for well-connected flim-flam artists to rob the public till.

Maybe in a couple centuries, our oil and coal reserves will be exhausted. There's a good chance that when that happens a Dark Ages will descend on this world. On the other hand, if the world is affluent enough, we might be able to absorb the loss with far more expensive solutions. So, until then, we need to NOT impoverish ourselves with artificially high energy prices.

Iraqi Mojo said...

So the world economy is dependent on fossil fuels, the supply of which is finite. Any significant disruption, or even the anticipation of that disruption, will affect oil prices. A hurricane could cause the disruption. Simply saying that our economy is held hostage by foreign oil is short sighted.

Maury said...

"No conceivable alternative fuel is EVER going to compete with carbon fuels in efficiency (power + low cost). Nor will there be any alternatives to fuel our planes or trains in the next 100 years. It is magical thinking to plan for anything else."

I agree that fossil fuels are indispensable for the forseeable future CMAR. That doesn't automatically translate to a continued dependence on oil however. The US is blessed with the world's largest reserves of coal. That coal can provide all the electricity we need for transportation. Now, we're being told our natural gas reserves are enormous as well. NG burns much cleaner than coal. Compressed natural gas can also power cars and trucks. A lot of folks in Utah and Oklahoma tank up on NG for the equivalent of .85 a gallon, or less. There's no reason the same can't be done nationwide.

And don't look now, but immense reserves of crude oil, previously deemed unrecoverable, are being added to the nations reserves. Crude production is rising again. The US was the world's OPEC for half of the 20th century. Don't be surprised if it happens again.

Maury said...

Mojo, it's just a fact that King Abdullah could shut down the world with a wave of his hand. Literally. If that isn't being held hostage to the whims of a dictator, what is?

Iraqi Mojo said...

Good point, Maury. But why would the king decide to stop selling oil? Isn't it in his best interest to sell the oil?

Maury said...

It is until protesters start hitting the streets, and the world turns its back on the Wahabbi's, or King Abdullah perceives as much. I'm sure you saw the story where Saudi Arabia told the US to forget all this human rights stuff and support Mubarak. KSA can go without oil income for a few months. I'm not sure world economies could last a few weeks without Saudi oil.

CMAR II said...

"So the world economy is dependent on fossil fuels, the supply of which is finite."

The supply of everything is finite and always will be. The supply of good locations for solar and wind energy is finite and effected by unforeseeable, uncontrollable weather conditions.

"I agree that fossil fuels are indispensable for the forseeable future CMAR. That doesn't automatically translate to a continued dependence on oil however."

Well, still need petroleum to manufacture and maintain the products to build our electric cars (should they become feasible) and to build and maintain our electricity plants. The reason to "drill-baby-drill" and "mine-baby-mine" is the "jay-oh-bee". If someone is buying a fossil based product, I want Americans to be able to offer it to them.

I'm fine with electric cars. I hope they are a huge success. But not at the expense of $10,000 in subsidies per car. Or by penalizing people who buy something else.

K said...

CMAR II, you are very mistaken. Oil has no chance of remaining the dominate source of energy for the planet past 60 years from now. It is simply impossible. We have already reached the peak of cheap worldwide oil well discovery. As Maury pointed out, new oil will require expensive new technology (a.k.a. "magical thinking") to exploit. The price can only keep going up.

Fossil fuels have already been overtaken by nuclear (a.k.a. "magical thinking") in Japan and France, and these economies are just fine. Japan has already stockpiled enough plutonium from breeder reactors to power their country for another thousand years. In addition to nuclear, solar and wind would take over a healthy chunk in heartbeat if they received even a fraction of the investment that we put into subsidizing oil at the taxpayers expense.

The only reason nuclear power hasn't taken over already is because Chernobyl scared the shit out of people and we stopped building reactors. This is so shortsighted given haw many far worse disasters have come out of oil: The Kuwaiti oil fires and the gulf, etc. The EIA doesn't take this type of political planning into account so they can only draw a straight line through the status quo and call that a prediction. But plenty of others in the DOE now damn well where we are really headed.

Iraqi Mojo said...

"Japan has already stockpiled enough plutonium from breeder reactors to power their country for another thousand years."

Wow I did not know that.

CMAR II said...


Perhaps you are too young to know that we've been told for the last 30 years that we only have half-a-century left in oil reserves. But technology makes continuously better use of the reserves at hand, and makes reserves available that were not before.

You can't run a plane or a ship on an electric motor, and no one will run anything but a military vessel on nuclear energy. Nuclear energy is a valuable part of the mix (if we could get the environuts to stop blocking long term disposal methods), but it is not what most people think when they say "alternative energy". It was all those other alternatives that I was referring to when I said "magical thinking". But the idea that we will replace fossil fuels entirely with nuclear energy in the near term? That's just naive.

K said...

"You can't run a plane or a ship on an electric motor" -CMAR II

Which is exactly why it is so stupid to burn up all our oil now making electricity when it can be made using better alternatives.

Maybe the problem is I am too young. Maybe you don't care about using up my grand kids' jet fuel cause you will be long dead.

K said...

"But technology makes continuously better use of the reserves at hand, and makes reserves available that were not before." -CMAR II

Well that's clearly just magical thinking.

Iraqi Mojo said...

Maury and CMAR II, were you guys around in 1973? What was the mood like in America after the oil embargo? I was 4 years old in Baghdad during OPEC's embargo. I've read about it. It was quite a significant event, no? Is that when Americans began feeling that we are held hostage by OPEC?

Maury said...

The embargo didn't seem that big of a deal at the time Mojo. Vietnam was going on, and there was the daily drama of the Nixon administration...LOL. Oil imports from the Persian Gulf almost doubled between '72 and '73. They continued to climb until 1979, when the Shah was overthrown. Imports from the Gulf dropped for the next 6 years, from 2M bpd, to 300K bpd.

The gas lines of '79 were a lot more painful than the embargo imo. Americans might grumble about gas prices, but what we hate more than anything is long lines....LOL.

Maury said...

We got 43% of our imports from OPEC in 1972. 47% in '73 when the embargo started. 53% in '74, when the embargo ended. You really gotta wonder what all the yap was about.

Our reliance on OPEC peaked at 70% of imports in 1977. That dropped to 36% by 1985. Imports have more than doubled since then, but OPEC's share is still only 40%. Saudi Arabia and Venezuela account for almost half of that.

CMAR II said...


"Burning our reserves" is irrelevant. It assumes 1) that we are the only one's burning oil and 2) we will be the only ones allowed to use it when the other fields are depleted. It's a global economy and when the oil is gone it's gone. But I'm pretty sure you're dead wrong that the oil will be gone in 6 decades. Still, I probably won't be around to collect on a bet. Anyway, in 60 years they'll still be sayin "gone in 60 years" (just as they were 30 years ago). Using that method of prediction, eventually, they have to be right. But they aren't this time.

Something else I forgot to mention. We can't even BEGIN to imagine the electrical infrastructure required to support an all-electric vehicle fleet in the US. I hope the oil lasts another century because it will take that long to prepare for a conversion to electricity.

CMAR II said...

Maury is right that it is the gas lines that gets people. Although, I remember those lines being a bigger deal at the time. But it was only for a short while. No one actually went without gasoline.

The truth is that it is now even more impossible for OPEC or anyone else to "turn off the tap" of oil at all. But it is quite easy to disrupt the refined gasoline pipeline regionally. Which is why the construction of local refineries should be seen as a national security and state-level economic security issue.

Maury said...

There will always be oil CMAR. There just won't be enough of it. World crude production plateaued 20 years ago. It will eventually drop like a rock. We've seen it happen in the US, the North Sea, and Mexico....among other places. Alternatives aren't a luxury. They're a neccessity.

I disagree that electric cars will be hard pressed to replace internal combustion. Battery materials are as common as anything else. Lithium is more prevalent on the planet than nickle or lead. The "rare earth" materials China has a lock on aren't that rare. China has that market sewn up because they have $1 an hour laborors and massive government support. They refuse to be undersold.

CMAR II said...

I think you and I will be dead before I can definitively prove you are wrong. But switching to an electric economy is equivalent to rebuilding all of our cities and roadways. It's not practical UNTIL it is actually proven necessary. In the meantime, we should not artifically impoverish ourselves to be there first. Being first is pointless, as the Japanese discovered in the 80s regarding HDTV. When everyone else HAS to, that's when we should do it. We have no idea what will be SOTA technology in 60 years. Getting there early is an expensive waste. In the meantime, we should ensure that if the world economy is buying petrolium, Americans are allowed to produce it for them (what are we saving it for if we're going electric in a few decades?). In the meantime, smart car technology (cars that drive themselves) will make automobile travel more efficient and possibly move us closer to electronic vehicles.

If electric technology (which is proven to be more expensive and less efficient than petrol technology) is so great, let venture capitalists invest in it and get rich when your predictions come true. What makes you think policy wonks in DC know anything about this? What makes you think the lobbyists in the electric battery market are so exceptionally trustworthy? When has government subsidies placed an industry on the cutting edge?

K said...

I'm not claiming we will run out of oil in 50 years (or even a few hundred years.) I hope we never run out to be honest. I am claiming that we will see then end of cheap oil in just a few decades. I am claiming that the dominant fraction of our energy will come from other sources well before the end of the century. Alternative energy is only getting cheaper and cheaper, and oil is only going to get more expensive. It is inevitable that the world will transition.

It frustrating that people want to pump so much taxpayer subsidies into sources that are doomed to failure and cause so many problems, both political and environmental, and yet are so negative about even the tiniest investment on what so many scientists see as the obvious path forward.

I don't know why you think it has always been predicted 30 years in the future. Hubbert's theory seems pretty sound it successfully predicted peak oil production in the USA and seems to be predicting worldwide oil output pretty well so far. Check out how well Hubbert's curve can be fit to Norway. This model predicts that Norway will run out of crude and NGL in exactly 20 years. There's not a lot of wiggle room.

Maury said...

"But switching to an electric economy is equivalent to rebuilding all of our cities and roadways. It's not practical UNTIL it is actually proven necessary."

It's not all that herculean CMAR. 15 million new cars are sold every year in the US. An increasing number of them will be hybrid, electric, or PHEV. Internal combustion cars already on the road will continue on their merry way. I don't expect half the transportation fleet to be electrified for at least 15 years. Still, our dependence on oil will steadily lessen as we go along.

Those much heralded subsidies on electric cars only last for a few hundred thousand vehicles. The early adopters get the worm. Do I mind if we spend a couple billion on EV subsidies while spending $200 billion annually to police Mideast oil fields? Not really.

Iraqi Mojo said...

Pollution problems with natural gas development.