Calling for the Four Horseman of the Apocalypse of the Global Oil Industry
Perhaps it's a sign of politics inching back toward business as usual: Congressional Republicans were exploiting the Sept. 11 terror attacks to push the Bush administration's plan for an all-out increase in energy production, and drilling advocates are likely to continue invoking terrorism fears as they argue for more oil development while continuing to profit from higher and higher oil prices. Bush has recently failed to convince OPEC to stop curtailed production.
Bush, of course, has long maintained that his energy plan will increase America's "energy security" -- meaning the nation's access to relatively inexpensive electricity and fuel. To that end, he had proposed a package of measures intended to encourage greater production of oil, along with other fossil fuels and nuclear power.
In a victory that surprised even Republicans, the House of Representatives in August of 2001 endorsed much of Bush's approach, including $33 billion worth of tax incentives for oil companies. But where is the beef? Oil prices have soared because of the falling dollar on world markets and bad foreign policy after the invasion of Iraq.
Oil, as long as the dollar continues to fall, is inching closer to $40 per barrel than the much more comfortable level of $10, certainly a more reasonable price in any consumers estimation.
The U.S. is mired down in the occupation of a land that has an estimated $2 trillion in oil and gas reserves but it will take another decade to get it to market at the current rate of turmoil.
Some people say that the reason behind the hatred of the US by Mideast extremists can be summed up in one word: oil. This is why we have a military presence there and why we have supported corrupt regimes (Saudi Arabia a la Carlyle Group and reciprical trades via Citi Group) that do not pursue democratic or equitable societies.
If I Had $33 Billion from the Federal Government I would invest it in alternative energy projects such as alternative vehicles production that didn't use oil and gas to run on. I would put the Japanese auto makers to shame with that kind of investment.
There are plenty of those types of opportunities out there. But trying to put a fund like that together against the grain of the military industrial financial media complex is like trying to milk honey out of a dried turnip.
It was questionable even then whether these steps announced by the Bush administration would in fact guarantee stable energy prices. Given the power that OPEC and the international oil companies have to manipulate production, the usual rules of supply and demand don't apply to the oil business.
And even if Bush's approach had worked, it would only affect the price of oil in a narrow sense: what a barrel of light crude fetches on the London spot market, what a gallon of gasoline for the family automobile costs at the pump.
What matters more is what should be called the real price of oil. This is comprised of two elements: petroleum's market price, plus the many indirect costs that its production and consumption impose on nature, public health, and future generations.
Under Bush's old plan, for example, the real price of oil would have included not only those $33 billion in subsidies, but the potential destruction of Alaskan caribou calving grounds. Increased production also means a growing possibility of more oil spills like the 1989 Exxon Valdez disaster, as well as continuation of the less-publicized release of an average of 10 million gallons of petroleum into the oceans every year from tanker accidents.
America needs to either increase its oil production by 10 million barrels per day or cut it in half. The cost of increasing it is far greater than investing in alternative energy transport systems in the major cities of America.
There are literally thousands of alternative transport projects on the boards that could use $33 billion in federal government subsidies which could be implemented within the next 24 months. It all boils down to bad administration and Bush has certainly been bad for the majority of small and medium sized businesses. Only the most powerful and wealthiest of businesses have benefited from the Bush administration's energy and foriegn policies.
Needless to say, without tapping into Alaska's reserves, invading Iraq has cost an additional $200 billion to date, leaving the tab for oil closing in on a quarter trillion dollars in hard tax dollars, let alone the mounting cost of human life.
This is a clear sign of a failed energy policy as well as the remaining unanswered questions surrounding the Cheney Energy meetings. Perhaps when the death toll from the war reaches 3,000, America will wake up and realize that lives and families are worth more than the blood of any nation.
Further raising oil's real price will increase air pollution made possible by Bush's relaxation of environmental regulations. Already, diseases stemming from car exhaust kill some 30,000 Americans each year, according to a 1995 Harvard University study. And back in 1993, the Worldwatch Institute estimated the damage to human and environmental health from vehicle emissions at $93 billion a year. Bottom line, the US Energy Policy is costing closer to half a trillion a year in total.
For the world at large, the most serious consequence of continued reliance on oil and other fossil fuels will be accelerating climate change in the 21st century. Though a number of factors contribute to the greenhouse effect, oil remains a major culprit. Some 40 percent of America's greenhouse gas emissions stem from automobiles.
This is a solvable problem that requires more than just money backing reforms. It requires a global revolution toward an industrial overhaul of energy policy and educating the consumers who are hooked on oil by no choice of their own.
Getting support for that is near impossible due to the monopolies enjoyed by US multinationals and OPEC, their global media reach, and the vested interests of the multinational bankers behind them.
Even a more open disclosure policy by major oil companies who pay soveriegns for the use of their natural resources is being pushed from various NGO's around the world, but the process is slow going.
Scientists have noted that already -- after a mere one-degree increase in temperatures over the past century -- glaciers are melting and catastrophic storms becoming more severe and frequent. They expect the planet to warm an additional 4 to 11 degrees Fahrenheit in the 21st century, bringing yet more violent weather, flooded coastlines, killer droughts and social havoc. One insurance industry study projects that climate change will impose $304 billion of additional direct costs on the global economy every year.
Aside from these hypotheticals, the solution is not in spending another trillion dollars on Mars exploration until we put our own global house in order. A trillion dollars spent on alternative energy over the next decade would result in ten trillion dollars in total global costs during the same period.
Bush has rightly been criticized for rejecting the Kyoto accord on global warming. But the truth is, America has never been shy about expecting the rest of the world to support its oil habit. Presidents and Congresses of both US political parties have for decades affirmed military and diplomatic policies aimed at guaranteeing American access to overseas oil; the CIA-assisted overthrow in 1953 of Iran's prime minister Mohammed Mossadegh -- who had advocated nationalizing the country's oil supplies -- is but one of many examples.
According to the Rocky Mountain Institute, an eco-think tank that analyzed Pentagon and Department of Energy spending data for the mid-1990s, federally funded research and development provided at least $300 million annually in subsidies for the fossil-fuel industry.
And at least $50 billion of the US annual military budget during those years paid for forces whose primary purpose is to safeguard Middle Eastern oil fields and shipping lanes -- and whose presence, especially in the Islamic holy land of Saudi Arabia, provokes bitter resentment in much of the Muslim world.
Since its inception, the United States has spent over $5.5 trillion on nuclear weapons research and has created over 80,000 metric tons of hazardous chemical wastes which are estimated to cost between $1.7 to $2 trillion to clean up over the next decade. This money, even half of it, could have created a national electric transportation grid without the incumbent debt currently driving up fuel prices to record levels.
Economists use the term "externalities" to refer to costs that are not included in a commodity's market price, but are borne by society as a whole. Society, of course, also has benefited from the past century's increase in oil consumption: The US economy underwent an extraordinary expansion during the 20th century, when cheap oil fostered first the automobilization of the nation and, after World War II, its suburbanization. Oil also made possible a transportation system built around individual mobility and personal convenience that in many respects remains the envy of the world.
But the impending threat of climate change suggests that our reliance on oil has reached a point of diminishing returns. It's time for a new strategy -- a shift to energy efficiency in the short term and to solar and other renewable energy forms in the long term. Such a Global Green Deal would not only reduce ecological damage, but yield substantially more jobs, profits and economic prosperity than today's system does.
Investments in energy efficiency create two to ten times more jobs per dollar than investments in oil and nuclear power -- a crucial concern as the global economy slides into depression due to the collapsing dollar.
Bush is still betting that the nation is willing to pay whatever it takes to keep oil flowing, and he may be right. In the House of Representatives, the president's plan was supported by Democrats and Republicans, labor and corporate interests.
The majority of hard working Americans may ultimately agree with Bush that maintaining their oil habit is worth any price. But we should at least acknowledge the full cost of such a decision -- not only for Americans, but for the six billion people we share the planet with.
A $33 billion energy fund would create at least 3 million jobs and build a national electronic mass transport system in every major city in North America within four years. The technology already exists. Perhaps the democrats should consider such a fund in their political platform this coming November and get more backing from the likes of Buffet, Soros, Gates and Turner.
The four of them alone could provide the necessary seed money and create the starter fluid to get the entire project moving forward. Certainly Buffet could provide the insurance, Gates the software, Soros the political might, and Turner the United Nations development support to get the rest of the world and the media behind it. The only risk to them might be their becoming known as the Four Horseman of the Apocalypse of the Global Oil Industry.
What do you think?
Mark Hertsgaard originally contributed to this story. Edited by G! Alex Gabor
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