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.”
Click here to watch Anne Korin discuss why liquid fuel choice is critical as we move toward electrification at Cascadia’s “Beyond Oil” conference.
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 Drakeâ€™s discovery of oil in the United States, Turki lambastes American politicians for invoking energy independence, which â€œis now as essential as baby-kissing,â€ accusing them of â€œdemagoguery.â€ For him, energy independence is â€œpolitical posturing at its worstâ€”a concept that is unrealistic, misguided, and ultimately harmful to energy-producing and consuming countries alike.â€ â€œLike it or not,â€ Turki concludes, â€œthe fates of the United States and Saudi Arabia are connected and will remain so for decades to come.â€
Weâ€™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 â€œnightmare scenarioâ€ if consuming countries made progress in the development of alternative fuels. A decade ago, his predecessor, Sheikh Ahmed Zaki Yamani, called technology â€œthe real enemy for OPEC.â€ 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, â€œMy father rode a camel, I drive a car, my son flies a jet plane, his son will ride a camel.â€
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 â€œenergy independence is not a constructive idea,â€ or former secretary of defense and energy James Schlesinger, who called it a â€œforlorn hope,â€ or Pulitzer Prize winner Daniel Yergin who referred to it as â€œpipe dream,â€ or Andy Grove, former chairman of Intel, who called the concept â€œa faulty goal,â€ 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 â€œdoing the nation a disservice.â€ 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 doesnâ€™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 noneâ€”one that underlies the global economy and determines the course of world affairsâ€”into just another commodity to trade.
Oilâ€™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 sourcesâ€”coal, natural gas, nuclear, solar and windâ€”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 Arabiaâ€™s oil would have to compete over the driversâ€™ 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 oilâ€™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 Turkiâ€™s descendants, on the 200th anniversary of Drakeâ€™s discovery, will be more likely to ride camels than private jets. No wonder he wants us to think otherwise.
One hundred and fifty years ago in the sleepy lumber town of Titusville, Pa., â€œColonelâ€ Edwin Drake struck oil and changed the world forever. On this anniversary it’s time to consider a new strategy. Read Gal Luft’s Houston Chronicle piece here.
In a tale of national capitulation to thuggery and strong arm diplomacy Switzerland showed the world the implications of oil dependence. Read here
The Gigaton Throwdown Initiative comprised of investors, entrepreneurs, executives and academics investigated what it would take to reach gigaton scale for 9 technologies currently attractive to investors, including alternative liquid fuels. Here’s what they had to say about the need for fuel flexibility to be a standard feature as a market enabler for fuel competition:
“If flex-fuel capability were required of all new vehicles starting in 2012 at a cost of $70 per vehicle, 128 million new flex-fuel vehicles would be produced by 2020, and the total cost would be approximately $10 billion spread over 10 years”
“Because of the low cost of converting new vehicles ($70 per vehicle), new vehicle flex-fuel requirements would be the most economic strategy for ensuring flexible fuel options and driving private investment in infrastructure to support more widespread deployment of biofuels.”
“A large-scale expansion of ethanol production will require coordination with car manufacturers to expand the FFV fleet. Sales of [light duty vehicles] in the U.S. were 16.1 million in 2007. It is unlikely that FFV deployment can be accomplished through pure consumer choice given the chicken-and egg relationship between vehicle deployment and the need for sufficient density of vehicles to support private investment in fueling infrastructure. As noted previously, new vehicle flex-fuel requirements would be the most economic strategy for driving private investment in infrastructure to support more widespread deployment of biofuels.” Gigaton Throwdown report (p.35, 36, 39)
“OPEC, the supplier of 40 percent of the worldâ€™s oil, will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah.The Organization of Petroleum Exporting Countries, due to meet again in September, wouldnâ€™t raise production with oil at $75, â€œbut if it reaches $100, maybe,â€ Sheikh Ahmed told reporters in Kuwait today.”
How many times do we need to learn the same lesson before we act to break this cartel by breaking oil’s virtual monopoly over transportation fuel? We’re in for a shock, as Set America Free’s Gal Luft wrote recently in the Baltimore Sun. Are we going to do anything about it?