Political Views

Michael Klare, Just How Addicted to Oil Are We?
by MWC Editor At Large Tom Engelhardt

On a recent sunny San Francisco Bay Area Saturday, having walked the beach at Limantour Spit and seen nature red in tooth and claw -- actually, an Osprey flying overhead, a large fish in its talons -- I paid the price for visiting the wilds. It turned out to be $2.53 a gallon for unleaded regular on my trip back to reality -- and that was by no means the worst price I saw that day.

For anyone who slips into the driver's seat of a car -- and except for those who live in cities like New York with full-scale public transport systems, that's most of America most of the time -- life is already a permanent energy crisis. No wonder the President stumbled across reality this year and declared before the nation that we were all oil addicts in a hooked homeland and it was time to rid ourselves of our "dependence" on Middle Eastern oil (a region where, as it turns out, oil use is surging). You know -- that horribly "unstable" part of the world the President personally destabilized with his invasion of choice.

The Saudis were mildly insulted by the presidential speech (especially since they sell us their oil at relatively cut-rate prices while energy-hungry Asian powers pay top Euro for it); the big oil execs, knowing the truth of the situation, were unflustered ("No combination of conservation measures, alternative energy sources and technological advances could realistically and economically provide a way to completely replace those imports in the short or medium term," said Exxon Mobil senior vice president Stuart McGill); and the President, it turned out, had his facts upside down. It's true that we now import 60% of our oil from elsewhere, but because it's cheaper to transport energy from relatively close at hand, our one-two punch in imported oil turns out to be neighbors Canada and Mexico. (The Saudis only place, and right behind the top three comes not, say, Kuwait, but... gulp... Hugo Chavez's Venezuela.) To add insult to injury, just this week, the government's Energy Information Administration announced that "U.S. and world oil demand growth in the second quarter [of 2006] is expected to be stronger than previously forecast."

From the beginning, the Bush administration has been an all-oil-all-the-time regime. Chevron even dubbed one of its double-hulled tankers the Condoleezza Rice because she was on the company board. (The name was changed when she became Bush's national security adviser.) Our President and Vice President were, of course, in the business and the government has since been Halliburtonized; Zalmay Khalilzad, our ambassador first to Afghanistan and now to Iraq, was once an advisor to Unocal, the energy company that tried to negotiate the running of a natural-gas pipeline through the Taliban's Afghanistan... and so on.

Though various neocons and top administration officials dreamed of a Pax Americana in the Middle East, they certainly never meant to take those heartland energy reserves for the United States. Settling permanently into bases in Iraq was to be the royal way to global dominance over other energy-desperate powers. (Imagine the frustration, then, that Iraq can now hardly get its oil out of the ground!)

Still, the President had a point. We do have a problem. Of course, problem number one was how little lay behind Bush's words. As Valerie Marcel, energy expert at the Royal Institute of International Affairs in London commented, "Bush was playing to a very, very domestic agenda. It's just rhetoric."

What's the point, after all, in announcing that we're a nation of addicts, if you're not only not planning to put money into treatment centers, but cutting funds for them? As Michael Klare so vividly points out below, we are entering what is, in essence, a permanent global state of energy crisis without significant thought or planning.

The Bush administration largely rejects the very idea of climate change -- only the Pentagon and NASA seem to take it seriously -- and the main form of alternative energy that really interests them right now, nuclear energy, is essentially another form of addiction. Elsewhere in the world, there are people putting some thought into the onrushing crisis we face, but not us. The Chinese, worried about their energy future, have not only been stomping the planet from Sudan and Iran to Venezuela looking to nail down their long-term fossil-fuel fixes, but have been putting some time, energy, and thought into renewables. Sweden has, remarkably enough, just launched a fifteen-year plan to make itself the first advanced industrial country to go permanently off oil. (Already, 26% of the energy consumed there comes from renewables.) But not us.

This is, of course, painfully shortsighted. After all, there's the Swedish government working closely with Saab and Volvo to produce cars and trucks that will work off biofuels -- and where is our government? (Note to GM: How long will you really sell those monsters of yours in a $4 or $5 a gallon world?) So, with Michael Klare, author of the (sadly) ever more indispensable book, Blood and Oil: The Dangers and Consequences of America's Growing Dependence on Imported Petroleum, at your side, consider our predicament in the new world of eternally tight energy. Tom

The Permanent Energy Crisis
By Michael T. Klare

President Bush's State of the Union comment that the United States is "addicted to oil" can be read as pure political opportunism. With ever more Americans expressing anxiety about high oil prices, freakish weather patterns, and abiding American ties to unsavory foreign oil potentates, it is hardly surprising that Bush sought to portray himself as an advocate of the development of alternative energy systems. But there is another, more ominous way to read his comments: that top officials have come to realize that the United States and the rest of the world face a new and growing danger – a permanent energy crisis that imperils the health and well-being of every society on earth.

To be sure, the United States has experienced severe energy crises before: the 1973-74 "oil shock" with its mile-long gas lines; the 1979-80 crisis following the fall of the Shah of Iran; the 2000-01 electricity blackouts in California, among others. But the crisis taking shape in 2006 has a new look to it. First of all, it is likely to last for decades, not just months or a handful of years; second, it will engulf the entire planet, not just a few countries; and finally, it will do more than just cripple the global economy -- its political, military, and environmental effects will be equally severe.

If you had to date it, you could say that our permanent energy crisis began, appropriately enough, on New Year's Day, 2006, when Russia's state-owned natural gas monopoly, Gazprom, cut off gas deliveries to Ukraine in punishment for that country's pro-Western leanings. Although Gazprom has since resumed some deliveries, it is now evident that Moscow is fully prepared to employ its abundant energy reserves as a political weapon at a time of looming natural gas shortages worldwide. It won't be the last country to do so in the years to come. In just the few weeks since then, the world has experienced a series of similar energy-related disturbances:

* The sabotage of natural gas pipelines to the former Soviet republic of Georgia, producing widespread public discomfort at a time of unusually frigid temperatures;

* An eruption of oil-related ethnic violence in Nigeria, resulting in a sharp reduction in that country's petroleum output;

* Threats by Iran to cut off exports of oil and gas in retaliation for any sanctions imposed by the U.N. Security Council over its suspect nuclear enrichment activities;

* And as result of such developments, a series of mini-spikes in crude oil prices as well as reports in the business press that, if this pattern of instability continues, such prices could easily rise beyond $80 per barrel to hit the once unimaginable $100 per barrel range.

Vectors of Crisis

Events like these will certainly spread economic pain and hardship globally, especially to those who cannot afford higher transportation and heating-fuel costs. As it happens, though, these are not isolated, unrelated events. Think of them as expressions of a deeper crisis. Like the tremors before a major earthquake, they suggest the dangerous accumulation of powerful energy forces that will roil the planet for years to come.

Although we cannot hope to foresee all the ways such forces will affect the global human community, the primary vectors of the permanent energy crisis can be identified and charted. Three such vectors, in particular, demand attention: a slowing in the growth of energy supplies at a time of accelerating worldwide demand; rising political instability provoked by geopolitical competition for those supplies; and mounting environmental woes produced by our continuing addiction to oil, natural gas, and coal. Each of these would be cause enough for worry, but it is their intersection that we need to fear above all.

Energy experts have long warned that global oil and gas supplies are not likely to be sufficiently expandable to meet anticipated demand. As far back as the mid-1990s, peak-oil theorists like Kenneth Deffeyes of Princeton University and Colin Campbell of the Association for the Study of Peak Oil (ASPO) insisted that the world was heading for a peak-oil moment and would soon face declining petroleum output. At first, most mainstream experts dismissed these claims as simplistic and erroneous, while government officials and representatives of the big oil companies derided them. Recently, however, a sea-change in elite opinion has been evident. First Matthew Simmons, the chairman of Simmons and Company International of Houston, America's leading energy-industry investment bank, and then David O'Reilly, CEO of Chevron, the country's second largest oil firm, broke ranks with their fellow oil magnates and embraced the peak-oil thesis. O'Reilly has been particularly outspoken, taking full-page ads in the New York Times and other papers to declare, "One thing is clear: the era of easy oil is over."

The exact moment of peak oil's arrival is not as important as the fact that world oil output will almost certainly fall short of global demand, given the fossil-fuel voraciousness of the older industrialized nations, especially the United States, and soaring demand from China, India, and other rapidly growing countries. The U.S. Department of Energy (DoE) projects global oil demand to grow by 35% between 2004 and 2025 -- from 82 million to 111 million barrels per day. The DoE predicts that daily oil output will rise by a conveniently similar amount -- from 83 million to 111 million barrels. Voilá! -- the problem of oil sufficiency disappears. But even a cursory glance at the calculations made by the DoE's experts is enough to raise suspicions: Behind such estimates lies the assumption that key oil producers like Iran, Iraq, Nigeria, and Saudi Arabia can double or triple their oil production -- unlikely in the extreme, according to most sober analysts. On top of this, the DoE has been lowering its own oil-production estimates: In 2003, it predicted that global oil output would reach 123 million barrels per day by 2025; by the end of 2005, that number had already dropped by12 million barrels, reflecting a growing pessimism even among the globe's great oil optimists.

This is not to say that oil will disappear in the years ahead: There will still be adequate supplies for well-heeled consumers who can afford higher fuel bills. But much of the world's easy-to-acquire petroleum has already been extracted and significant portions of what remains can only be found in places that present significant drilling challenges like the hurricane-prone Gulf of Mexico or the iceberg-infested waters of the North Atlantic -- or in perennially conflict-ridden and sabotage-vulnerable areas of Africa, Central Asia, and the Middle East.

No Escape from Scarcity

To make the energy picture grimmer, "spare" or "surge" capacity seems to be disappearing in the major oil-producing regions. At one time, key producers like Saudi Arabia retained an excess production capacity, allowing them to rapidly boost their output in times of potential energy crisis like the 1990-91 Gulf War. But Saudi Arabia, like the other big suppliers, is now producing at full tilt and so possesses zero capacity to increase output. In other words, any politically inspired (or sabotage related) cutoff in oil exports from countries like Russia or Iran will produce instant energy shock on a global scale and send oil prices soaring to, or through, that $100 a barrel barrier.

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