Thursday, June 17, 2010

Can President Obama Really Break Our Oil Addiction?

Earl Ofari Hutchinson
Two surreal things happened within the span of two days. In his televised address, President Obama again sternly warned that the nation must break its dependency on oil. He again called on Congress to pass an energy bill that would vastly expand our hunt for and use of alternative and renewable energy sources. The next day he sternly tongue lashed BP executives about the monumental damage of their spill, and demanded they cough up billions to pay the damage costs. They agreed. The tough talk generally about breaking America’s oil addiction publicly played well, and BP paying the damage freight played even better. But while the president made his umpteenth pitch to break the oil addiction, a slew of Gulf Coast congresspersons and senators loudly called for Obama to lift the moratorium on off shore drilling. There’s some evidence that the president may listen to their plea.
Before the BP spill Obama had approved an expansion in off shore drilling. After the BP spill, he quickly reversed gears. However, he also left the door for a resumption of drilling when he indicated that he would wait and see what his oil spill commission came up with about the spill.
The love-public loathe relation that politicians have with big oil has been the all too familiar pattern. The very moment that House committee leaders very publicly saber rattled BP’s hapless CEO Tony Hayward, GOP Senate leaders very quietly moved to kill off any effort to dump the farcically low $75 million liability cap on damages big oil would have to shell out, for well, a Gulf spill. The Orwellian reason for not tampering with the cap is that it would push all but the biggest oil giants out of the business of oil exploration and drilling since smaller companies would be too scared to drill if they knew they would have to pony up tens of millions for a mishap. Big or little, the drill, baby drill crowd had to be protected at all cost.
The operative word is always cost. The much touted alternative energy sources, wind, solar, hydrogen and ethanol are too expensive, too time consuming, and often not cost effective. Even if congress was willing to do what it publicly claims it wants to do and push hard to develop these alternative sources, it won’t pay what it will cost. The climate and energy legislation pushed by Obama as it now stands increases funding for R&D and demonstration of alternative sources by a paltry $2 to $4 billion. That’s a fraction of the $25 to $30 billion per year experts agree it takes to achieve the technological breakthroughs needed to make clean energy cheap and scalable. Congress has further tilted the playing field against all out production and use of all alternative energy sources by taxing it. There is no tax on foreign oil imports.

It still comes back to supply and demand. In 2008 the United States consumed 23 percent of the world’s petroleum nearly 60 percent of this was imported. But the country holds less than 2 percent of the world’s oil reserves. About 40 percent of the imports came from Canada, Mexico, and Saudi Arabia, and that figure continues to climb. The naked fact is that the US is running out of oil. The amount of oil in proven U.S. reserves, reserves that the United States is fairly certain it can extract oil from in the future, plunged nearly 20 billion barrels the last thirty years. This means even if the country drilled and produced all the oil reserves it had they’d be depleted in four years.
Oil is still by any standard relatively cheap. As painful as it is to swallow, for the forseeable future, anyway, sustainable. The country consumes over 7 billion barrels of oil per year. Federal estimates are that the nation's outer continental shelf could hold more than 80 billion barrels of crude. That includes more than 10 billion barrels off California alone. If the US did not get another drop of oil from the world’s land suppliers, and relied solely on the supply it got from California off shore drilling it would fill the country’s energy need for twelve years. The near 100 billion of oil deposits is just in or near US coastal waters. A 2008 International Energy Agency report estimates that reachable conventional oil located in water more than a quarter-mile deep world-wide is between 160 and 300 billion barrels, with more than two-thirds of that in Brazil, Angola, Nigeria and, of course, the United States.

The BP spill ratcheted up the much needed war of words from President Obama and congress about the peril of America’s incessant oil addiction, and the urgency of breaking it. Words are one thing, but the terrifying reality is that to break the oil addiction, as with any other addiction, it takes a strong will and the means to do it. So far neither one is there.

Earl Ofari Hutchinson is an author and political analyst. His new book is How Obama Governed: The Year of Crisis and Challenge (Middle Passage Press).
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Martha said...

The climate and energy R&D work should be funded first by each lone ranger that thinks he can make a difference with his own money.

Allow any company large or small to participate in building a prototype together with plans to back up the project providing "paper proof" of how his system would work if deployed in the real world.
The company should feel out the things that might not work and solutions if any should occur.

[Under what conditions would it fail and so on.]

Large corporations have deep pockets now - with so much cash- since very few employees have been hired of late.

Let them put their money where their mouth is.

Have the best brains to look the stuff over.
There's a lot of stuff out there already, so patent and copyright is a must for the companies to do first before presenting their work.

Don't look for giant steps during the first round, but many small ones, since Rome wasn't built in a day.

The responders should alter one variable in the oil dependency equation at a time, while observing how that one alteration would affect other important activities around the globe - this should be done by the corporation's staff via computer modeling or research.

A partial list of products made from Petroleum (144 of 6000 items)

Start this thing as a contest first with a promise that if a company's plan passes the smell test then they will be invited to a conference to explain before a body of experts.

Many corporations have deep pockets today. There is no need to waste taxpayers dollars on failed experiments - or stupid stuff.
[Let them fail with their own money - this technique has been used before in the aircraft industry on small projects and generates much competetion.]
Moreeover, many large corporations are multinational and R&D taxpayer money may end up anywhere.

Hopefully, the work won't end up
in some foreign country with the corps skimming off most of the cream or to H1b imported foreign workers rather than the American home grown kind.

We may have to do this like we did when we were behind Russia in space race.

This has giant possibilities.

But caution must be exercised at first - to see if the corporations are on the right page.
Of course schools must be allowed to participate also - since there is where our brightest minds will be obtained.

Obana is probably the only president one that can pull this off.
Nixon was told about global warming but chose not to act. This was in the 70's.
Now it will be harder because things are much more complex, but if we take one step at a time then folks won't get scared.
Allow them to keep their cars - I suggest.
But alter everything else under the sun.
Then work on auto retooling.
That will take awhile to retrofit all the blooming cars.
Some poor folks cain't afford new hybrids either.

So go slow, but attack many areas.

Martha said...

Don't get me wrong. Funding is a must. The 2 billion dollars,however, should be let to small businesses, spread across America, but wisely.

Perhaps the size of the business allowed to win - would be those businesses under $25 million - or whatever the maximun size can be determined after detailed analysis of what works on average. The low end could be a mere zero.
I am not in the driver's seat of course, but I believe that once a small business has won a grant to perform then strings should not be attached for the small guy/gal to team with a more experienced corporation.

Why? What we are seeking is creativity not business as usual.