Archive for the 'Saudi Arabia' Category

How to End America’s Addiction to Oil

Wednesday, April 14th, 2010

Set America Free Coalition member Jim Woolsey writes in the Wall Street Journal:

“Oil dominates transportation: About 95% of transportation fuel in the U.S. is derived from petroleum. And over three-quarters of the world’s reserves of conventional oil are in OPEC nations. But OPEC is pumping less than it did in the 1970s, despite a doubling in global demand, because it’s a cartel maximizing its income. OPEC sets oil’s price at a level that exploits our addiction but is generally not high enough for long enough that we go cold turkey.

“Oil profits enhance the ability of dictators and autocrats to dominate their people. This is one reason that eight of the top nine oil exporters (Norway is the exception) are dictatorships or autocratic kingdoms, as are virtually all of the 22 states that depend on oil and gas for at least two-thirds of their exports.

“Saudi Arabia’s oil wealth enables it to control around 90% of the world’s Islamic institutions even though it has less than 2% of the world’s Muslims. [...]

“so far every national policy we’ve tried to end our oil addiction has failed, including picking winners. Neither the Synfuels Corporation (the early 1980s drive for coal-to-liquid fuel) nor the hydrogen highway (the push early in this decade to get Americans to drive hydrogen-powered cars long before the technology was ready) had a chance of succeeding. It was too easy for OPEC to drive prices down and crush such costly competition.

“Supporters of cap-and-trade legislation have argued that putting a price on carbon would help us get off oil. But the effect of this would be negligible. Twenty dollars a ton of CO2 equates to about 20 cents a gallon at the gasoline pump.

“Drill, baby, drill? Some suggest that if we replace foreign with domestic oil our problems will be solved. Domestic drilling does help reduce oil’s share—a billion dollars a day—of our huge balance of payments deficit, and it adds some domestic employment.

“But that’s it. OPEC has very large reserves and cheap extraction costs, while domestic drilling costs for new oil will be many times that of the Saudis. We can’t drill our way out of the cartel’s control of the global oil market.

“Shifting the way we produce electricity also has essentially nothing to do with oil dependence; less than 2% of U.S. electricity comes from burning oil. We may decide to shift from coal-fired electricity to wind or nuclear for environmental reasons, or not do so for cost reasons, but these issues are not at all central to the oil debate.

“We urgently need to reduce oil dependence in the short term. This means lowering demand and utilizing substitutes as cheaply and quickly as possible. Here are four strategies we can implement beginning today:

“First, we should take advantage of electronic modifications that are being developed for internal combustion engines in existing vehicles. Innovations in computer chips and valves hold an early promise of substantial improvements in mileage by regulating combustion much better than current engines can.

“Second, we should pay attention to T. Boone Pickens’s recommendations to switch to natural gas for fleet vehicles such as buses, and for interstate trucking. Buses and trucks are easily modified to run on natural gas and would only require new pumps at a few central locations and interstate truck stops.

“Third, we should force petroleum products to compete with other fuels as soon as possible. There are many ways to do this, and we should use them all. For example, we should deploy “drop-in” fuels produced from waste and algae. These fuels can mix freely with gasoline and diesel in existing vehicles.

“We should also require all new gasoline-using vehicles to be “flexible fuel, open standard.” What this means is that these vehicles would use a type of plastic in their fuel lines that tolerates nongasoline fuels such as ethanol and methanol. This is a cheap and simple change: Brazil accomplished it easily several years ago. Methanol made from natural gas can be produced for around $1.20 a gallon (of gasoline equivalent) today.

“Fourth, we should move to electrify automotive transportation. Plug-in hybrids are on the road now (I drive one), and production models such as the Chevy Volt, due out this autumn, can drive electrically for roughly 40 miles before needing to plug in or to use on-board liquid fuel. Three out of four days an average car in the U.S. travels fewer than 40 miles.”

Farce as reality: Saudis seek payment for any drop in oil revenues

Wednesday, December 16th, 2009

No, we aren’t making this up. The New York Times reports: “Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers.”

Saudi to America: Forget energy independence. Depend on us.

Thursday, September 17th, 2009

Saudi Prince Turki al-Faisal, former ambassador to the United States, has a suggestion for America: drop this nonsense called energy independence. In a strongly-worded essay in Foreign Policy magazine, which coincides with the 150th anniversary of Edwin Drake’s discovery of oil in the United States, Turki lambastes American politicians for invoking energy independence, which “is now as essential as baby-kissing,” accusing them of “demagoguery.” For him, energy independence is “political posturing at its worst—a concept that is unrealistic, misguided, and ultimately harmful to energy-producing and consuming countries alike.” “Like it or not,” Turki concludes, “the fates of the United States and Saudi Arabia are connected and will remain so for decades to come.”

We’ve heard these lines before each time the United States made progress toward lessening its dependence on oil. In February, for example, Ali al-Naimi, the Saudi oil minister, warned of a “nightmare scenario” if consuming countries made progress in the development of alternative fuels. A decade ago, his predecessor, Sheikh Ahmed Zaki Yamani, called technology “the real enemy for OPEC.” This is understandable. After all, no pusher wants to see his client circling around a rehab clinic. For Saudi Arabia, a world where oil plays a marginal role is the nightmarish materialization of the Saudi saying, “My father rode a camel, I drive a car, my son flies a jet plane, his son will ride a camel.”

More troubling is the parade of prominent Americans who deride the notion of energy independence, viewing it as jingoistic, unsophisticated, naive and misleading. One cannot doubt the patriotism of former CIA director John Deutch, who said “energy independence is not a constructive idea,” or former secretary of defense and energy James Schlesinger, who called it a “forlorn hope,” or Pulitzer Prize winner Daniel Yergin who referred to it as “pipe dream,” or Andy Grove, former chairman of Intel, who called the concept “a faulty goal,” or even the members of the Council on Foreign Relations energy security task force who went so far as to accuse those promoting energy independence of “doing the nation a disservice.” But just like Prince Turki, all of those distinguished Americans misunderstand what energy independence really is. As a result, they underestimate our ability to get there.

Contrary to popular conception, energy independence does not mean self-sufficiency. It doesn’t mean not importing any oil or walling ourselves off from the global market. Energy independence is not a function of the amount of oil we consume or import. Rather, energy independence means turning oil from a strategic commodity second to none—one that underlies the global economy and determines the course of world affairs—into just another commodity to trade.

Oil’s strategic status stems from its virtual monopoly over fuel for transportation, which in turn underlies our entire way of life. Worldwide, 95 percent of our transportation energy is petroleum-based. Our cars, trucks planes and ships can run on nothing but petroleum. This is why the much-touted policies that aim to either increase oil supply through domestic drilling or decrease its use by boosting fuel efficiency, while helpful, are insufficient as they do not address the factor that gives oil its strategic status: the petroleum-only vehicle.

Energy independence thus requires breaking the virtual monopoly of oil over transportation fuels, and this can only be done via competition in the transportation fuel sector. (Think about our electricity sector, where a variety of competing energy sources—coal, natural gas, nuclear, solar and wind—can contribute to the grid.) If our cars and trucks were able to run on other fuels in addition to those refined from petroleum, Saudi Arabia’s oil would have to compete over the drivers’ wallet against utility companies, alternative liquid fuels producers and natural gas suppliers. But as long as our cars are gasoline-only, oil remains the only game in town, which is exactly what Saudi Arabia wants.

A few types of vehicle technologies allow us to break oil’s monopoly. The first, and most affordable, is the flex-fuel vehicle that can run on any combination of gasoline and alcohol (alcohol does not mean just ethanol, and ethanol does not mean just corn). It costs an extra $100 per new car to make a regular car flex-fuel. All it takes is a fuel sensor and a corrosion-resistant fuel line. An Open Fuel Standard ensuring that every new car sold in the United States be flex-fuel would not only give rise to an industry of alternative fuels and the associated refueling infrastructure, but it would also drive foreign automakers to add fuel flexibility to all of their models, effectively making it an international standard.

Electricity is another transportation fuel that can compete against oil. It is cheap, largely clean, domestically produced and can be made from multiple sources. Its refueling infrastructure is widely available. All that is needed for an electric car to connect to the grid is an extension cord. Most automakers have already committed to produce models of limited-range pure electric vehicles (EV) or plug-in hybrid electric vehicles (PHEV). The latter allow drivers to travel on stored electric power for the first 20-40 miles, after which the car keeps running on the liquid fuel in the tank, providing the standard 200-400 mile range. For the 50 percent of Americans who drive 25 miles per day or less, shifting from barrels to electrons would make the visit to the local gas station a rarity. If all of those Americans owned PHEVs, a population the size of New York, Florida and Pennsylvania combined would be off oil most days of the year. A PHEV would normally drive 100-150 miles per gallon of gasoline. If it is also made as flex-fuel and fueled with a blend of 80 percent alcohol and 20 percent gasoline, oil economy could reach over 500 miles per gallon of gasoline.

These technologies are either at or few years away from commercialization. If we only understood energy independence properly and took the relevant measures to open the transportation fuel market to competition, oil would be far less central to the world economy than it is today. If we ensure that new cars are platforms on which fuels can compete rather than perpetuate the petroleum standard, then Prince Turki’s descendants, on the 200th anniversary of Drake’s discovery, will be more likely to ride camels than private jets. No wonder he wants us to think otherwise.

Terrorists targeting oil infrastructure

Thursday, June 26th, 2008

Back in 2003, Gal Luft and Anne Korin wrote: “However, after the attacks on World Trade Center and the Pentagon, symbols of U.S.’ economic and military dominance, terrorist organizations of global reach like al Qaeda have identified the world’s energy system as a major vulnerability and a certain way to deliver a blow to America’s oil dependent economy as well as global economy at large. With attacks against transportation networks, military bases and government installations becoming more difficult to execute due to heightened security, terrorists looking for a big bang might find oil, to quote al Qaeda, the “umbilical cord and lifeline of the crusader community,” the object of the next major assault on the west, an assault that could wreak havoc with America’s economy and way of life. ”

Fast forward to the present, where attacks on oil targets have removed a significant amount of oil from the global market contributing to the drastic rise in prices. The likelihood of a catastrophic attack against a hub of the global oil market is high. AP reports: “Saudi authorities arrested 701 suspected al-Qaida-linked militants in 2008, some of whom planned a car bomb attack on an oil installation, the Interior Ministry said Wednesday.” The threat extends beyond the Middle East: Nigeria, for example, has lost almost one million barrels a day of production due to attacks, the most recent of which were last week.

Frank Gaffney calls a spade a spade

Wednesday, June 18th, 2008

Set America Free Coalition member Frank Gaffney writes:

the Saudis’ reported, new-found willingness to increase oil production by half-a-million barrels per day should not be confused with acts of friendship. After all, twice in recent months King Abdullah contemptuously rebuffed pleas from President Bush for just such relief from the damage caused by soaring petroleum prices. Only when that damage appeared likely to trigger a renewed U.S. determination finally to end America’s “addiction to oil” have the Saudis seen any need to bring down prices at the pump.

Fortunately, the latest Saudi gambit may be too little, too late to perpetuate our present enslavement by the Organization of Petroleum Exporting Countries, the Saudi-led oil cartel that has been waging economic warfare against the United States for decades and lately with increasingly devastating effects. Thanks to the likes of Robert Zubrin, author of the highly acclaimed “Energy Victory: Winning the War on Terror by Breaking Free of Oil,” Fox New’s popular prime-time host Bill O’Reilly and a growing number of legislators, the American people are awakening to the fact we have an alternative: Flexible Fuel Vehicles – cars that at a nominal cost can use existing technology to run on alcohol-based fuels (such as ethanol, methanol or butanol), gasoline or some combination thereof.

Once again, hat in hand, we go to Saudi Arabia

Tuesday, May 20th, 2008

originally posted by Set America Free Coalition member Gal Luft on MESH on May 16:

Four months and thirty extra dollars a barrel later, President Bush is again in Saudi Arabia trying to persuade the Saudis to open the spigot and increase OPEC production. Last time the answer was a resounding no. Not even a gift of 900 precision-guided bombs helped convince the Saudis to show more oomph at the pump. The lesson for the Administration: speak softer and wave a bigger gift. This time the United States has agreed to help Saudi Arabia, the world’s largest oil exporter, develop “civilian” nuclear power.

Of course the Saudi interest in nuclear power has nothing to do with energy production but with Iran and the Sunnis’ fears of Iranian hegemony. Does President Bush really believe that helping the Saudis with nuclear technologies would cause Tehran to pull the plug on its nuclear program?

Saudi Oil Minister Ali al-Naimi insists that the oil market is well supplied, blaming the high prices on hedge funds and speculators. Considering the fact that OPEC production level is not much higher than its level thirty years ago and that Saudi output is lower than it was two years ago, putting the entire blame on speculators is utter nonsense.

The Saudis have always taken pride in their role as swing producers, claiming to own over 2mbd in spare capacity. But what good is this liquidity mechanism if they are not prepared to use it? When last month Nigeria’s production fell by 330,000 bpd, OPEC did not lift a finger to compensate for the loss. At what level will they provide us with liquidity? $200? $300?

If the Saudis are right and it’s all about the speculators, why not put this to test? This is exactly what Bush should have suggested: pour some oil into the market for a limited period of time and let’s measure the effect on prices so we can determine who is the culprit. With projected revenues of $400 billion this year, the Saudis can surely afford to embark on such an experiment and clear their name once and for all. But as I wrote here in January, we’d rather beg than blame.

The spectacle of an American president begging for oil every few months only to be rewarded with a slap in the face is getting a bit tedious. What’s next? Naming one of our aircraft carriers USS Ibn Saud?

What oil money buys

Monday, May 5th, 2008

The Australian surveys what petrodollars buy for the Saudis:

The Saudi Government – largely through its embassy – is believed to have funnelled at least $120 million into Australia since the 1970s to propagate hardline Islam, bankroll radical clerics and build mosques, schools and charitable orgnisations.
But the Saudi cash that has flowed into Australia, that also allegedly has paid the allowance of hardline Canberra cleric Mohammed Swaiti, who has publicly praised jihadists, is dwarfed by the $90 billion Riyadh is believed to have pumped into promoting Islamic fundamentalism internationally.

The article adds this additional insight into the regime that holds the world by its unmentionables by virtue of its control of a quarter of the world’s oil reserves and essentially all of the oil market’s swing capacity:

The most recent insight into the nature of Saudi society came with the release this month of the Human Rights Watch report Perpetual Minors, about the status imposed on women by Riyadh’s doctrinaire interpretation of Sura 4, verse 34 of the Koran: "Men are the protectors and maintainers of women because God has given the one more (strength) than the other and because they support them from their means."
The report outlines how adult Saudi women generally must obtain permission from a male guardian to work, travel, study or marry, while being denied the right to make even the most trivial decisions on behalf of their children and being segregated from men under laws enforced by the Orwellian-sounding Commission for the Promotion of Virtue and the Prevention of Vice (the religious police).
In 2004, the UN ranked Saudi Arabia 77th of 78 countries for gender empowerment, defined as the ability of women to take part in economic and political life, ahead of Yemen. Australia was eighth, Norway first.
While Saudi Arabia exports its Wahhabi version of Islam to the world, Saudi society groans under the weight of its internal contradictions. The first class of female law students will graduate from King Abdul Aziz University this year, but the Saudi Ministry of Justice prohibits female lawyers from practising. Judges consider women to be lacking in reason and faith, and have refused to allow them to speak in the courtroom because their voices are shameful.
A Saudi labour code, which came into force in 2006, states that all Saudi workers have the right to work without discrimination, but also specifies "women shall work in all fields suitable to their nature".
Literacy among Saudi women and girls over the age of 15 has risen sharply, according to UN reports, from 16.4 per cent in 1970 to 83.3 per cent in 2005 and Saudi women make up 58 per cent of university graduates (most at teachers colleges), but education is dependent on the permission of male guardians, universities are segregated, and women are excluded from disciplines such as engineering, architecture or political science.
Last year, a 19-year-old gang-rape victim was sentenced to 200 lashes and six months’ jail for being in a car with an unrelated man when she was attacked by seven men. In 2002, a fire at an elementary school in Mecca resulted in 15 schoolgirls being burned alive because the religious police refused to let them out of the school without headscarfs.

Freedom’s Enemies Hate Biofuels

Monday, April 28th, 2008

Venezuelan petrotyrant Hugo Chavez has renewed his denunciations of biofuels. According to an Associated Press story dated April 26, 2008:

“Venezuelan President Hugo Chavez says a U.S. push to boost ethanol production during a world food crisis is a ‘crime.’
The socialist leader says he’s concerned that so much U.S.-produced corn could be used to make biofuel, instead of feeding the world’s poor.
Chavez says the corn needed to fill an average car with ethanol would be enough to feed seven people for a year.”

Actually, since a bushel of corn yields 2.8 gallons of ethanol, the corn needed to fill a 20 gallon SUV tank is 7 bushels, which at the current market price of $5/bushel, costs a total of $35. According to Mr. Chavez, then, the cost of feeding one person for a year is $5. With oil hitting $120/barrel, Mr. Chavez’s government this year will receive about $88 billion in revenues taxed from the rest of the global economy, while the OPEC governments collectively will tax the world to the tune of $1400 billion.

(Omitted from Chavez’s analysis is the fact that the ethanol program has actually stimulated corn production so much that, after the part used for ethanol is taken away, the net US corn harvest available for food and feed is up 34% since 2002. Furthermore, contrary to claims in many articles, this has not been done at the expense of soy or wheat production. In fact, U.S. soy plantings this year are expected to be up 18% to a near record of 75 million acres, wheat plantings are up 6%, and overall, US farm exports are up 23%. Much more can be produced as demand requires, since of 800 million acres of US farmland, only 280 million are actually being farmed. This is why – $5 per person per year feeding price aside –  the entire Malthusian conceit underlying Chavez’s fuel vs. food argument is nonsense.)

Chavez’s remarks reinforce those made by the Saudi Arabian oil minister in a speech made in Paris April 8, wherein he expressed his deep concern that biofuels could contribute to global warming. Chavez and the Saudi’s negative assessments of biofuels were also strongly supported by arch Malthusian Lester Brown in an op ed in the Washington Post April 22.

The fundamental unity of the Islamist, the petrotyrant, and the Malthusian positions was made clear by pro-OPEC propagandist Robert Bryce, in a debate with me that aired on the Mike Medved Show April 21. (Which can be heard by clicking here.)

When hard pressed, Bryce finally emerged with the following argument: Biofuels are to be shunned because they threaten to lower the price of oil, and thus encourage economic growth, particularly in the third world, and thus global warming.

So apparently we should all be thankful to OPEC, which by taxing the world economy into a recession, is doing so much to curtail uncontrolled human aspirations, while concentrating power in the hands of those who would eliminate all freedom forever. 

Robert Zubrin, author “Energy Victory: Winning the war on Terror by Breaking Free of Oil,” www.energyvictory.net

UPDATE:
A reader writes in with an example of how innumerate Chavez’ statement is:

“If the $88 billion/year Venezuelan oil revenue figure is correct (and I have no reason to suspect otherwise), then Hugo Chavez can singlehandedly end global hunger – $88 billion/$5 per person = 17.6 billion people that can be fed on Venezuelan oil revenue alone. What a humanitarian gesture that would be! And as there are only 6.6 billion people on Earth, he can still pocket $55 billion dollars for his own personal needs…”

Would you like 15% higher oil prices?

Friday, April 25th, 2008

Merrill Lynch commodity strategist Francisco Blanch says that oil and gasoline prices would be about 15% higher if biofuel producers weren’t increasing their output. That would put oil at more than $115 a barrel, instead of the current price of around $102. U.S. gasoline prices would have surged to more than $3.70 a gallon, compared with an average of a little more than $3.25 today. Biofuels are playing “a critical role” in satisfying world demand, says Fatih Birol, chief economist of the Paris-based International Energy Agency. Without them, “it would be much more difficult to balance global oil markets,” he said.

Source: Wall Street Journal, March 24, 2008

With oil around $120, the 15% increase in oil price discussed above should the anti-biofuel propaganda prevail and biofuel production be reduced would carry us to $138. Apparently, the anti-biofuel crowd, with Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi taking the lead, wouldn’t mind that outcome.

The Saudis hate alcohol

Friday, April 11th, 2008

It’s official. Right from the top. The kingdom of Saudi Arabia hates biofuels. Out of concern for the environment and world energy security, of course. At the International Oil Summit in Paris Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi promised that fossil fuels will supply the bulk of global energy needs for at least the next 50 years. He said that “ethanol and other biofuels do not meet environmental and energy security goals” and that “their cultivation eats into the human food supply, reduces the absorption of carbon dioxide as forests are cut down, has not improved the security of energy supply and has not reduced petrol prices.” Biofuels also enjoy “financial favouritism” from governments, according to the minister.
“we have to look beyond biofuels… and concentrate instead on truly renewable sources of energy,” he said, flagging solar energy as “perhaps the best source” of alternative energy, predicting researchers will succeed in making solar cells “more effective” to expand use. What the Saudis omit is that we no longer produce electricity from oil so solar power is no threat. This cannot be said about alcohols which directly displace oil and snatch petrodollars from the Saudi coffers.

Merrill Lynch analyst Francisco Blanch just told the WSJ that without biofuels, the price of oil would be about 15% higher than it now is. This means at least $13 higher. This year the US will import 5 billion barrels. At $13 saving for each barrel, that adds up to a saving to the country as a whole of $65 billion in foriegn oil payments due to current biofuel programs.
That shows that our biofuels program has cost the Saudis billions. No wonder they are opposed to it. It just needs to be taken further.