Friday, January 7, 2011

Myths of Energy Independence

If you've followed this blog, you know I'm very big on energy independence as a means to free us from our ties to the Middle East and also provide a cleaner environment, though I don't believe in the theory of anthropogenic global warming.

This is an article about the myths of energy independence. It's worth a read. I'll provide the entire text as an archive for when the Washington Post doesn't want to bother with maintaining it, because I think it's worth preserving. The original article is here.
5 Myths About Breaking Our Foreign Oil Habit

By Robert Bryce
Sunday, January 13, 2008

With oil prices still flirting with $100 a barrel, everyone is talking about the need for "energy independence." Late last year, President Bush signed the Energy Independence and Security Act of 2007; Sen. John McCain has declared, "We need energy independence"; and Sen. Barack Obama has called for "serious leadership to get us started down the path of energy independence."

This may all be good politics. But the idea that the United States, the world's single largest energy consumer, can be independent of the $5 trillion-per-year energy business -- the world's single biggest industry -- is ludicrous on its face. The push for energy independence is based on a series of false premises . Here are a few of the most pernicious ones.

1 Energy independence will reduce or eliminate terrorism.

In a speech last year, former CIA director R. James Woolsey Jr. had some advice for American motorists: "The next time you pull into a gas station to fill your car with gas, bend down a little and take a glance in the side-door mirror. . . . What you will see is a contributor to terrorism against the United States." Woolsey is known as a conservative, but plenty of liberals have also eagerly adopted the mantra that America's foreign oil purchases are funding terrorism.

But the hype doesn't match reality. Remember, the two largest suppliers of crude to the U.S. market are Canada and Mexico -- neither exactly known as a belligerent terrorist haven.

Moreover, terrorism is an ancient tactic that predates the oil era. It does not depend on petrodollars. And even small amounts of money can underwrite spectacular plots; as the 9/11 Commission Report noted, "The 9/11 plotters eventually spent somewhere between $400,000 and $500,000 to plan and conduct their attack." G.I. Wilson, a retired Marine Corps colonel who has fought in Iraq and written extensively on terrorism and asymmetric warfare, calls the conflation of oil and terrorism a "contrivance." Support for terrorism "doesn't come from oil," he says. "It comes from drugs, crime, human trafficking and the weapons trade."

2 A big push for alternative fuels will break our oil addiction.

The new energy bill requires that the country produce 36 billion gallons of biofuels per year by 2022. That sounds like a lot of fuel, but put it in perspective: The United States uses more than 320 billion gallons of oil per year, of which nearly 200 billion gallons are imported.

So biofuels alone cannot wean the United States off oil. Let's say the country converted all the soybeans grown by American farmers into biodiesel; that would provide only about 1.5 percent of total annual U.S. oil needs. And if the United States devoted its entire corn crop to producing ethanol, it would supply only about 6 percent of U.S. oil needs.

So what about cellulosic ethanol, the much-hyped biofuel that can be produced from grass, wood and other plant sources? Many in Congress believe that it will ride to the rescue. But the commercial viability of cellulosic ethanol is a bit like the tooth fairy: Many believe in it, but no one ever actually sees it. After all, even with heavy federal subsidies, it took 13 years before the corn-ethanol sector was able to produce 1 billion gallons of fuel per year. Two and a half decades elapsed before annual corn-ethanol production reached 5 billion gallons, as it did in 2006. But now Congress is demanding that the cellulosic-ethanol business magically produce many times that volume of fuel in just 15 years. It's not going to happen.

3 Energy independence will let America choke off the flow of money to nasty countries.

Fans of energy independence argue that if the United States stops buying foreign energy, it will deny funds to petro-states such as Iran, Saudi Arabia and Hugo Ch¿vez's Venezuela. But the world marketplace doesn't work like that. Oil is a global commodity. Its price is set globally, not locally. Oil buyers are always seeking the lowest-cost supplier. So any Saudi crude being loaded at the Red Sea port of Yanbu that doesn't get purchased by a refinery in Corpus Christi or Houston will instead wind up in Singapore or Shanghai.

4 Energy independence will mean reform in the Muslim world.

The most vocal proponent of this one is New York Times columnist Thomas L. Friedman, who argues that the United States should build "a wall of energy independence" around itself and thereby lower global oil prices: "Shrink the oil revenue and they will have to open up their economies and their schools and liberate their women so that their people can compete. It is that simple." When the petro-states are effectively bankrupt, Friedman argues, we'll see "political and economic reform from Algeria to Iran."

If only it were that easy. Between about 1986 and 2000, oil prices generally stayed below $20 per barrel; by the end of 1998, they were as low as $11 per barrel. As Alan Reynolds pointed out in May 2005 in the conservative National Review Online, this prolonged period of "cheap oil did nothing to promote economic or political liberty in Algeria, Iran, or anywhere else. This theory has been tested -- and it failed completely."

5 Energy independence will mean a more secure U.S. energy supply.

To see why this is a myth, think back to 2005. After hurricanes ravaged the Gulf Coast, chewing up refineries as they went, several cities in the southeastern United States were hit with gasoline shortages. Thankfully, they were short-lived. The reason? Imported gasoline, from refineries in Venezuela, the Netherlands and elsewhere. Throughout the first nine months of 2005, the United States imported about 1 million barrels of gasoline per day. By mid-October 2005, just six weeks after Hurricane Katrina, those imports soared to 1.5 million barrels per day.

So we're woven in with the rest of the world -- and going to stay that way. Today, in addition to gasoline imports, the United States is buying crude oil from Angola, jet fuel from South Korea, natural gas from Trinidad, coal from Colombia and uranium from Australia. Those imports show that the global energy market is just that: global. Anyone who argues that the United States will be more secure by going it alone on energy hasn't done the homework.

robert@robertbryce.com

Robert Bryce is a fellow at the Institute for Energy Research. He is the author of the forthcoming "Gusher of Lies: The Dangerous Delusions of 'Energy Independence.' "

2 comments:

tom said...

I guess I'm not opposed to throwing cold water on energy independence dreams. I very much believe that now and in the future, we have to slowly replace oil in favor of other sources of energy. But nothing is going to happen overnight.

But I was struck how point #1 in this article is contradicted by point #3. Point #3 is quite correct. Oil is fungible. You can sell it anywhere. That means you don't get to claim that, if the U.S. receives most of its oil supply from Mexico and Canada, that purchasing that oil does not increase the wealth of, for example, Iran. If the U.S. stopped purchasing oil tomorrow, that would be very bad for Mexico, Canada, Iran, Saudi Arabia, Venezuela etc. If the U.S. starts buying more oil from Mexico's production, that's great for Iran and every other producer.

The last paragraph under point #1 is slightly more convincing. Terrorism is relatively cheap and goodness knows that the KKK predates Al Qaeda. Still, if anyone besides archeologists are interested in the Middle East, it's because there is a lot of oil there. Without oil, nobody cares that Iraq annexes Kuwait and threatens Saudi Arabia. Hence, no U.S. troops in Saudi Arabia. Maybe Osama bin Laden would have dreamed up another reason to attack the U.S., but without oil, he wouldn't have even $500,000 to fund such a plot, not to mention all the other Al Qaeda infrastructure that existed before 9/11.

Andrew said...

Actually, if you read my previous posts on energy, I'm very much in favor of moving away from oil, and as quickly as we can manage it. I think the point of the article was to point out things that energy independence won't do. That doesn't mean there aren't many great things it will do.