Another Side of Oil

I began reading Thomas L Friedman's "Hot, Flat, and Crowded", a while back.  Reading it here and there, but not with any consistency.  Just finished Chapter 6 which is titled "Fill 'Er Up with Dictators".  To summarize, Friedman makes the case that there is a connection between high oil prices, and the advance of authoritarian regimes around the world.  

He posits that when oil prices are low, western nations have leverage to push for democratic reforms and freedoms, plus pressure from the citizens themselves for such changes also gains traction.  But, when oil prices spike, those same external and internal pressures can be ignored.  In fact, flush with money, authoritarian leaders tend to use that income to suppress political rivals, shut down newspapers which criticize them, and beef up their personal and military apparatus, while being able to trade concessions from the west for an increase in oil production that will reduce global oil prices.

In essence, Friedman is saying that our addiction to oil (and natural gas in the last decade), funds the very people who actively desire the decline of global democratic nations, or at the very least, want them  weakened.  He illustrates his theory with a chart that seems to reveal a correlation between these phenomenon.  What is really interesting is that "Hot, Flat, and Crowded" was written in 2008, so there has been another 14 years of the rise and fall of oil prices to check his theory.

But let me backtrack a bit.

I found a chart from the US Energy Information Administration (EIA) which listed the US crude oil purchase price per barrel from OPEC from 1974 to May 2022.  Using the January price for each year as a benchmark, the cost was between $7 and $10 per barrel from 1974 to 1979, spiked to $34.59 in March 1981, dropped below $30 by Feb 1982, then steadily fell through the $20's until Feb 1986 when it went into the $teens until the end of the century with a short rise over $21 in Jan 1997 but also falling under $10 for a while in 1999.  Now, I know that this is a big generality, but weren't those years, especially 1990 to 1999, a time when America actually had a few balanced budgets, and, did not involve itself in many foreign conflicts?  Is it possible that because the tyrants of the world, did not have the money to fund their atrocities things were relatively quiet? 

With the new century, prices still stayed low (below $30) until 2004, when they began to rise steadily, into the $40's, then over $50 per barrel in 2005, then over  $70 in Sept 2007, over $80 in Nov 2007, over $95 in March 2008, peaking at $128 in July 2008. The economic meltdown gave us brief relief, but by 2011 we broke the $100 per barrel mark again and stayed over $90 until Sep 2014.  Is it a coincidence that Russia invaded Crimea that year?  

Another oil price crash from late 2014 through mid 2016 kept prices below $50 a barrel until mid 2017 but prices mostly stayed in the $50's and $60's until the pandemic of 2020 when oil prices fell back into the teens for a few months in the spring of that year.  At this time, most global oil producers scaled down their production as their break even points were far above this low price.  But when recovery from the pandemic outpaced the return to higher production, oil prices spiked passing $50 then $60 then $70 in 2021, then $80 in Jan 2022.  Which brings us to Russia invading Ukraine, and then a dramatic spike due to the western countries boycotting Russian oil.

Now, as they say, hindsight is 20-20, but were all those pundits wrong who did not point to rising oil prices as a reason for Putin's decision to invade? Or is it a coincidence that he became aggressive at the exact two times when oil peaked in price in the last 10 years?

Friedman, of course would have no way of knowing about that oil price spike leading to Russian aggression since he wrote his book in 2008, although he did correlate some of the reform attempts by Gorbachev when oil was low.  Mostly though, he focuses on the nations of the middle east, especially Saudi Arabia and Iran as examples of when oil was cheap, reformers were tolerated, but when oil spiked, leaders clamped down on freedoms.  

The sad part of all of this is that when oil was cheap during so many of those years before 2008 when his book was written, and since then, America and the European nations didn't take full advantage of the drop in cost.  Could we have kept oil prices at the pump higher by increasing the federal gas tax and investing that extra money in greener fuel sources?  Could we have continued to increase our average gas mileage standards, including trucks, to keep the pressure on global oil supplies thereby keeping the price down rather than reverting to our gas guzzlers when the price dropped down?

I have said a few times this past month, that we should not let the price at the pump drop much below $4 a gallon, certainly not below $3.50, but should instead raise the federal gas tax to match the drop in price, thereby providing extra money for green investments, rewarding those who choose to buy cars that either get 50 and 60 miles per gallon, or who buy e-cars, and also providing a first strike option to reduce the gas tax should prices take an unexpected turn due to an uncontrollable global event.  

Currently, the tax is only 18.4 cents per gallon (24.4 for diesel) and hasn't been raised since 1993. Compared to national gas taxes in European countries which are all over $1.50 per gallon, most over $2 and a few over $3, and it is obvious that we are not paying the true cost of our gas when you figure in the cost of pollution and greenhouse gases that are ruining our environment, not to mention that portion of our defense budget that goes to the various expenses related to the issues that Petropolitics have created ever since we helped the Arab world and Russia figure out how to get their oil out of the ground.

The main point of Friedman's book is that we should be focused on creating a green revolution which would not only begin to reduce our dependence on foreign energy sources, but would also create tens, if not hundreds of thousands of good paying green industry jobs, demonstrate America's leadership in tackling the climate change crisis, and, bonus, defund the type of authoritarian leaders who use their petro dollars to suppress freedoms in their own country (Saudi Arabia, Iran), attack other sovereign countries (Russia), and indoctrinate and radicalize their citizenry to demonize western nations.

Of course, as I have said, this book was written in 2008, and, while oil prices were low as compared to now, America did not follow Friedman's advice.  We are still using more oil than we produce, despite US oil production tripling since 2008.  And, even in those months when we produce as much as we consume, oil is sold to the American consumer at global market prices, plus we still sell oil overseas.  While drill, baby, drill makes for a good bumper sticker or yard sign, the fact is we have been drilling, yet still we find ourselves whining about high pump prices.  And, in the meantime, global oil consumption and production is just about at 100 million barrels per day, so increasing our production by even 20% year over year, is only another 2 million barrels a day.  

Reducing and replacing our oil dependence is the only realistic way to become energy independent, and yet 14 years after Friedman's book we are only baby steps on our way, and even those steps are being constantly assailed by those beholden to the fossil fuel industry, and those who choose to ignore the data. 

Sadly, I found 3 posts I had written about oil back in 2010.  I say sadly because, at the time, I was reacting to the deep water Horizon oil disaster, and I say sadly because there wasn't enough done since then to try to prevent what is happening today.  Here are those posts.     

https://wurdsfromtheburbs.blogspot.com/2010/05/big-slick.html

https://wurdsfromtheburbs.blogspot.com/2010/05/time-for-passion.html

https://wurdsfromtheburbs.blogspot.com/2010/06/more-on-big-slick.html

And lastly, as I have done before, here is a link to the story I wrote, in 2011, which cast a negative light on our energy policy, and foretold our continued dependence on foreign energy sources, although with a slight twist.

https://wurdsfromtheburbs.blogspot.com/2011/05/energy-conundrum.html

Keystone Pipeline

As I have mentioned before, I receive a weekly summary of all the high profile votes cast in the United States Congress.  The last few weeks have featured a number of votes related to the Keystone Pipeline, a topic upon which I recently commented.

To begin, the Senate passed a bill by a 62-36 vote (there were a few abstainers) that would immediately allow TransCanada to construct, connect, operate and maintain the pipeline, including any revision to the route within Nebraska.  It also would consider the January 2014 environmental impact statement issued by the State Department sufficient to satisfy all requirements of the National Environmental Policy Act and the Endangered Species Act.  

At this point a number of amendments to the bill were put to vote, amendments generally sponsored by Democrats.  One such amendment expressed the sense of the Senate that climate change is real.  This amendment was voted in favor of, overwhelmingly.  

What's that you say, the Senate, a GOP majority body voted almost unanimously that climate change is real?  Finally, sanity has prevailed.  But alas, a different amendment that added the phrase "and that human activity significantly contributes to it" was also brought to the floor.  It also passed, 50-49 with 1 not voting, but by unanimous consent the Senate agreed to raise the requirement for adoption of this amendment to 60 votes.  Ah, so close to the promised land.

Two quick questions here.  One, why is the State Department issuing an environmental impact statement as opposed to the federal agencies empowered to protect our environment?  Could it be because the state department might look favorably on a project that continues to benefit the fossil fuel industry while the EPA might consider potential risk to our water supply?  Hmm.

Also, what happened to the 49 Senators who voted that human activity is contributing to climate change, but then voted to require 60 votes to pass a bill recognizing our complicity?  I guess they figure then can say they voted for it without mentioning the second part.  Can you say spineless?

Then there is the amendment that also expresses the sense that climate change is real, that human activity is partly to blame, and that we should promote an overhaul to our energy system away from fossil fuels towards sustainable energy.  This amendment, sponsored by Senator Sanders from Vermont was defeated 56-42, 2 not voting. 

Two more quick questions.  Isn't is obvious that we need to continue to experiment with, invest in and encourage the development of cleaner energy sources?  That doesn't mean we have to stop all the government subsidies for the fossil fuel industry.  Or stop all the drilling in the earth and offshore.  Or even stop poking little holes in the ground and injecting chemicals.  In just means that we recognize the need to think towards the future, think about harnessing that bright ball in the sky that will be shining there for quite some time.  

But, I guess if a Senator votes in such a way, even if it is to make the point that we will need to someday get away from fossil fuels, said Senator risks the ire of the Koch brothers, et al, and the chance that a different fossil fuel industry shill will have a Senate seat purchased for them at the next election.

Second, who is not voting?  If my Senator was abstaining from any of these votes, they better be mostly dead.  I would be curious as to what their notes from mommy said as to why they were absent.

Two other amendments were offered that would have addressed the current law that exempts tar sands companies from paying a per-barrel tax that goes into a government fund for oil spill cleanup. This loophole is especially relevant because tar sands oil is harder to clean up than conventional oil when it spills.  TransCanada of course, currently benefits from that loophole.  But, sadly, both were defeated.

All the benefits, none of the responsibility.  Socialism for business is certainly alive and well.

Strangely, a generally favorite tea party issue, eminent domain, was addressed.  But, as usual, the politics of "I voted to protect rights even though my vote was meaningless" raised its ugly head. 

A GOP sponsored amendment which claimed to protect property owners from having their land seized (right now, landowners in Nebraska are being served with eminent domain papers from
TransCanada) was passed, but it appears that the amendment likely won’t do much to protect those property owners from getting their land taken. 

The language of the amendment states that the U.S. must “ensure private property is protected as guaranteed by the United States Constitution.” But,  eminent domain can be used for economic development, and the U.S. Constitution says land can be taken if the company provides “just compensation.”  I would bet dollars to donuts that the company will meet the requirements of just compensation; they will probably even use it as a PR spin and claim they overpaid.  

Strangely, the Senate rejected an amendment that actually would have prevented TransCanada from seizing property owners’ land in Nebraska by making it law that private property could not be seized under eminent domain for the financial gain of a foreign-owned company.  Remember, TransCanada is the name.  I imagine that vote won't be part of any GOP campaign anytime soon.

So, what do we learn from this?  The GOP loves to talk citizen rights except when a large company is looking to trample them.  And the DEMS love the environment until it gets in the way of business.
The good news, of course, is that some temp jobs will be created.  Unless someone deep in the heart of Arabia leeks information that a terrorist strike against the pipeline is in the works.  Then, we will have to guard every inch of that pipeline.  Do you think TransCanada will pay for the guards?  Or will that be just another "expense" that the fossil fuel industry passes along to the American taxpayer?

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More on the Big Slick

I sent the following letter to the Phila Inquirer this past week after reading a column on who is to blame for the spill in Monday's paper. The author, Charles Krauthammer, while saying that BP was to blame for the actual spill, spent most of the column blaming democrats and the environmental movement for the spill.

In the meantime, as the week progressed, there was more criticism of President Obama for not being mad enough about this horrible disaster. In my letter, I also criticized our president, but not because he isn't jumping up and down having a hissy fit or swearing, or demonstrating his anger in some emotional outburst. I don't understand how that would help. We just had 8 years of a president who flew by the seat of his pants and made decisions based on his gut. Look where that got us! As I said in my letter, I want the president to go on national TV, tell us the state of deep water oil drilling (like how many are there and how much oil we get from them). Maybe name some names, such as who were the government regulators who didn't do their job, who they interacted with and who at BP gave the orders that lead up to the explosion. 

But then, most importantly, tell us what we have to do to get off the oil addiction. What do we need to do, each one of us, to reduce our dependency on fossil fuels. Challenge us. Be presidential...and willing to lose the next election by telling us what we need to hear, and need to do. 

To the editor: Mr. Krauthammer asks an extremely poignant question in this week's column, "Many to blame for oil spill". Why are we drilling in 5,000 feet of water for oil in the first place? Unfortunately, his answers leave much to be desired. It is simple, sir. Rather than spending the last 30 years weaning ourselves from fossil fuels in general and oil in particular, we chose to increase our dependence on these finite sources of energy. Starting with President Reagan (does anyone remember him unceremoniously removing the solar panels from the White House after then President Carter practically begged us to kick our oil habit), we ignored our ever growing dependence on energy from unfriendly sources, pretended that the changing climate was unrelated to the release of carbon into the atmosphere, and discounted the thousands of lives and trillions of dollars that we wasted on wars to maintain our habit. 

Think about it. Less than 10 years after President Kennedy challenged the scientific community to land a man on the moon, it was done, yet here we are, almost 30 years after the oil embargo of the 70's and we are worse off than before. I do agree with one point made by Mr. Krauthammer; President Obama does share some of the blame. Like all of the presidents since Reagan, he lacks the political will to tell the American people, enough is enough. Rather than being presidential and challenging us to face our damaging dependency, he has chosen a course of conciliation with the powers that represent the status-quo, and which encourages us, the American people, to continue to live our lives waiting for someone else to step up to the plate instead of the person each of us sees in the mirror everyday.

Time for Passion

I have heard it said that liberals in general, and compared to today's tea party movement in particular, are not passionate enough about their positions and beliefs. My stock answer has always been that a thoughtful and well reasoned position considers all viewpoints before reaching a conclusion and allows for a change of mind when facts are encountered that prove the original viewpoint incorrect. Conversely, a passionate perspective is often based on emotion, a feeling, or a faith in something not provable with logic. It can be unshakable and uplifting when correct but blind to information that contradicts its veracity. At least for today however, I will toss away the constraints of reason. 

I AM MAD. Actually, outraged would be a better word. Outraged that more than 5 weeks have passed since the explosion on the deep sea drilling rig in the Gulf of Mexico and the subsequent release of literally millions of gallons of oil into the water. Outraged that BP would ever place profit above the lives of those working on that rig, above the lives of millions of sea creatures and above the livelihood of thousand of Americans who are dependent on the sea. And I am mad at our president, not because I believe it is his fault, but because he has missed an opportunity to talk to us, on national TV. To tell us how many other deep sea rigs are in use today. To tell us how the regulators we depended on to defend our interests against the oil giants failed at this responsibility. To tell us that he will not rest until the leak is capped and accountability is determined. To assure us that this will never happen again, even if he has to close down all those deep sea wells until their safety is assured. And to ask us to redouble our efforts to conserve gas by car pooling, bicycling, walking, using mass transit and yes, driving a bit slower which he would then mandate by reducing the speed limit on our highways to 55 MPH.

And I am mad at the republicans who have the audacity to try to deflect the blame being accorded to BP as if they don't know that we just spent the first 8 years of the new century with a "business is great" president and a "big oil is the greatest" vice president. As if they don't know that the problem with the regulations is the regulators who weren't doing their job, or worse, were acting under the assumption that they weren't supposed to do their job. And while I am at it, I am mad at the Supreme Court for their decision a few months ago which seemingly granted the right of individuals to corporations. Gee, do you think that more or less influence will be heaped upon our representatives by special interests whose only concern is that their company gets a tax break or a loosening of regulations? 

And I am especially mad at those driving the economy of this country. People who have been fortunate enough to have been born with great intelligence, superior knowledge of business and economic influences and who used those gifts to make as much money as they could for themselves to the detriment of everyone else. I can't help but wonder how anyone who makes such decisions can sleep at night. Is that all they have gleaned from their life, that money and possessions is all that matters? The Scrooges of our times. 

But I am most mad at my fellow citizens who are clearly not interested in the ecological catastrophe that is taking place. Where are the protests and boycotts of BP products? When I recently drove to New York City on I-78, I set my cruise control on 65 and watched in dismay as I was passed continuously, sometimes on the left and right, by my fellow travelers. Even people with PA Wildlife license plates whizzed be me. I am mad at them for handing over their money to the sharks, demanding that they produce double digit returns and then acting shocked when the hedge fund managers had to make up financial instruments to satisfy that demand and who consequently created nothing more than gigantic Ponzi schemes which they then bet against! We created the monster to feed our own greed and are paying the price for this deal. 

But more than anything I am mad at Americans for taking their democracy for granted. Less than 60% voter turnout at the last presidential election! Perhaps 35% turnout at the recent round of primaries! Wake up!! This is your government. There are people being killed in other countries as they fight for the right to vote, American men and women dying to defend our rights and you don't have the time to vote every four years!! I don't know who first said this but you get the government you deserve. We are neck deep in a situation where corporation bottom lines trump their responsibility to provide Americans with livable wages and safe products and our government oversight regulators have traded their responsibility to intervene on our behalf for sporting event tickets and vacations in the Bahamas. So, which is it? Are we disillusioned that our individual actions can't make a difference or do we just not care anymore?

The Big Slick

By now, everyone is aware of the massive oil slick moving towards shore from the oil rig that exploded last week. In addition to the tragic loss of life, the ecological impact will most likely ripple through the economy for the remainder of the year. Not to mention the loss of sea life which will occur as a direct result. I know, you're thinking, "here goes another bleeding heart liberal about to attack the oil industry".

Perhaps. But is anything I have said so far inaccurate? There was loss of life. The economy will be effected, some more directly like the fishing and tourism industries of the area and some indirectly as the price of seafood increases. And, of course, the cost for cleanup incurred by both the federal and state governments (our tax money) and the oil company itself who may or may not pass along the cost to consumers. Obviously, we are not in a position to stop off shore oil drilling. One accident should not scare us from any activity, whether it is space exploration or the use of nuclear energy. But there does need to be an accountability when people die in the attempt. 

Has the technology which allows us to drill deeper and deeper into the ocean's depths outpaced our ability to do it safely? What actually went wrong here? Human error, or is the concept of this deep underwater drilling not thought completely through? If we are to continue to hang our economic future on the idea that we can provide for our own energy needs through expanded off shore drilling, don't we need to know if the drilling can be done safely? Eventually, there will be some conclusions drawn from this disaster as well as the mining disaster in West Virginia that took so many lives. The proponents of these types of energy sources will do well to become a part of the investigations if they expect everyday Americans to continue to support them. And yes, they will probably take some lumps and be castigated by those who do not support these sources of energy but that is part and parcel to advocating a policy or process that occasionally fails and results in death and destruction. Risk and reward. 

For me, it seems more and more obvious that we need to change our dependence on fossil fuels. We are more dependent on foreign sources for our energy than 30 years ago. In my opinion, all 30 years featured pro-business Presidents, including President Clinton. I believe that this nod towards the existing business mind set prevented our country to look into the future and begin investing in energy sources that were cleaner, safer and more sustainable. Yes, it may have resulted in higher energy prices. Perhaps we might be paying $5 or more per gallon of gas like much of Europe. But also, perhaps, we wouldn't have spent a trillion dollars in Iraq and Afghanistan in the last 10 years. Perhaps we would be getting 30, 40 even 50 percent of our energy from cleaner sources. Perhaps we wouldn't be forced to put safety aside to obtain our energy but could have a combination of energy sources including wind, steam, nuclear, coal, oil and solar. A balance.