Sunday, April 22, 2012

The World Runs on Oil; Hating it is Irrational

A Foreign Confidential™ Editorial for Earth Day 2012

Dateline USA…. The Democrats' decades-old hatred of oil--they seem to despise the "fossil fuel" regardless of how or where it is produced or who produces it--is fundamentally irrational, politically unwise--ordinary Americans are pro-production and apparently appreciate that the current increase in domestic output is happening in spite and not because of the party in power--and inherently threatening to America's national security and well being owing to the importance of oil to the nation's economy.

Contrary to that which nearly all Democrats from President Obama on down would have you believe, the crude reality (pun intended) is that the world runs on oil and will continue to run on oil for at least the next 20 years. There are no presently available or soon-to-be available substitutes for gasoline and diesel, which are made by refining crude oil, to meet global needs for motor transport fuel. (Similarly, there are no substitutes for coal and nuclear energy for producing baseload, as opposed to intermittent, electricity, without which our society would cease to exist.)

Yes, we can use more natural gas, especially to fuel municipal vehicles, assuming the transportation and environmental hurdles can be overcome (the threat to water supplies from gas fracking is formidable) along with more electric cars and trucks (although these, as indicated, are really coal and nuclear vehicles) … and, yes, it's also true that emerging technologies for biomass-derived, drop-in diesel and gasoline may make marginal contributions toward reducing dependence on their non-renewable counterparts (just as woody biomass-derived bio-coal and industrial wood pellets suitable for co-firing with coal may help cut its use in coal-burning power stations and steel plants, assuming feedstock sustainability issues can be addressed in order to preserve precious forest resources and to avoid using farmland to grow inedible energy crops instead of food for a hungry planet). But oil and petrochemicals--products that make modern civilization possible--will continue to be vitally important for the foreseeable future. There is no escaping this; nor should there be, because it turns out that there is enough oil to go around for everyone. Nobody needs to die for oil; no oil wars need to be planned or waged.

Running into Oil

In fact, the world is running into oil and not out of it, as alleged by the oil shortage propagandists--an unholy alliance that includes Big Oil companies, aiming to control the transition from relatively scarce and inexpensive conventional oil resources to more plentiful and costlier heavy crude and oil sands resources, and extreme environmentalists, seeking to cripple and eventually end all oil production for climate change/global warming reasons, regardless of the pain and suffering caused by high gasoline and diesel prices that affect practically all economic activities, from the cost of growing and transporting food crops to the cost of commuting to work. You say we can't drill our way into an era of energy independence and affordable gasoline prices? Simply Google heavy oil, heavy crude, oil, Enhanced Recovery Oil (EOR), etc. The truth is hiding in plain sight--on US Government and other authoritative websites. (Foreign Confidential™ has been a rather lonely voice in pointing this out.)

Unfortunately, energy independence and affordability don't necessarily go hand in hand. In principle, high oil prices could trigger a truly historic oil boom--we could be self-sufficient in crude just by squeezing new oil from old fields using commercially proven and available EOR methods--but we could still end up exporting much or even most of the end products of the boom because of a lack of oil refineries and pipelines. (High oil prices also make inefficient and nonexistent alternative energy sources more attractive.) More important, high is a relative concept. What may be high to a domestic, independent oil producer is not necessarily high enough to attract a multinational (American-in-name-only) energy behemoth.

The same holds true for the terms profitable and economical. Domestic onshore EOR and heavy crude development is clearly economical yet apparently not economical enough--producing the resources isn't profitable enough--for publicly traded multinationals whose business models and stock market valuations depend on the exploitation of giant conventional oil fields, both onshore and offshore. Which is why the oil that the nation needs has been and is likely to remain in the ground unless something dramatic, something really radical, is done to both produce and refine it with the national interest in mind.

The Case for a National Oil Company

One such "something"-- a solution that so-called progressives should long ago have embraced, dating to the the first energy crisis during the Carter administration, and that Republicans are certain to reject on account of their fanatic opposition to non-defense-related arms and programs of the federal government--would be the creation of a national oil company, or NOC, that would be charged with developing domestic resources, exclusively, with a focus on EOR and heavy crude. (Nationalizing energy is too radical to even consider in the United States absent a catastrophic national emergency, such as a devastating nuclear or biological attack on the U.S. homeland or a complete collapse of the financial system.) National--meaning, state-controlled--oil companies hold about 75% of the world's oil and gas reserves. The case for an American NOC, which could directly and indirectly create millions of well paying, permanent jobs, has never been greater, except, that is, for the period during President Obama's first few months in office, at the height of the worst financial crisis since the Great Depression, when he missed the opportunity to most meaningfully stimulate the economy by spurring the development of neglected natural resources and arguably blew the chance to become the leader the country so clearly yearned to see in the White House and that many voters, including some disaffected Republicans, following the disastrous, country-and-party-ruining Bush years, believed they had elected--namely, a new FDR.

Foreign Confidential™ intends to make the case for an American NOC in the coming months, along with the alternative case for a national energy policy that would for the first time seriously support private-sector domestic oil output, in the context of an overall policy that would encourage the development of  natural resources--America's real wealth--while still striving to protect the environment and preserve the country's awesome wilderness areas for future generations. Our view is that energy independence and the economic strength that can come from massive but responsible domestic oil development are essential both for the much needed formulation and conduct of a smarter, more effective foreign policy--one that would result in far fewer foreign interventions and finally produce the peace dividend that should have materialized at the end of the Cold War--and for laying the foundations for establishing a historic, new era of long-term prosperity marked by major advances in environmental protection and public health.

All of which should at least theoretically be of some interest to independents and true progressives.

Copyright © 2012 Foreign Confidential™