Lisa Margonelli : The Atlantic

The Keystone Pipeline Is No Victory for Environmentalism

2012-01-19T15:03:00-05:00

And at most, it's merely a symbolic and short-lived win. To ensure the end of tar sands oil, the government will have to enact measures to make high-carbon fuel unprofitable.

Reuters

Yesterday, everyone involved in the support and opposition to the Keystone XL pipeline got what they wanted: Obama tossed a squib to environmentalist supporters whom he's previously disappointed, and Republican boosters of the pipeline got to turn the Obama's refusal (which they accelerated by attaching a February 21 deadline for approval to the payroll tax bill) into a talking point against Obama in the upcoming election. In a country without a greenhouse gas strategy or an energy policy, this is passing for political action, but it's really... nothing, a draw, a symbol of symbols.

The Keystone XL is merely on hold, and oil from all sorts of other "dirty" situations continues to flow into our gas tanks. The next time around, environmentalists should resist fighting the symbolic pipeline to concentrate on fighting the larger issue -- reducing emissions and making tar-sands oils prices reflect their environmental toll. We need to stop fighting oil development project by project -- and instead focus on passing a Low Carbon Fuel Standard (which could make the Keystone XL economically unviable), and on reducing oil consumption overall.

First, I have to say I'm a skeptic about the economic viability of the Keystone XL pipeline. Tar sands oils are expensive to extract, so they require a high global oil price -- well over $50 a barrel to be profitable. In the global crude market, these oils do not command the higher prices that light sweet crudes do. So tar-sands crude operates within a pretty narrow margin of profitability. In addition, 15 companies, recently including Chiquita, and the EU are refusing to buy gasoline made with these oils -- which means that the stuff risks becoming an "orphan" crude, where only a few buyers compete for it. (The consulting firm Purvin & Gertz wrote a report suggesting that the Low Carbon Fuel Standard, which sets the tax on different fuels according to their total life-cycle emissions, would seriously impact the profitability of tar sands.)

When you put an oil with so many costs and qualifications into a $13 billion pipeline, you may magnify these price risks even further. Take the example of another TransCanada pipeline, the mainline gas pipeline running from Alberta to New England, which is now in a "death spiral" of rising costs and falling shipping volume. When less product is shipped in a pipeline, the cost per unit of product increases, making the product even more expensive. This, in turn, drives other suppliers out of the pipeline, making the product even more expensive. It's not hard to imagine this happening with the Keystone XL. It would join the dust heap of "must have" energy projects including LNG terminals, pipelines, and extra refineries that were sideswiped by market forces.

To stop tar sands development in Canada, we must work furiously to pass a low-carbon fuel standard. It is obviously a clunky bit of legislation, and it would need to be watched carefully and adjusted to account for how the market responds, but it's essentially fair. More importantly, it gets at the root of the problem with the oil sands -- their high, unpriced, environmental toll. Oil companies and Canadian Government have fought the Fuel Standard ferociously, but the legislation has the potential to create jobs, clean the air, and level the playing field for alternative fuels in the U.S. Environmentalists should put their resources into making a case to voters and pushing it hard.

More on Keystone XL
	Stopping Keystone XL Won't Stop Global Warming
	Proposed Tar Sands Pipeline Sparks Civil Disobedience
	Keystone XL Oil Pipeline: Today's Most Explosive Environmental Debate

More generally, I'm wary of big social movements taking on small-minded projects like opposing Keystone. The world is covered with pipelines built at the convenience of American companies with assistance from the State Department for the relative convenience of American consumers.

For the past 30 years, American environmentalists have concentrated stopping oil drilling off the east and west coasts, in the Arctic National Wildlife Refuge, and now in the tar-sands region. Over that time, until very recently, U.S. oil consumption has grown, so this activism has essentially off-shored our oil production to places like Angola, Chad, Nigeria, Ecuador, Kazakhstan, and Russia, among others -- places with far fewer environmental laws, human rights, and economic opportunities for citizens. (For the past four days Chevron has been battling what appears to be a serious offshore gas well blow-out in Nigeria. And yet coverage of the issue has been confined to the satellite fans, the drillers, and the sea captains .) Our desire to use oil that is not in our backyards, and preferably invisible, makes Saudi Arabia our perfect supplier: Its oil production is enormous and completely hidden from our view.

Even opposition to the high-carbon emissions of oil sands production bears a whiff of hypocrisy: Driving a mile in a conventional vehicle releases 377 grams of CO2, more than twice the amount of CO2 produced by refining that gasoline from tar sands (166 grams). The U.S. environmental community needs to become more broad-minded, more deeply moral, by changing strategies to really address the problem, which is that our use of oil is is despoiling lands, and producing greenhouse gasses that affect the whole world.

The Republicans made it easy for Obama to reject the Keystone XL this time around. Environmentalists of both parties should seize this moment by committing themselves to the much harder project of reducing worldwide oil consumption.

Give the Gift of an Extra 10 Miles Per Gallon

2011-12-14T12:16:00-05:00

Rather than giving an energy-guzzling device this holiday season, here are three ways to stuff a stocking with the gift of fuel efficiency

Gasoline-wise, 2011 has been a very expensive year. Who knows what gas prices 2012 will bring? Rather than giving lovely gadgets that will only consume more energy, like everyone else, here are three ways to stuff the gift of *less gas* this holiday season.

1. Turn Your Honda Civic Hatchback into a Homemade Hybrid for just $1600.

Green gearhead Nick Rothman is an electric car renaissance guy: Fluent in Japanese, he's a certified Prius mechanic, and has built scads of plug-in hybrids at Pat's Garage in San Francisco while developing a second career in custom electric bikes. A few years ago, he started tinkering on a salvage title Honda Civic hatchback, adding an electric motor in the spot where the air conditioner goes to boost starts. He wired it all together with a bunch of off-the-shelf batteries and controllers for around $1600. Driving around San Francisco, Nick toggled his electric motor throttle and engine kill button to boost the Civic's fuel efficiency by 42 percent, which works out to an extra 10 mpg. Now he's produced a how-to book about the process which you can buy from Electric Motor Sport and soon from Amazon, where he already sells a book on electrifying your bike.

Homemade Plug In Hybrid ($40, perhaps less as a Kindle edition) is a fine gift for eco-dreamers and tinkerers. It's full of illustrations and explanations and offers interesting strategies like building a mock version of the motor from cardboard to be sure it will fit inside the hood. Practically, however, you do need to know how to fabricate a drive sprocket and a lot more to make the car. But even if you have no intention of building your own hybrid, it's an education in the state of the U.S. electrical vehicle movement. First, you learn it's possible to build your hybrid with American-made parts. Nick prints detailed comparisons of components, listing those that are made in the U.S. and those that are not. For many in the electric vehicle business, DIY also means DI-USA, and tinkerers are often willing to take on heavier components because they're part of a "Little Magneto on the Prairie" vision.

"A lot of the best electric conversion components are made in the USA," Nick says. "The concept of converting cars to electric in your garage is still a very American phenomenon. It's an American tradition to take your car and lavish time and money on it to create something that didn't exist before. The Civic has become the modern Mustang -- there are endless catalogs of after-market parts.

Out of this grand-old tradition of building hot rods comes a new tradition, and new industry, of building cool rods.

(Next year, you may want to just give your loved ones all of your old coffee grounds. Here's a British car powered by gasified coffee grounds that averaged 66 mph in September.)

Option 2: Have a Hypermiling Holiday

While I was talking to Nick he mentioned that he'd been experimenting with ecodriving -- a way of driving to increase gas mileage -- and found he could sometimes get an extra 8 to 10 mpg out of his Honda Fit. The key, he says, is to invest in a feedback gadget, like this Scangauge, ($95 and up) which plugs into your car's computer system to tell you how much mileage you're getting out of every gallon and every tank. Then read up on the tricks of the hypermilers. Hypermiler Wayne Gerdes says he got 67 mpg from a 2009 Toyota Corolla XRS that the EPA has rated at 25 mpg. Some hypermiling moves are easy -- turning off the car when you're idling. Others -- like dramatically changing the rhythm of your driving patterns in traffic -- may require a personality transplant. Nick says he's found that almost everyone changes they way they drive when they adjust the Scanguage's feedback to show how much they're spending on gas every day. (If you add that daily cost of gasoline to the daily cost of insurance and the daily cost of auto financing, you may just want to try option three, below.)

Option 3: Where possible, get a bicycle, a pair of shoes, or a bus pass, and wrap it up in a very large box labeled "new car."

Image: Reuters.

The (Illegal) Private Bus System That Works

2011-10-05T11:00:00-04:00

Brooklyn's dollar van fleet is a tantalizing demonstration of how we might supplement mass transit with privately-owned mini-transit entrepreneurs

Winston Williams owns and operates this advertising-wrapped dollar van / Lisa Margonelli

America's 20th largest bus service -- hauling 120,000 riders a day -- is profitable and also illegal. It's not really a bus service at all, but a willy-nilly aggregation of 350 licensed and 500 unlicensed privately-owned "dollar vans" that roam the streets of Brooklyn and Queens, picking up passengers from street corners where city buses are either missing or inconvenient. The dollar van fleet is a tantalizing demonstration of how we might supplement mass transit to include privately-owned mini-transit entrepreneurs, giving people alternative ways to get around, and creating jobs.

To see how the dollar van universe works (I'll get to why it's illegal in a minute), I spent a morning riding around with one of Brooklyn's dollar van entrepreneurs, Winston Williams of Blackstreet Van Lines. I caught up with Winston's pink, advertising-covered van on Livingston Street in downtown Brooklyn and hopped in the front seat, and off we went up Flatbush Avenue. Almost all of the dollar vans are Ford E350's, with a high body and side doors and enough seats in the back to hold 14 people. Once you notice them in the parts of Brooklyn and Queens where they work, they're ubiquitous. Winston looks in the rear-view mirror and explains that the trick is to keep a distance between the vans in front and the vans behind to maximize the chance of getting passengers. At $2 a ride, he needs to get 14 people in the van on the 5.6 mile trip from downtown Brooklyn to King's Highway to turn a profit. The cost of licensing, insuring, staffing, and fueling the eight vans in his fleet is considerable.

Some people worry that dollar vans pick up passengers who would otherwise ride the bus, but Columbia Assistant Professor of Urban Planning David King and doctoral student Eric Goldwyn say that's not likely. Dollar vans seem to complement the bus service, and they have real advantages. Goldwyn has ridden in the vans and conducted tallies where he's found that on some corners there are four city buses an hour and 45 to 60 vans, meaning that passengers literally don't have to wait more than a minute for a ride. Also, the vans can be a lot faster than public transit. A service that runs between Chinatowns can get from Flushing to Sunset Park in 20 minutes while the subway will take an hour and 13 minutes at minimum. And for regular riders, there are other perks. "I've heard they offer more services -- for example, they'll wait while a parent walks a child up to the door of daycare or a school." That is service that you can't get from a bus.

With its pink advertising wrapping, Winston's van gives the impression that the inside will have a party atmosphere. But it doesn't. The passengers, most of whom are from Jamaica (like Winston) or Trinidad, sit quietly. One Trinidadian woman dressed in business clothes overhears me interviewing Winston and volunteers that vans are a common way to get around the islands. The interior of the van is clean, gray, and institutional -- very much of a piece with Winston's overall business plan to brand his vans and make them mainstream.

He'd like to eventually move beyond the Flatbush route and pick up, say, hipsters in Williamsburg and bring them to Manhattan. If this sounds improbable, it's really not: Think of the incredible popularity of food trucks, which were known as "roach coaches" only 10 years ago. A hip fleet of dollar vans, providing proximity and cheap transit to 20-somethings, could easily catch on. If the vans ran on cleaner engines -- hybrids or natural gas -- they could be part of a greener city. (In another move to raise the profile of his vans beyond Flatbush, Winston allows a music promoter called Dollar Van Demos to film rappers in his vans for broadcast on the Internet.) But no broader growth can happen until the vans can be branded and made attractive to people who don't already know them, says Winston.

Ah, and that's where the illegality comes in. Winston used to have his vans all painted with a green stripe, so they became easily recognized in the neighborhood. While this "uniform" was good for business, his vans also caught the attention of police of various kinds who ticketed him for stopping to pick up passengers, and he accrued fines that ate into profits. This is the paradox of Winston's work: While he is fully licensed, insured, and inspected, his vans are prohibited from doing the one thing they really do -- picking up passengers off the street.

David King, from Columbia, quips that all dollar vans are 100 percent illegal (because they work the curbs), but some are 200 percent illegal (because they don't bother to get licensed in the first place). Winston says police don't cite the unlicensed vans, which eat into his business, but do go after the licensed ones for the curb infractions. "The law gets made up as you go along," Winston says, adding that the pink cellphone ad on the van is both an attempt to make a little money as he cruises up and down Flatbush, and a trial balloon to see whether there's a specific law prohibiting advertising on the vans. Later, one of the 500 or so completely illegal vans pulls up beside him, and in friendly Jamaican patois, Winston accuses the driver of being a terrorist. "It's not like I hate against them. But I'm running a business and they're running a hustle," he says.

The existence of laws and the lack of enforcement put the legal drivers in a bind that Winston describes as a Catch 22. In 1993, New York outlawed dollar vans entirely. It took the intervention of some activist van owners with the help of the Libertarian Institute For Justice to get them legalized. Deliberate or not, the city's perverse policy of half-legalizing legal vans and failing to enforce laws against the unlicensed ones limits the growth of what could be a useful transit resource. Winston describes a decade and half of Coyote and Roadrunner exploits with the law, concluding with, "Let there be a train strike, a blackout, a storm, or 9/11, and people are practically tearing the doors off." Last year, when the city was trying to cut bus routes, they even tried to substitute official dollar van routes, but that program was canceled when van drivers were uninterested in the routes, and riders were uninterested in the vans.

You might want to know why, exactly, jitneys or dollar vans are illegal in most states. The answer lies in the history of public transit. Until the early 1950s, most transit systems in the U.S. were privately owned companies that operated as regulated monopolies (like electric utilities today) and expected to provide transit service to an entire city. In exchange, they got the right to be the city's only transit service. Transit ridership peaked during World War II, but the transit companies slid into bankruptcy afterwards, as they were expected to serve greater suburban areas, service declined, and more and more federal money went into highways -- all of which tempted people to buy cars and abandon the trolleys and buses. Most of the country's 200 private transit franchises died in the 1950s. (Roger Rabbit had nothing to do with it. I swear.) In the late 1950s, cities took over the bankrupt transit lines and tried to make a go of them, retaining for themselves the monopoly on the right to provide service. In the early 60s the feds became involved in propping those systems up, but without much enthusiasm. Meanwhile, private transit were prevented from driving the streets even when they offered serviced different from the public transit agencies.

What's interesting about dollar vans, if they're properly licensed and insured -- and reasonably legal -- is that they could gravitate to where the riders are and where they want to go faster than public transit, which requires more infrastructure and meetings. In some cities, bus routes have histories going back decades, and they don't change to reflect how people's lives and work habits have changed. (They certainly don't stop at daycare centers.) Dollar vans are out there to make a buck, and that's not bad for passengers. Here's a video of a valiant dollar van on the prowl for customers during Hurricane Irene, when New York subways were shut down. You can see Winston's pink van at the curb.
dollar van

Note to Obama: Try Channeling Michele Bachmann's Gassy Genius

2011-08-26T17:00:00-04:00

There's no need to make energy promises you can keep: The key is getting people to listen to pledges you won't fulfill.

President Obama now finds himself between a pipeline and a hard place. With his green supporters getting arrested on the White House lawn and pressure to okay the Keystone XL tar sands pipeline from the State Department, the president is in yet another no-win situation. If he had fully articulated a 21st-century low carbon energy plan, or pushed through a climate change bill or even treaty, he'd be able to okay the pipeline and point to his larger strategy. Unfortunately, he's now in the position of just backing the pipeline and looking like he never really cared. He could learn a lot from Michele Bachmann, whose political acumen on the subject of energy is striking.

Intellectually, Bachmann's energy position doesn't make much sense. But she has an excellent political ear, a fine sense of theatrical timing, and the ability to pull off political stunts that are counter-intuitive. And when it comes to energy, she has a gut sense that puts most of the other challengers to shame. Two weeks ago she caught an enormous amount of flak for saying this: "Under President Bachmann, you will see gasoline come down below $2 a gallon again. That will happen."

Punditlandia concentrated on what Bachman said: The Atlantic's Alexis Madrigal pointed out that presidents don't control the price of gas; Time's Bryan Walsh said increasing oil production won't reduce the price of gas; John Huntsman said it wasn't "real world." All so true!

But then again, since 1974 American presidential candidates have been promising the impossible with energy and failing to deliver every single time. Nixon said the country would be energy independent by 1980, and then President Ford moved the goal post to 1985. Carter called it "the moral equivalent of War," and moved the date to 1990. And so on. In 2003 President Bush promised that a child born that year would have a hydrogen car as his or her first car which was part of promoting "energy independence." Obviously, there's no need to make energy promises you can keep: The key is getting people to listen to them.

Bachmann's genius is that she neatly pivoted away from the impossible dream of energy independence to the impossible dream of $2 gas, which is hugely important to struggling lower middle class voters. While intellectuals heard "$2 gas" and scoffed at the hubris, many Americans heard "$2 gas" and thought such cheap fuel would be awfully nice to have and that "President Bachmann" would feel their pain more than someone mealy mouthing away about cutting imports from the Middle East. After 38 years of stasis, Bachmann managed to change the premise of the energy debate away from the abstraction of "independence" to the visceral issue of price. In addition to getting the phrase "President Bachmann" into our ears, she managed to turn every one of the country's more than 120,000 gasoline price signs into a rebuking advertisement for herself.

This is not a savant-ish accident on Bachmann's part. She's been talking about $2 gas since 2008 among voters in her own state. Statistics back up the idea that $2/gallon is the comfort point for households making $50,000 a year. As I've mentioned here before, the Department of Commerce estimates (pdf) that at $2.53 a gallon that family pays $7900 for car and fuel a year--more than they pay in taxes or health care (the big Republican and Democratic promises to this demographic, respectively). At today's price of $3.59/gallon they're spending more than $8332 on their car, but I'd guess most of them drive cars that get 20 mpg rather than the 31 mpg that the estimates are based on. That means they're spending $9135 on their cars--more than 18 percent of their total income. Over the past 8 months, I've been interviewing drivers for my blog The Energy Trap, and many spend far more than this on their commutes, and feel they have no control over that spending, or over their economic fate. They, no doubt, have heard Bachmann's promise.

President Obama needs to pull off a similar pivot. He needs to offer a pragmatic greenish future for the middle class, and it should start with car costs. He can't promise $2 gas--instead he should promise and deliver a cheaper commute. For much of his presidency, the lower middle class has been paying extravagantly to get to work as oil prices rise and fall. Without much access to credit, they've been unable to get tax credits for Priuses, take advantage of Cash-for-Clunkers, or qualify for the luxurious tax kickbacks for buying a Volt or a Tesla. As oil prices have risen, the price for conventional fuel efficient cars has risen. Money for mass transit seems to help transit high wage earners more than low wage earners, according to a recent Brookings Study. If the Waxman-Markey climate bill had passed, the middle class might have gotten a worse deal: This CBO study found that while the lowest income families would get a payout to cover additional costs from cap and trade, the richest 20 percent of American households would get 63 percent of the value of the greenhouse gas allowances awarded to businesses. This was not fair, and whether voters have understood this intellectually, they have felt its unfairness on a gut level.

President Obama should start talking about the other green -- cash -- make a stimulus program that will reduce the amount of money middle class Americans spend on their cars, create jobs in Detroit, and reduce the amount of oil we burn and greenhouse gases we create. I wrote about a model car loan program called More Than Wheels, in the primary state of New Hampshire, last week. Rather than making the EPA fight for its life, the president should make an explicit case that the EPA creates jobs and reduces costs. Here is a pragmatic green promise to the middle class: "You know that promising $2 gas is a political stunt. I'm not going to do that. I'm going to promise that you'll buy less gas and make our economy and environment stronger at the same time. I'm going to promise that we can make a more economically and environmentally secure future for our kids." And, taking a page from Bachmann, he needs to pay more attention to the people who are listening than to those who are speaking.

Image credit: Reuters

Is Releasing the Strategic Oil Reserve About Strategy or Pure Politics?

2011-07-07T09:00:03-04:00

What problem are releases from the Strategic Petroleum Reserve trying to solve?

For 30 years, the Strategic Petroleum Reserve has been more lethargic than strategic. Its roughly 700 million barrels of oil have sat in their salt caverns on the Gulf Coast, not doing anything more ambitious than providing a feeling of security. That may have changed last month, when the Obama administration arranged for a release of 30 million barrels from the SPR, and an equivalent amount from IEA worldwide reserves. This move, rife with what we'll call "strategic ambiguity" may be one of those smallish moves that turns out to be decisive in the long run of history. Will the US now take a more Strategic (with a capital S) approach to world oil markets? Will we come to guard moderated world oil prices as we now use our navy to guard the world's oil choke points? Is this even a worthy goal?

The SPR was initially designed to be our answer to the 1973 Arab Oil Embargo's "oil weapon." Yet by the time it was built in the early '80s, the evolution of the world oil market had made embargoes obsolete. So, until recently, there had been just two "emergency" releases: once after the beginning of the first Gulf War, and again after Katrina. The SPR was probably more notable for what it didn't do: The Bush Administration didn't release oil from the reserve at the start of the Second Gulf War. Instead they asked Saudi Arabia to increase its production, which was exactly the sort of political sausage making the SPR was created to avoid. And in the aftermath of Katrina, the SPR release did not relieve US prices, because the SPR, the pipelines, and the refineries were all in the path of the hurricane. Instead it was tankers of refined gasoline from Europe that sailed to our rescue.

SPR aside, there is a strong case to be made for the US taking a more strategic approach to oil prices

The "emergency" that triggered the oil release this time was the disruption in Libya's sweet crude production -- many months after the fact. Libya provided a cover story for the release, says John Shages, a DC-based consultant who worked on SPR issues at the Department of Energy for many years. "This (release) is being used strategically, but the administration has a lawyer's mentality and they need an emergency event." The strategy, as he sees it, is to bring down oil prices enough so that the US and world economies can continue to recover, essentially because the administration has run out of political options for stimulus at home. "Regardless of whether you think the government should intervene in oil prices," he said, the rise in oil prices was threatening a repeat of 2008, and more ominously, a return to the middle years of the Great Depression. Allowing that to re-occur would be, according to Shages, "poor public policy," not just for the US, but for the world.

So how does this SPR strategy work? One would expect that the administration would use the SPR both to add more oil to markets, and more importantly, to generate "policy uncertainty," so that traders aren't tempted to bid up oil prices. Energy Secretary Steve Chu signaled this when he announced the sale, adding: "As we move forward, we will continue to monitor the situation and stand ready to take additional steps if necessary." Shages believes, and others agree, that the administration will have to make good on that threat of releasing more oil to make this first release worthwhile.

But why did the administration release the oil now, and not several months ago when the troubles in Libya started? One theory has it that they were either backing or undercutting the Saudis, who failed to get OPEC to put more oil on the market in early June. Another, more alarming, possibility was raised by a provocative piece in the Wall Street Journal The article quoted Prince Turki, a member of the Saudi royal family and former government player, saying that Saudi hoped to "squeeze" Iran by putting enough oil on the market to lower prices and "cripple" the government. A deliberate US role in this scheme strikes me as unlikely, but Flynt Leverett and Hillary Mann Leverett have a glum read on the regional "strategery" of the US move, whatever its intention.

Intervening -- whether on behalf of the world economy or to influence Middle East politics -- brings up a huge question. Should the US be extending its expensive "self-sacrificing hegemon" role beyond providing military cover for all of the world's oil shipping lanes, and into providing price cover for the world economy? Even if it sounds a little attractive right now, it would quickly become a burden. Taxpayers currently support the idea of policing shipping lanes -- maybe because they want cheap gas at all costs, and they have a dim sense of what this policing entails. But SPR releases will be publicized, judged harshly against oil market prices, and will come to seem burdensome over time. It'll be even worse if the IEA backs off its promises to release strategic stocks, as it did this time, and leaves the US to shoulder most of the task alone.

SPR aside, there is a strong case to be made for the US taking a more strategic approach to oil prices. Many, including oil super-pundit Daniel Yergin, believe that the market has become prone to bubbles. These analysts claim that oil has not only become commodity exchange, but also an enormous financial play. If that's so, then the SPR release should be a beginning, not an end of a thoughtful engagement with the oil market. We might start by requiring refiners to keep larger stocks of oil on hand, as Europe does, to buffer price swings. We should also reconsider the primacy of West Texas Intermediate as the index oil. In his thoughtful analysis of the workings of the world oil market, Oxford's Bassam Fattouh calls WTI, the crude oil traded at the NYMEX, a "broken benchmark." Reading his report may make you wish the government would attend to the obvious fundamental issues in the market, rather than trying to monkey with outcomes like price. And in fact, the deeper one looks into the problems in today's oil markets, the more the SPR seems like a convenient approach rather than an appropriate one.

Ironically, as the US is releasing strategic stocks to stimulate the economy, American merchants are giving away free gasoline to try to lure cash-strapped consumers to their stores. Can "free gas" ever be the answer to the problem of expensive oil? Releasing SPR oil can't be the answer to real long term issues in worldwide supply and demand, as well as the functioning of the markets themselves.

We can and should take a more direct path to reducing the harm of high oil prices -- helping US consumers reduce oil demand. The Obama Administration's firm stand on increasing CAFE standards to 56.2 mpg by 2025 will get there in the long term. We go much further with incentives and gas taxes. An immediate approach would be to follow the recommendations of the IEA report Saving Oil In a Hurry (pdf), released in 2005, which outlines a slate of cost-effective ways to reduce oil consumption quickly and dramatically. Such measures include reducing the speed limit, increasing telecommuting and carpooling, and an eco-driving campaign. If the US adopted these five measures, the report projects (page 116), we could cut consumption by 2.3 million barrels a day -- more than double what we're trying to do with the SPR -- and it would save American consumers about $2.4 billion per week at current gas prices.

Image Credit: Wikimedia Commons

How High Gas Prices Could Help the Economy

2011-06-09T08:30:00-04:00

$4 gasoline and 9 percent unemployment may lead to increased fuel efficiency of commercial vehicles and help businesses grow

The two biggest numbers in American politics are gas prices, which remain over $3.79 for a gallon of regular in 19 states, and unemployment, which stands over 9 percent nationwide. Those numbers are obviously related. If we changed the politics of how we respond, we could actually begin to use one to solve the other. Last month saw a mutually-assured-destruction pact as Senate Dems and Republicans floating equally beside-the-point oil bills. Both flopped. A bipartisan approach to solving some of our energy costs--though we can't do much about gas prices in the short-term--could boost the economy and our long-term competitiveness.

Gas prices play both a real and psychological role in causing employment. A recent poll of small business owners found that a quarter said that high fuel costs had caused them to lay off workers or reduce their hours, and 47 percent said they'd avoided hiring because of gas prices. The cost of fuel may literally displace some workers, but it has an even bigger psychological effect, creating an air of uncertainty that discourages job creation.

To get a better sense of the whole problem, I interviewed last weekend a small business owner named Brent who runs an air conditioning repair business in Albuquerque, New Mexico. Since 2006, he's laid off 12 employees, and is now down to just himself and one employee. Together, they're spending $1200 a month on gasoline to get to jobs in a relatively new cargo van, and a truck that average about 10 mpg. Behind payroll and insurances, gas has become his third largest expense.

In addition to spending more getting to jobs, gas prices send ripple effects through his other costs---increasing the prices of the products Brent installs, while triggering fuel surcharges on equipment he rents. Meanwhile, Brent has to underbid contracts to stay in business. Rising costs and falling bids have reduced the profit margin on his bids from 10-15 percent during the boom years to 3- 5 percent today. He's changed the way he operates, too: A few years ago, he always replaced broken equipment with new. Now he fixes it or makes do without. All of these decisions have effects beyond Brent's business alone.

As Brent explains, gas prices are major contributors to uncertainty--and that uncertainty keeps him from hiring more workers. "If gas rises to $5 a gallon, I just have to bow down to the pump" Brent says. "They've got us by the gonads. This is how we get around--and that's the bottom line."

One strategy to increase employment, then, would be to decrease spending on gasoline and reduce the uncertainty of gas costs for small business owners. What Brent would really like are service vehicles offering better mileage. Both of his current GMC vehicles have 6 cylinder engines that designed for speed that he doesn't need. Brent would prefer something capable of lots of stops and starts, powerful enough to pull a trailer, but fairly pokey on the highway. " I'd like something with lower torque, not necessarily where we're going zip-a-dee-doo-dah."

As an energy strategy, encouraging Detroit to triple the fuel efficiency of business trucks and vans seems to make a lot of sense. While automakers have focused on increasing fuel efficiency of household cars--from the Prius to the Volt to the Tesla--service vehicles actually drive nearly 3 times as many miles per year as household vehicles. As a consequence, increasing the fuel economy of a cargo van from 10 mpg to 25 mpg would reduce yearly gasoline consumption from 2500 gallons to 1000 gallons per vehicle, saving Brent, for example, $5940 per year at today's gas price in New Mexico. In 2008, the last year for which numbers are available, business and government fleets purchased 780,000 light and medium trucks--so this has the potential to scale up to considerable gas savings quickly. What's more, these vehicles generally stay in service for five years or less, so the turnover is far faster than household vehicles that stay on the road for 15 years or more.

As an employment strategy, making service vehicles efficiency leaders will definitely provide business owners with savings when gas prices are high, and more important, prevent them from feeling insecure: like they have to "bow down to the pump." This, coupled with other improvements in the economy, could encourage business owners like Brent to bring in another employee.

How to do this? The US approach to vehicle efficiency is limited to either regulatory showdowns (like the upcoming struggle over whether to increase CAFE by 3 percent or 6 percent) or X-Prize type contests. When lawmakers give tax incentives for green cars, they end up giving tax breaks to the people who make over $100,000 a year and can afford a Prius or a Volt--or an increased gas bill. What we need is an approach that allows a competitive market to develop. And at the moment, the market is focused on the consumer vehicles, where the juicy tax breaks are.

I think we need a fundamental change. Rather than tax incentives, the government should offer credit--low- or zero-interest auto loans--to purchasers of the most efficient cargo vehicles. The Small Business Administration, which already has years of experience providing loan guarantees to banks, should be the initiator. For small business owners, getting very-low-cost loans for vehicles saves them a lot of money, because they don't have to get commercial loans with high APR's. For the taxpayer, this scheme has benefits because, unlike Cash For Clunkers, the money is returned to the treasury in the form of loan payments. In effect, the government is helping businesses pre-pay for energy efficiency and pay it off over time, rather than paying unpredictable gasoline prices over time. This has multiple positive effects for the economy.

Increasing the fuel efficiency of fleet vehicles refocuses dollars from gasoline (which provides relatively few jobs) towards manufacturing more efficient engines, which provides jobs with multiplier effects. A 2005 study published in Energy Policy (pdf) found that aggressively increasing fuel economy for cars would result in a net gain in jobs, though it would also involve lots of upheaval. Interestingly, the five states with the most to gain from such a move are also states that currently have relatively high levels of unemployment: Michigan, Ohio, California, Indiana, and Illinois. Under the (much larger and longer term) scenario proposed in the study, those five states alone would gain more than 150,000 jobs by 2020.

Finally, starting a program to aggressively increase the fuel economy of fleet vehicles sets a precedent for pushing more technology into the vehicles that get the heaviest use. Using government loan guarantees to stimulate a market for electric, natural gas, hybrid, or other innovative vehicles will benefit the country as a whole, and small business in particular, but the money will be repaid to taxpayers. It will provide an incentive to Detroit to move faster, without the partisan deal making, or tax credits that distort markets. Investing in engines rather than gasoline has other benefits as well. For one thing, burning a gallon of gasoline imposes many social costs: it creates pollution which creates health care costs, produces greenhouse gases, refining and shipping carries risks of spills in water and air, and dependency upon some foreign suppliers of oil has military and foreign policy implications.

Unfortunately, "bowing down to the pump," has become a habit for policy makers, but we absolutely have to find a way to lower the impact of gas prices on our economy, and particularly employment. In that survey of small business owners, 38 percent said that gas prices could threaten their ability to be in business. There may be some hyperbole in those numbers, but can we afford to take chances with the oil market?

Image Credit: Wikimedia Commons

How to Create a Culture of Public Transit: The 'Marci Option'

2011-04-12T12:35:25-04:00

An exurban office park in California shows that we don't have to spend long commutes alone in our cars if we don't want to

Today's national average gas price is $3.77 for regular, which means we'll spend about $1.428 billion dollars on gasoline today. But what if we decided not to? Instead of bloviating about drilling our way out of high prices, or coming up with magical green fuels and sparkly green cars, or punishing these alleged speculators in the oil market, we could--as a nation--take our foot off the gas. Think of it as a sort of Shock and Awe at the pump.

The American driver buys about a quarter of the world's oil production and has been willing to put up with higher and higher prices, despite the extraordinary drain on our household and national economies. (In March, we spent more than $42 billion on gasoline. Our gas tanks have become a stimulus program in reverse.) If we significantly reduced our commutes, we'd not only reduce the amount of money we're spending on oil, we might also send a message to the oil market that there are limits to what we'll pay, thus dampening prices.

But conventional wisdom says that Americans will not get out of our cars. Only 4.5 percent of us take public transit because it's too [fill in the blank] inconvenient, expensive, slow, unpredictable, dangerous, or un-American. Another 10 percent or so use carpools, but nearly nine out of 10 of us commute to work in cars, mostly alone. (Outside transit-rich cities like New York, Washington DC, and San Francisco, this number is higher.) The hurdle to change the way Americans commute seems impossibly high, and made of expensive investments in high-speed rail, light rail, and long-term changes in development patterns.

Marci and her team see leaving the car at home as a lifestyle choice rather than a sacrifice—something you'd read about in Real Simple or Oprah.

But is that really true? Last week I went to an exurban office park in San Ramon, California where 33 percent of the park's 30,000 workers leave their cars at home. Despite the fact that Bishop Ranch is 37 miles from San Francisco, a dozen miles from the nearest BART rail station, and home to Chevron's corporate offices, its parking lots are surprisingly empty, and it has won many awards for transit. Marci McGuire, the program manager for the Ranch's Transportation center, describes the attitude at the park as "a culture" where it's cool to have a bus pass. "When you do it right, it's like a cult," she says.

I spent a couple of hours with Marci to find out how she nurtures this cult that gets 10,000 people out of their cars daily. It seemed to me that there were three aspects of the program that operate counter to the current thinking. First, logistically, there are a lot of buses that terminate and originate within a few blocks of all the 30,000 jobs in the park. Secondly, the focus of the transit program is not exclusively environmental, but encompasses health, stress, and financial benefits. Thirdly, though there are 500 businesses at the park, a single office takes pride in its ability to get people on transit, and thus there's an evangelical zeal to the whole operation. It's not "just a program"--it's Marci and her team's program.

First, the logistics: The park was developed from farmland by Masud Mehran's Sunset Development Corporation in 1978 on the belief that San Francisco real estate would soon become expensive and companies would need cheaper space for their administrative services. His grandson, Alexander Mehran, describes the transit program as "a necessity that developed into a whole different animal." When the park started, it was simply too far from anywhere. "We were getting crushed by people going to work in Walnut Creek and Dublin," where the BART stations are. As a result, the ranch bought a fleet of buses and worked with the city and county transit agencies to subsidize both bus routes and bus passes for workers. There are now 13 different bus routes running to the park, and the connections to BART and various local train and express bus services are coordinated. On its website, the Ranch now pitches its transit program as a competitive advantage.

The need for employment-centered transit often falls out of debates about Transit Oriented Development, but recent analysis by economist Jed Kolko of the Public Policy Institute of California shows that making sure that transit ends at job sites reduces car commutes more than putting the transit near homes. Policy-wise, transit oriented employment could be easier to encourage through tax breaks and enterprise zones.

Secondly, Marci and her team see leaving the car at home as a lifestyle choice rather than a sacrifice--something you'd read about in Real Simple or Oprah. While Marci tells everyone that one Ranch rider got rid of his car and saved $10,512 a year on his auto lease, maintenance, fuel, and tolls through the transit program, she sees that as the start of a long discussion. "If they're just looking to save money, it won't work," she explains, "If you're riding because it helps you make several changes in your life, you'll ride longer. It really matters that people feel they have a choice."

Marci says she often tries to figure out what's causing stress in people's lives and uses transit to solve it. One of the biggest problems is that people feel pressed for time, and she suggests they get off transit a stop or two early and walk so that they can avoid spending time on the treadmill later. The ranch is also along a bike path which is used by hundreds of workers for occasional rides. Marci herself lost 40 pounds taking transit and sprinting to make a difficult connection. The one hurdle Marci says she can't overcome is childcare problems, but for easier problems the Ranch also provides free taxi rides home--though only 2-3 percent of the coupons are ever used.

Marci says that once riders begin leaving their cars at home they go through a stressful period of two weeks or so where they feel that they've lost the control they had in the car. But within three weeks they notice their overall stress levels are lower. "Transit requires that you go at a different pace. You have to wait. If there were roses, we'd smell them," she says, "There's not much of that in our lives." She says HR people have called her saying some of their meaner workers have become pleasant people after switching to transit.

Do you believe her? Would you believe that taking transit solves problems other than getting to work and avoiding oil use--if that? You probably would if Marci were standing in front of you. She's a small, passionately chatty evangelist. Because she and her small staff have been tasked with transit for the whole park of 550 businesses, they take pride in every rider in the program. While urban planners tend to see bus ridership as a design issue, Marci sees it as a cultural endeavor. A conversation with her ricochets from practicalities like transfers to aspirations (that stress!) to an academic understanding of traffic. Typical of her approach is a packet of microwave popcorn --the currency of office afternoons--adorned with a sticker reading: "What do popcorn and traffic have in common?" (Answer: They both expand rapidly to fill empty space.) Will that abstract concept alone get a person out of her car? No, but Marci sees the impact as cumulative. While policy pundits like myself gabble on about the need for policy leadership and pricing externalities and the like, Marci works the gig more like an Avon Lady -- hand delivering bus passes to offices in the park so she can get to know the receptionists who then refer frustrated auto commuters to her.

Sitting in Marci's office, the path towards reducing our oil use in a hurry seems clearer than elsewhere--and possible. Maybe we don't need to wait for years of expensive infrastructure buildouts, new development patterns, technology, and punishing taxes or high oil prices. We need some of that, to be sure. But in the short term we could do a lot with policies to encourage employer-centered transit, a lot of connector buses, and a whole army of Marcis.

Image: Wikimedia Commons

How Rising Gas Prices Are Eroding the American Dream

2011-03-10T12:50:04-05:00

Jeff Grant is an ER technician and a paramedic. He lives in Waldoboro, Maine. He works two jobs, and his wife works one. Last month between them they spent $760 on gasoline, car payments (for two modestly used cars), and car insurance. This month the 50-cent increase in the cost of fuel means they'll spend about $828 for transportation. That means that Jeff is working one job just so he and his wife can get to their other two. This is astonishing, but there is nothing statistically unusual about his situation--and its implications for the American Dream (for lack of a better word) are stark and depressing.

I'll get back to Jeff's story in a moment, but the New York Times ran an article saying that American drivers are adapting faster to today's gas prices than they did in 2008. That's probably true--we'd be complete idiots to not have learned some lessons from $4/gallon gasoline--but it runs the risk of being happy talk that masks the true problem that we're facing.

When gas prices go up, Jeff and his wife don't cut back on gas, but spend less on food. They've already cut out most paid entertainment.

Most Americans have no transportation options other than owning a car and buying gasoline, and when prices are high, this burden imperils their financial stability and dampens the entire U.S. economy. If gas prices stay at $3.50 for the month of March, U.S. drivers will spend $41 billion on gasoline--about twice what they spent in March of 2009. The economic drain of high gas prices is an entire stimulus program--but running in reverse. Some decent policies to increase transit choice and reduce oil use would give the U.S. economy some breathing room, and let people like Jeff work hard and get ahead, instead of falling further behind.

I met Jeff at a locally famous diner called Moody's, which serves grapenut pudding, blueberry pie, and fried clams, among other things. Jeff grew up in the next town over, "driving 18 miles just to go to the grocery store." Driving a car here is how you grow up, and Jeff got his work license at 15.

"It's the locals who really pay through the nose for our community, our heritage, and our families to exist here," Jeff says. He explains that towns like Waldoboro have struggles between locals who want more jobs and retirees from outside who argue that growth is bad. The upshot is that Jeff commutes to work in Damariscotta, 15 miles each way, and Boothbay Harbor, 30 miles each way. He and his wife also go to Damariscotta and Rockland for all their groceries, clothes, and other shopping. In the summer, tourists arrive bringing dollars and traffic jams, which make everyone's commute longer.

You might wonder why Jeff and his wife don't move. Heritage is undoubtedly part of the reason--Jeff describes his hobbies as taking his skiff to the islands off the coast, mackerel fishing, and recreational lobstering. Towns in here are still distinct places. Another issue, though, is housing prices. Jobs--and hospitals--are located in towns where housing prices are high, like Damariscotta and Boothbay. Miles Hospital, where Jeff works, half the workers commute more than ten miles a day. This phenomenon was actually tracked in an MIT study, which you can find cited on pages 47 and 48 of this PDF. (The researchers probably underestimated distances by not accounting for the region's notoriously roundabout roads.)

While we tend to reflexively blame "sprawl" for the high cost of commuting in the U.S., housing values, income inequality, and local job development also play a role in the distance between home and work. When I asked, Jeff said he'd never considered taking public transit because he couldn't imagine it accommodating his 12-hour days at the ER or his erratic schedule.

Meanwhile, Jeff can't get a different vehicle than his 2005 Chevy Silverado, which gets 17 miles per gallon, because he's still paying it off. He goes back and forth on whether he could live without a truck--it would be hard to haul firewood and garbage, both part of the weekly routine. And he'd need to find another way to haul a boat. He concludes, "I'll never be able to afford a vehicle like that again." He and his wife make car payments of $300 a month, and pay another $100 for insurance. When gas prices go up, they don't cut back on gas, but spend less on food. They've already cut out most paid entertainment.

When I ask Jeff where he wants to be in five years, he loses his cheerful pragmatism. "The future is scary. We've got decisions to make about where we're going. We're happy now, but then there's the reality." He said he and his wife want a family, but they're trying to figure out how to afford health insurance to make that possible. Jeff worries that he can't be a good provider or a good spouse if he can't provide insurance, which costs about $760 a month. (Similar to last month's transportation costs.)

He continued talking and said something that I didn't expect during an interview about gas prices, something that gives me a catch in my throat when I think of it. "In my family, our jobs are something we do, but not who we are as individuals. Our priorities are first our relationship to God, second to family, and the job is number three. But it's hard to have those priorities because the jobs have to be number one right now."

Too often, we associate the American Dream with materialism--two cars in every garage, or having more stuff than our parents--but Jeff's desire to choose who he is as an individual in the spiritual or community sense is more exactly the motivation of the founders of this country. Without giving it much thought, we have let these freedoms erode under the pressure of making a living, which now requires owning cars and buying fuel from regimes (like that of Libya) that more directly constrain their citizens' freedom.

Photo: Jeff Grant, by Lisa Margonelli

Do American Drivers Get a 'Dictator Discount' on Gasoline?

2011-02-04T12:15:01-05:00

Today, as Anti-Mubarak protests in Egypt wear on, Brent crude oil prices are continuing their week long rise above $100 to levels not seen since 2008. While US drivers are fretting about the effect even higher gas prices will have on their commutes and the economy, we should also be asking ourselves the opposite question: Have dictatorships in the Middle East been giving us discounted gasoline? With our notorious dependence on cheap gas, have we been the beneficiaries of an authoritarian markdown at the pump?

Watching the oil market, it's obvious that this week's rise in prices is not really attributable to real problems around the Suez Canal or the Sumed pipeline, but lies in less tangible fears about stability. Steve LeVine, at Foreign Policy, calls the rise in prices "classic casino behavior." But more and more, the fear that's being articulated is that all the regimes in the Middle East are vulnerable, and the days of cheap oil may be over. "The OPEC president has said that oil above $100 is not desirable, but while Middle-East unrest continues prices will probably hold around here," Bache Commodities analyst Christopher Bellew said. "The terrible fear must be of this unrest spreading to a major producing country like Saudi."

The Saudis are a notable authoritarian regime in the Middle East, but by no means the only one -- or the only one that could significantly raise oil prices. Look at this rendering of the Economist's Democracy Index Survey for 2010. Virtually all of the countries in the region are authoritarian, with the exception being Iraq. Now look at the EIA's map of oil production, and you can easily see the problem. Compare it with the tab about oil reserves for a glimpse of the future.

It's not possible to quantify the relationship between the authoritarian status quo in the Middle East and the cost of a gallon of gas here because the oil market is more art than science. (I invite readers to estimate in the boards.) But I'd imagine that a few months of political uncertainty in the Middle East could send gas prices up perhaps an extra 50 cents a gallon. A prolonged period of uncertainty would certainly cost U.S. drivers more. Just yesterday, Ben Bernanke described higher oil prices as "a kind of tax," that could slow the recovery, an intellectual formulation that I think is basically accurate. But it may be time to fear not higher gas prices, but the undemocratic implications of lower ones.

The economic benefits of cheap gas have a moral price for U.S. consumers. There's a lot of scholarship tying oil exports to authoritarianism. See UCLA professor Michael Ross's work, for one. (Ross has also done a fascinating study of the relationship between oil exports and women's rights.) This nuanced essay by Larry Diamond examines the role of oil money in creating and reinforcing the structure of states in the Middle East, and the geopolitics that causes bigger powers to shower them with diplomatic and economic legitimacy. Diamond follows the implications of this repression into non-oil areas like the Israel-Palestine conflict. Diamond sees the solution as a prolonged period of low oil prices -- but that is precisely NOT what the oil market will deliver as more regimes are threatened by protests like the ones going on in Egypt. As we've seen this week, turmoil makes prices rise.

Here's the rub: America's oil problem runs deeper than our dependence upon authoritarian regimes for cheaper gasoline to keep our economy running. The very mechanism of the oil market reinforces the status quo by raising oil prices when these regimes are threatened, potentially keeping them (or others nearby) in power.

And this suggests that we need a whole holistic approach to deal with the various tentacles of our oil problem. American consumers express their will not only at the voting booth but by buying products that support everything from breast cancer research to rainforest preservation to tuna fishing methods to PAC's. Merely buying gasoline, though, with its dictator discount, makes a mockery of these righteous efforts. The solution to our gasoline problem -- both economically and morally -- will require much more than "right" buying: concerted legislative action to lower oil demand, funding for science for alternatives for transportation, diplomacy to lower oil prices, and of course, diplomacy that encourages the will of the people in the Middle East, whatever that turns out to be.

Forget About $5 Gas: $3 Gas Is Bad Enough

2011-01-04T15:00:31-05:00

James Schlesinger famously said that Americans have two modes when it comes to oil: complacency and panic. This week, it seems, we're having both at the same time.

Today the national retail average for gasoline is $3.07 per gallon, which is higher than it's been since 2008. But instead of freaking out about that, the media has been focusing on the possibility of $5 gasoline in 2012, a claim made by former Shell President John Hofmeister. Hofmeister's point (he heads a non-profit called Citizens for Affordable Energy) is that the problem is that we're "essentially frittering at the edges of renewable energy, stifling production in hydrocarbon energy," leading to "blackouts, brownouts, gas lines, rationing."

When Platts printed Mr. Hofmeister's predictions the day after Christmas, he became an instant media sensation. Even Platts claimed to be surprised by the ruckus, since Mr. Hofmeister had predicted the same many times before, and it would imply that the price of crude reaches $180 a barrel, which even the boldest analysts think is too high.

Why are we panicking about unlikely $5 gasoline? Perhaps because it's more comfortable to think about something that probably won't happen rather than preparing to be clobbered by $3.25-$3.75 gasoline between now and May. By then, OPIS analyst Tom Kloza estimates we'll be spending $38-$44 billion a month on gasoline. That's about twice as much as we spent on gas in the month of December 2009. I mean, that's about $20 billion more!

This is not going to wallop all families equally. Consider the city of Atlanta, where the average commute length is 39.4 miles each way. I've mentioned before that the Department of Commerce estimates that a household making $50,000 a year spends more on their cars and fuel ($7,900) than on health care or taxes, but those numbers are low. Extrapolating out from the government estimates, I'd guess that an average Atlanta commuter, driving an average car (17.4 MPG) is spending an extra $35 a week on their commute today (over the government average) and at $3.75 a gallon they'll need an extra $55 a week. There was a time when people could put expensive gas on their credit cards (and pay it off at high interest later) but those "free" cards don't arrive in the mail as often now.

People will have to search for alternative transit, which is rarely available. If they can't find a carpool, they'll eventually have to figure out if they can continue to afford to get to their jobs, or if they can move or get a new car. (I'm working on a new project called the EnergyTrap to study how high gas prices affect middle income families and the economy at large. Please join us at the website, or on Facebook .)

Rather than talking about $5 gas, which Mr. Hofmeister thinks can be avoided by OKing more drilling in the US (a long-term project), we need to be planning about what to do in late February. On a local and national level, we need to think of new ways to get people to work--or let them stay home. Congress should discuss giving emergency tax breaks to companies that either encourage telecommuting or provide carpool incentives to their employees. Startup companies that help people find trustworthy carpool buddies, or otherwise get from A to B with less gas should be encouraged. We are now able to clearly see that prices are rising and they they will continue to be volatile for the next decade. While we can't remodel our spread out system immediately, we can certainly plan for the inevitable.

The last two years have seen a tremendous hullabaloo about creating "green jobs," we need to take the step of making every job greener by giving workers more ways to get to work than burning expensive gasoline.

Does $100-a-Barrel Oil Threaten the Recovery?

2010-12-03T15:40:54-05:00

On October 28, Transportation Secretary Ray LaHood announced that $2.4 billion in stimulus funds for high speed rail would soon be disbursed. Immediately, a hullabaloo went up from the governor-elect of Florida and some in California that the money would build a series of white elephants around the country. Republicans in Congress are threatening to withdraw the unpaid stimulus money for all projects, including $6 billion in unspent transportation upgrades. I'm not going to talk about the politics of this. I'm going to talk about the $2.4 billion.

Sounds like a lot. But during the month of November US drivers lost $2.7 billion to the 24 cent rise in the price of gasoline over November 2009. Overall, in November we spent $32.5 billion on gasoline--more than the yearly income of the proposed $30 billion "millionaire's tax."

When it comes to gasoline, business as usual has a shockingly high cost for the US economy. Back in 2009, McKinsey Global Institute wrote about how a worldwide economic recovery could send oil prices higher, stopping a recovery in its tracks. We may be about to find out.

Today, Venezuela reportedly said $100 would be a fair price for crude oil. They're not the only ones anticipating such a rise. That will convert, roughly, to $4 per gallon gasoline and will mean that American drivers will be spending $1.5 billion a day on gas. This is a big hemorrhage of money that could be put to other uses that would boost our economy. And these rising costs are largely out of US control: Cold weather in Paris, the value of the dollar as a result of the EU bailout of Ireland, Chinese electricity rationing that has lead to increases in diesel demand, Nigerian militants attacking pipelines in a far-off dispute in the Niger Delta...

A jump in the price of gas will fall disproportionately on the shoulders of the middle class. Families making $50,000 a year already spend an average of $7,900 annually on their cars, maintenance and fuel, according to the GAO. (Download pdf) That's more than they spend on taxes or health care--two costs the Republicans and Democrats have made their respective signature issues. This is a group that has already been hit hard by declining income throughout this recession. Can they adjust to absorb even higher costs for gasoline?

High speed rail may not be the way to help median-income families get to work, but it's necessary that the new Congress come up with a creative and comprehensive energy and transportation plan. Let me put it this way: Would any self-respecting politician DREAM of levying a 24 cent tax on gasoline in the electoral month of November? Of course not! But having a heavily gasoline dependent economy with so few other ways for middle class workers to get to work has the same effect of sucking money directly out of voters' pocketbooks and putting the whole country's economic health in jeopardy. The real cost of such passive politicians is enormous.

For an unconventionally bi-partisan and pragmatic slate of suggestions to increase mobility options while decreasing oil dependence see this report just out from the Mobility Choice Coalition.

Obama's BP Oil Spill Commission Gets It Wrong

2010-11-24T12:57:05-05:00

A few weeks ago, when the Presidential Commission on the Gulf Oil Spill announced that the Macondo blowout was NOT the result of decisions that BP made trying to save money, I was surprised. Much of the reporting we've seen has suggested that cost-cutting decisions on the over-budget well contributed to the disaster. But there was Fred Bartlit, chief counsel for the Commission, saying, "to date, we have not found a single instance where human beings made a conscious decision to favor dollars over safety ." A Wall Street Journal blog said he "all but acquitted BP of the gravest charge it faced."

Or maybe not. New and excellent reporting out from Katie Howell at Greenwire shows that the commission deleted a slide from last week's presentation. The missing slide showed 11 instances where companies involved in the spill took risks to save time, and therefore money. Seven of the 11 decisions listed were made by BP employees. The slide was apparently accidentally uploaded to the commission's website and has since been taken down. (Below is the slide provided by Greenwire.) A commission spokesman said the slide was removed because it hadn't been approved by all commission members.

I'm more of a snafu-theorist than a conspiracy theorist: The world as it is seems to be the product of compounded mistakes and inattentions rather than a grand diabolical plan. So I'm disinclined to imagine that the members of the commission were trying to somehow favor BP or "acquit" it of wrongdoing by leaving out the slide and making statements that directly contradict it. But doesn't this look just awful?

What is the commission thinking? The purpose of this commission is to examine the facts and develop options to prevent a repeat, while giving the public the satisfaction of a full and transparent investigation of the blowout before the whole thing descends into the murky depths of the courtrooms where BP and TransOcean and Halliburton will pull at each other like giant squid. Bartlit's earlier statement strained credibility, and now, with the addition of the slide the public is left with the impression that the commission is at best inept and at worst corrupt. The commission needs to make a serious statement about this slide and their conclusions. Also, I think the commission should make its deliberations more transparent--perhaps by webcasting them just like the Macando wellhead was webcast.

The Obama administration has had a persistent problem with managing the "optics" of the spill, so that they have appeared to minimize the spill and its effects in ways that seem to benefit BP. Early on the government appeared to accept BP's underestimates of the amount of oil flowing from the well and then in August Carol Browner said the "vast majority" of the oil was gone from the Gulf, referring to a NOAA report. (That "Oil Budget Calculator" was revised and re-released yesterday with a nuanced disclaimer that it doesn't claim to explain "where the oil is now.") At it's heart the administration seems to feel conflicted about the proper role of government as adversary or partner to the oil company, reflecting larger tensions in our society.

President Obama could use this opportunity to make a principled response to the spill, not only by making the commission's dealings more transparent, but also by explaining how government oversight and regulation makes markets work better--not worse. During Congressional hearings on the spill, it came out that BP had been cited by OSHA for 760 safety violations in the past five years while Sunoco had eight, ConocoPhillips had eight, Citgo had two, and Exxon had one. This vast disparity in violations suggests that when government allows safety violations on that scale it is essentially rewarding companies who court danger. After all, BP gas and Exxon gas sell for the same amount per gallon in the marketplace, while Exxon clearly invests more money and resources in safety. The role of government is to enforce safety laws to create fair markets, and keep the environment safe for everyone.

What's Really Wrong With the Smart Grid

2010-11-19T17:35:40-05:00

It was only a matter of time before the Tea Party turned on the Smart Grid. First there were lone citizens who tried to bar their local utilities from coming on their property to change their power meter, leading to news items like this one from Placerville, CA. Then this week Jerome Corsi, who was involved in the Swiftboating of John Kerry,as well as an interesting call to impeach George W. Bush, penned an indictment of the Smart Grid as the beginning of "energy police," "energy criminals," and a government invasion of privacy driven by a "green ideological agenda," and abetted by Google.

I don't buy Corsi's argument, but I think the fact that he's making it demonstrates that the biggest problems with the $1.5 trillion installation of the Smart Grid are not the dicey technological, financial, and regulatory riddles that currently obsess bureaucrats, but chewy philosophical ones.The Smart Grid is rolling out lickety split because all the right interest groups love it: Utilities like the idea of cutting labor costs and being able to manage electricity usage; environmentalists want to integrate renewables onto the grid while stimulating energy efficiency; manufacturers want to sell appliances; regulators are trying to forestall the electrical outages that already cost our economy $119 billion a year; Congress and the DOE wanted to throw money at such an eminently popular, modern, "smart," concept. This enthusiasm covers up the fact that there is no coherent ideology there at all, never mind a green one. And that's the problem: Nobody has bothered to explain why the Smart Grid is good for you and me and then turn that into a policy.

Consumers, who are seeing their unspoken agreement with their utilities rewritten for the first time since the 1920's, have been left out of the discussion. Across the country Smart Meters have become increasingly unpopular as they malfunction, overcharge customers, allow utilities to quickly disconnect homes, and put the burden of equipment installation on ratepayers. (For detailed tracking see Jerry Richman's excellent blog.) While there's a tendency to see each bit of bad news as an isolated event, together I think they reflect a failure of the country's leaders to articulate a clear philosophy of the Smart Grid and its relationship to consumers. We really need to define the Smart Grid not in what it might offer interest groups, or why it's a "good idea," but in how it will empower consumers to save energy and money, encourage innovation in technology and markets, and create a stable atmosphere for investment and productive competition.

What would that look like? For starters, a consumer-focused grid would make cooperation between utilities and their customers part of the contract. Right now, utilities are switching to "time of use" electricity pricing, allowing them to charge customers more for using energy at peak hours. In theory, users could install more efficient appliances or use them at different times of the day to save money, but many cannot make the investment or change their timing, or simply have no idea how to change their habits so they end up paying higher bills--charged, Corsi says, for being "energy criminals." At the moment utilities have no explicit incentive to reduce consumers' bills. A proper contract would put the onus on the utilities.

Here's an idea: For the first five years after installation, the utility has to charge the consumer the lesser charge--either calculating by time of use or by the old utility contract of static pricing. Utilities, however, are given the option of making more regulated profits by reselling power to other utilities, giving them a clear incentive to help their customers use less power or less expensive power by helping them change behavior or buy more efficient appliances. (And utilities could use the low-interest publicly guaranteed credit lines they use to build power plants to instead invest in their clients appliances--passing along the low interest rate of course.) Consumers, given the option of buying cheaper power at less popular times, would be able to--without paying a penalty (yet) for using more expensive power.

Looking at the current marketing of the grid, and its vulnerability to charges like Corsi's, one gets the sense that utility marketing departments, so secure in their support from Congress and regulators, have fallen asleep at the switch. Americans love low prices, why not pitch the Smart Grid as the Value Grid, where you can shop for cheap electricity in the middle of the night? Corsi (and many consumer advocates) fulminate against time of use pricing, but in fact it's a time-honored American tradition. Happy Hours and Early Bird Specials are beloved examples of time of use discounts. Expensive Mother's Day dinners, last minute air tickets, World Series tickets are examples of peak pricing that make instinctive sense to all of us. In wholesale electricity markets, off peak power can cost a third the price of peak power. Walmart, I'm sure, would figure out how to market bargain basement power prices to its frugal customers. The problem in much of the half-hearted marketing of the Smart Grid is that it suggests that the grid is the smart thing, without empowering consumers to be the "Smart" ones.

The second hot button issue Corsi touches upon is whether the Smart Meters invade users privacy. The short answer is that the utility is going to be able to "see" what you're doing inside your house, whether it's washing clothes at 3 am or using an ungodly number of grow lights. And eventually every appliance in your house may have a url, making it controllable from a central panel both inside and outside the house. Our traditional definition of privacy is that what happens under one's clothes, inside sealed envelopes placed in the mail, and behind the drawn shades of one's home is one's own private business. The idea of a home as a castle protected by a sort of legal moat is why government needs search warrants and due cause to cross any of those barriers. However, technology has broken down those physical barriers so that scanners can see under one's clothes; Google--never mind the government--can read my naked emails; and wires shuttling information penetrate the walls of the house, rendering them porous. (Ironically, the new porosity was apparently news to a PG&E executive who joined an anti-smart meter group under a false name and is now on leave from his job.) Ultimately, we need a better legal and philosophical concept of what privacy means when barriers are porous and the invader is not the government.

The chewier problem with the Smart Grid, as I see it, is that your utility can profit from its knowledge of your habits by selling the electricity you're not using for a profit. This isn't Corsi's jackbooted thugs busting down your doors, it's more like a boorish busybody sitting around your kitchen eying your plate and constantly saying, "Are you going to eat that?" The idea of my utility, or Google, making a profit from the energetic equivalent of my potato peelings is either the acme of boorishness or the highest attainment of the free market, depending upon how you look at it. And I think how we look at it will depend upon how successful the process is. If the Smart Grid brings us lower bills, lower carbon emissions, and better and more comfortable homes, without explicit invasions of privacy, we'll probably love it. But if it fails to deliver on its promises, and becomes largely the tool of utilities to maximize profits and lock out competition, we will judge it a failure. Worse, if utilities or others sell information about our habits to third parties like health insurers who, for example, decide that we spend too much time in front of the TV drinking beer to be worth insuring, it will become a whole new problem. This is another situation where the Obama administration needs to lead the alphabet soup of agencies overseeing the Smart Grid to clearly define a philosophy of consumer-centered privacy.

One final point. Opposition to the Smart Grid is picking up speed because there are parts of the roll out that some Americans find instinctively offensive, but that doesn't mean we should abandon the Smart Grid. It means we need to be smarter about it, to address the core issues first. At the same time, it's important to recognize that some "instinctive" arguments make no sense. For example, this Tea Party Patriot website, which contains a post opposing the Smart Grid, also endorses "limited government," and the "free market," neither of which is really part of the design of the regulated utility deal we've had for almost a century. Furthermore, the very promise of electricity for all as a virtual "right," was established by Tea Party boogeyman FDR.

FDR's influence on the construction of the TVA and other hydro electric power projects is well known, but he also campaigned for New York Governor on a platform called the "waffle iron campaign," in which he said every household, no matter how humble, should be able to have a waffle iron. That promise led not only to waffle irons, but also to the home appliance industry, and the frozen food industry, generating millions of jobs and profits, not to mention innovations like toaster waffles. (A clear dotted line leads from the waffle iron campaign to 1959's Kitchen Debate between Nixon and Khruschev.)

A similarly broad, encompassing, deeply philosophical promise of what a remodeled grid will do for consumers, and our economy, is exactly what the Obama administration needs to articulate over the next two years.

Question for BP: How Close Are We to the Unthinkable?

2010-06-18T12:02:04-04:00

Day 59: Yesterday was a long day of grandstanding at the Congressional hearings with Tony Hayward. The legislators threw a disorganized "junk shot" of questions at Hayward, ranging from questions about the health impacts on cleanup workers to specific questions about casing and cement integrity on the fatal night on the Deepwater Horizon. Rep Welsh noted that Hayward said "I don't know" 65 times. (With others, I blogged about it for the Lehrer News hour.)

The most important question (and one Tony CAN answer) was only hinted at by Rep. Scalise when he asked if the casing around the well was cracking. Hayward's response was a variant of "I don't know" because, he said, they can't see into the well. Scalise dropped the line of questioning without asking Hayward to offer his best explanation for the increasing flow rate of the well.

Why is the integrity of the casing or the ground around the well hole important? Because it says everything about whether the flow rate of this spill will increase, whether there are more disasters yet to come, and how long it could take to stop flow from this well with the relief wells. The question I'd like to ask Tony Hayward is this: To the best of your knowledge are we near the end of this spill? In the middle? Or perhaps, only at the very beginning?

Right now, a disaster that keeps flowing until August is the worst anyone wants to imagine, but there are worse possibilities-- it could be the start of years of unchecked oil flowing into the Gulf. (See this Bloomberg article suggesting that the relief well could take until December to solve the problem. One expert in the article mentions a decade. Keep that in mind as you read onward.)

There are legitimate concerns about the integrity of the casing. Yesterday, someone asked Admiral Allen about that. He said that concerns about the integrity of the well bore were part of the decision to stop the "Top Kill" a few weeks ago, indicating that there are significant concerns. On April 23, the Coast Guard was aware that the size of the leak could grow from 8000 barrels a day to 64,000 to 110,000 barrels a day if the well completely blew out. That's quite close to the current spill estimates. Does that mean that the well is nearing a full blow out?

The reason the casing's integrity matters is that if it's cracked, oil will push out through the cracks and into the surrounding ground, destabilizing the ground around the casing, and bubbling up from the ocean floor. Here's more, with Senator Bill Nelson's interview a week and a half ago saying just that. A seeping well, of course, will be hard to contain.

And finally, more alarming, and possibly a gross overstatement, there is the possibility that as the ground and the casing shift, the whole thing collapses inward, the giant Blow Out Preventer falls over, the drill pipe shoots out of the remains of the well, or any number of other scenarios that could make it very difficult or impossible to eventually stop the gusher even with the relief wells. (I do not know the author of this post, and cannot vouch for its accuracy. I do not share the author's fear that there is a conspiracy to hide this information. My sense is that it's unthinkable and so no one is asking the questions.) Thus the relief well are being drilled in a race with the integrity of the ground around the well and the casing.

If they don't make it, we're looking at a very very different kind of accident. (This is where the "decade" remark comes in.) And if so, Tony Hayward will look back upon yesterday as a relatively pleasant interlude before the *real* disaster struck.

It's time to start asking for a best guess of what is going on in the well hole. It is dishonest not to.

Oil Spill Theater: Catharsis or Catalyst?

2010-06-15T13:00:00-04:00

Day 56 of the spill and the political chemistry is now on full display. By the end of the day -- between the Markey hearings with oil industry and President Obama's scheduled address this evening -- we will have a better sense of whether this spill will result in a revision to our current politics of energy, or a whole new politics of energy and environment.

Obviously, I'd like to see policy makers seize this opportunity to have a fully blown discussion about the risks of oil dependence, and let that lead towards new and comprehensive energy policy moving away from oil dependence.

To some extent, that's what's on display, as the discussion gets down into the weeds on the details of what may have gone wrong in the Deepwater Horizon rig. Lock out collars, degassing mud before recirculation, annulus, tie back lines on the casing, blind shear rams -- I have to say I love this. The last few weeks I've had more discussions about blow out protectors around barbecue grills than in my previous eight years of writing about oil. At last, the big national conversation is beginning.

But this is also a throwback to the standard politics of energy since 1973. All hearings that call in oil executives (as Texas Rep Joe Barton called them "Mr. Chevron" and "Mr. Exxon") hearken back to the great grand-daddy of oil hearings, held in early 1974 by Henry "Scoop" Jackson. Jackson theatrically called the oil executives to account for their "obscene profits" during the oil shortages caused by the Arab Oil Embargo (and a misguided US gas rationing plan, which played a role in the time's famous lines at gas stations; see pages 638-639 of Dan Yergin's The Prize for more.)

In 1974, the executives were flummoxed by the negative attention and the public humiliation. The hearings provided a cathartic theater for angry drivers -- much the way Stephen Colbert's mock-thugging of Tony Hayward did last week -- but they didn't significantly change the way we regulate the oil industry or use their product. I would say that such theater, by offering an emotional outlet without actual change, enables the status quo. The oil companies simply figure hatred into their spreadsheets.

So. What to make of Congressman Markey's theatrical "reveal" of the oil spill response plans of the major oil companies in the Gulf? The identical boiler plate covers, the identical content, the absurdist mention of walruses, which Rep. Markey points out have not lived in the Gulf for 3 million years, offer a satisfying set up for a stand up joke. "The only technology you really rely upon is a Xerox machine," he said, Colbert-like. Then he moves on to try to extract an apology from McKay of BP, echoing the Super Nanny. "Are you ready to apologize?" he said. (And yet, if anything, the anecdotes about the walruses indicate that the MMS was not even bothering to read the spill response plans. Or hadn't read them for years. They were, as Congressman Bart Stupak says, "cookie cutters plans.")

Interestingly, I think the executives were prepared for humiliation this time. What they weren't prepared for, perhaps, was the annoying needling of Rep. Stupak, who worked away on the response plans in a more accountant-like way, and apparently got under "Mr. Exxon's" skin. Tillerson finally said, more or less, was that a full spill response plan was not necessary because such a spill would not have happened on Exxon's watch. That's an interesting, and somewhat huffy, admission that shows that many companies still believe it couldn't happen to them. (And they could be right -- perhaps BP was taking "obscene risks.") That sort of swagger may come back to haunt Mr. Exxon, if the public decides that the whole industry is rotten. And then this hearing will not be a repeat of the past.

The End of Magical Oil

2010-05-14T15:51:46-04:00

Until this horrifying video of oil barreling out of the well drilled by the now drowned Deepwater Horizon rig surfaced a few days ago, few Americans had given the deepwater wells of the Gulf much thought -- but all of us were getting more and more dependent upon them.

Between 1995 and 2004, deepwater production grew by 535 percent -- an unimaginably high, Madoff-like rate in a country with tapped oil reserves and a driving habit that gobbles up a quarter of the world's oil production. If we glimpsed these wells at all, they were in a Jules Verne-like dreamscape of triumphant technology presented in an oil company ad. Dangers? We didn't think of them. These wells were not on the east and west coasts, where the politically-empowered environmentalists worry about their views. And they weren't in the pristine white north, so dear to many of us who've never been there.

Deepwater wells were in the Gulf -- the official sacrifice zone for U.S. energy policy -- where a critical mass of our refineries, a tangle of marine terminals, the Strategic Petroleum Reserve, and many decades of oil exploitation have sullied waters and local politics as far back as anyone can remember. Until it appeared on YouTube, this was "magic" oil, miraculously plugging the gap in our unspoken energy policy of increasing imports while yakking ineffectually about energy independence. Magically, too, its seemingly sacrifice-free growth was projected to jump by 62 percent to 2.1 million barrels a day by 2016 -- nearly 43 percent of the whole U.S.'s straggling domestic oil production in 2008.

Now, as BP eerily prepares to drop a "top hat" over this ever larger spill, it's time to re-examine this magic oil, and the trick that brought it to us.

Deepwater drilling had an improbable, unbelievable, giddy rise from its birth in 1993. Every well was pushing the envelope, either of depth in the water or the depth of the drillbit beneath the crust. "Every well I did was the deepest ever," an oil industry professional told me, yesterday. "I worked on 20 wells that set records. Every guy that did my job had worked on 20 wells that set records. We were sprinting, breaking records right and left. Everything they did had never been done before." For 17 years the deepwater rigs were jamming on the edge of the envelope.

As the demand for deepwater oil grew, so did the demand for deepwater rigs, each differently designed than the last. "A year and half ago there were 35 drillships like the Deepwater Horizon," an officer on a Transocean drillship told me, "and by 2016 there will be 65. There's a very limited number of people with the experience to be officers on them. And that pool is getting diluted.The age of the captains on these ships is falling from the mid 40's to the mid-30's." The International Association of Drilling Contractors recently bemoaned a coming shortage of professionals.

And they were drilling into trickier and trickier formations. By 2008, 25 to 30 percent of remaining reservoirs in the Gulf had pressure issues, which the industry and the MMS were trying to figure out how to manage.

Deepwater was, in other words, an increasingly risky business in risky conditions, with new equipment, people, and practices. If it sounds a bit like the conditions that led to the financial meltdown, perhaps it was, particularly when you factor in the behavior of the regulator. The MMS, the proxy for American citizens, had put its faith in magic rather than in regular inspections and regulation. Like those of us driving around madly on land, who preferred not to think about the risks of this oil, the MMS didn't pay much attention to the details, and sometimes even violated the law to assist in oil extraction.

As industry sprinted, the MMS shuffled. Since 1997, it appears to have issued only one notice on Deepsea BOP (Blow Out Preventer) inspections ( NTL No.2009-G07). Puzzlingly, this notice issued some clarifications on modifications to the BOP's, which include an interesting sentence: "Failure of a choke line installed below a bottom ram could result in a blow out." (Perhaps that has something to do with some of the info on the lack of schematic drawings for the BOP's and the fact that they'd never been "emergency" tested since they had been placed on the seabed, according to Congressman Bart Stupak's statement.) In any case, here was a regulator trying to stay on top of an industry that was moving the needle with every well, and it only issued one notice on the BOP in 13 years.

In addition to the famous scandal around sex and drugs, the MMS had more insidious issues with industry. In 2001 it worked on Project Deep Sea Spill, which modeled an underwater spill much smaller than the Deepwater Horizon, but kept the information proprietary among the 12 cooperating oil companies for four years.

And so now, we are not only faced with an extraordinarily large, frightening, and nearly unthinkable oil spill, we are also facing the end of magical oil. Like the financial crisis, there are physical issues to deal with now, but in the future there will be a crisis of confidence in the oil industry and in government's ability to regulate it. And at the same time, all of that new oil will not flow magically toward our shores, lubricating our lifestyle, allowing us to glide on without an explicit energy policy. We shouldn't kid ourselves that this is merely a large oil spill. It is much more.

7 Ideas for Armchair Oil Spill Regulators

2010-05-13T14:35:24-04:00

With the Deepwater Horizon's oil still hovering off the coastline, a legislative rush is on to "do something!"

Here are a few suggestions:

1. "No secrets" policy for disasters.
Congress should forbid companies from preventing employees from leaving the scene of an accident without signing a waiver of their ability to say what they saw or claim injuries. That's grotesque, and it gets in the way of preventing future similar disasters. Congress should also require that any chemical -- dispersants in particular -- that can be put in federal waters must list ingredients and toxicity publicly. If other ingredients are being added to the dispersant, they should also be listed. (This Greenwire article suggests they're using a more toxic, less effective dispersant than the best on the market. In effect, allowing information blackouts creates market failures that prevent the development and sale of safer, better products.)

2. Drill here often? Then register your ship here, too--and pay some taxes.
I noted yesterday that though Transocean was in fact a company largely formed in Houston, it registered itself in the Cayman Islands so it didn't pay U.S. taxes. In 2008, company brass moved to Switzerland, avoiding U.S. income taxes as well. Even more problematic, their drilling ships are registered in the Republic of the Marshall Islands, which is officially responsible for inspections but actually leaves the work up to a classification society. Under the Jones Act, only U.S.-owned ships can do coastal shipping. Do we want to allow "non-U.S. rigs" from "non-U.S. companies" to drill off our coasts?

3. Increase liability and require outside insurance.
Congress is already taking steps to increase the liability for oil spills from drilling above the current measly ceiling of $75 million. It would be even better to follow the model of OPA 90 (which followed the Exxon Valdez spill) and require all drillers/leaseholders to hold insurance for that liability, part of it provided by an outside party. Not only does this assure the public that the costs of a spill will be paid, it also means that insurers get in on the act of monitoring safety and risk and influencing corporate behavior.

4. Charge real money for our oil.
U.S. taxpayers are missing out on a lot of oil revenue because we charge far less than other countries for the extraction of our oil. Our offshore lease terms are so generous to the oil companies that according to the GAO, U.S. revenues for oil in the Gulf of Mexico were the 93rd lowest out of 104 countries, meaning we may be missing out on hundreds of billions of dollars in oil royalties when prices are high. A 2007 Wood Mackenzie study found that while some governments' take for a barrel of oil at that time was $98, U.S. citizens were receiving only $44.09 per barrel of Gulf Coast oil.

It would be a fantasy to think that charging oil companies less for our oil keeps oil prices low in the U.S. oil is fungible. Oil companies swap high-priced oil for low all the time, making money. And the retail price is all the same. Therefore, what we're increasing is the profits of the companies who extract the oil.

5. Install spill-capture devices before the fact.
As we freak out about failed Blowout Preventers, it might help to shift focus to the fact that while we'd of course like to prevent blowouts, what we really want to control is spills. How would you prevent an oil spill from a well before it happens? I'm thinking a giant rubber bag, like a balloon, pre-attached to the top of the drill pipe, and ready to be deployed if a well gets out of control. I'm sure that's ridiculously primitive, but the people who came up with this can surely come up with something.

6. Look at how Norway balances the needs of fisheries and oil production.
A huge amount of U.S. fish come from the waters of the Gulf. They need a high-level advocate. Perhaps the Department of the Interior could create a high-level Department of Gulf Fisheries that would have to approve all oil drilling plans in the Gulf.

7. Hold big public hearings to determine how this happened.
My first reason for supporting this idea from the Center for American Progress is that there are too many conspiracy theories floating around on all sides, and we need proof that someone cares about understanding the ugly truth, whatever it is. (Also, I must say I'm enjoying the pointed questions of Captain Nguyen at the Kenner, Louisiana hearings.)

My second reason for supporting a public commission is that at least since the oil embargo, Americans have understood our relationship to oil through the theater of public hearings. After the 1973 oil crisis, Senator Henry M. Jackson called oil executives to Washington and accused them of making "obscene profits." This recurring theater around price "gouging" persists to this day, as does the oil industry's comeback about environmentalists keeping prices high by preventing offshore drilling. This argument is no longer useful, and a public investigation of the Deepwater Horizon Spill would, in effect, give us a new and more relevant "play" for our political theater. This new play would be about "risk," and it would drill into the heart of every schoolchild the notion that every drop of oil carries with it risks that we as a society can choose to accept or eschew -- but we can no longer deny that they exist.

No Easy Villains May Mean No Easy Oil

2010-05-10T18:10:24-04:00

Where did that oil spill go? We've got millions of barrels of oil sloshing around off the most sensitive coastline on the continent, and for lack of oiled birds, the Deepwater Horizon Spill disappeared from the front pages today. The iconography of ecodisasters (oiled birds) has a match in the narrative motifs of technological failure -- normally we find a "bad part" (as with the faulty O-rings on the Challenger disaster), or a villain (as in the supposedly drunk Captain Hazelwood of the Exxon Valdez Spill, who took it on the nose for a series of other unfortunate decisions made elsewhere). These familiar motifs reassure us moderns that there are practical solutions to technological disasters -- what's wrong is the part (or the person) and not the whole damn undertaking.

Such a reassuring motif is failing to materialize in the Deepwater Horizon disaster. In a rash of fairly detailed "first hand" stories this weekend, the problem appears not to be exclusively the Blow Out Protectors (the star suspicious part of the first week of the disaster), but harder-to-understand bit players like the foaming nitrogen-enriched "mousse" of cement, and a "packoff outside the casing." (The most detailed account is this AP story, which bears a strong resemblance to this anonymous narrative and analysis that's been circulating through the oil industry -- scroll down the page to May 6. Go ahead, be skeptical. I am.) There are early signs that the problem might be the whole thing: stories came out this weekend about the failed regulator MMS, and the troubled safety record of Transocean, the rig operator -- but still no smoking gun, or smoking guy.

In fact, doggedly searching for the "one thing" that could have prevented the spill may lead us in entirely the wrong direction. Over the past week I've been lurking in the forums of gcaptain.com, a virtual hangout for offshore drilling boat types. Gcaptain may have had the first news of the Deepwater Horizon fire when a nearby boat captain reported it ten minutes after it happened, kicking off a long thread of discussion about possible causes and meanings.

The conclusion I've drawn from my eavesdropping, and interviews with some posters on the boards is this: IT ALL FAILED. Deepwater Dynamic Positioning rigs have three lines of defense against blowouts: first is control of the pressure in the hole through "mud" and cementing which keep gas and oil from coming out of the well; the second is the Blow Out Protectors, which pinch off the top of the pipe coming up from the well, thus keeping the oil and gas inside; and the third and most dire is the Planned Drive Off, in which the captain fires up the engines of the rig (which is really a ship) and drives off very fast, in the hopes of smashing the riser, depriving the fire of gas, and getting everyone safely out of there. But in the case of the Deepwater Horizon, the mud and cement failed to control the well; the BOP's failed to work (possibly because they were jammed by well casing or disabled by sand from the big "kick" of methane); and then the rig engines caught on fire which is NOT SUPPOSED TO HAPPEN -- preventing the possibility of a planned drive off.

So how does everything fail, when much of the time most things more or less work? One interesting poster in the gcaptain forums is Bob Couttie, a consultant on ship safety who keeps a website called maritimeaccident.org where he creates podcasts of accident case studies that mariners listen to in their free time. Bob pointed to two aspects of the disaster that have troubled people who work on offshore rigs. First, the accident occurred on the last night of the crew's two-week "tour." Secondly, there was a party on board the rig to celebrate 7 years of safe operation -- which included executives from BP (as many as 7, according to published accounts) and probably Transocean executives as well.

Speaking by text message from the Philippines, Bob said:

When a kick starts the difference in good or bad outcomes can be a fraction of a second. The crew needed to be fully focused on what they were doing. Even a second's distraction, in these circumstances, would be enough. I'd say we have to look at 'human elements' and whether procedures were followed and whether the procedures were adequate -- not just those on the rig but the decisions made onshore. I'd be looking at the effect of what I gather was a 'head office' visit at a time of intense activity.

People on similar rigs told me that head office visits include days of extra work leaving everyone tired and stressed out. Bob continued by email:

Another thing I'd look at is the 'end of job effect'. It's interesting how many seafarers die doing something wrong the day before they leave the ship. I think what happens is that towards the end of the job time is short, the work is intense, and people become more and more focused on what they are doing rather than what's going on around them -- they want to get their part of the job done. So they loose situation awareness -- almost a sixth sense of what's going on around them.

There is a vast literature on accidents and causes and concepts. The classic is James Reason's "Swiss Cheese Model." My own working concept is the "tower block:" you're probably familiar with the tower game which consists of layers of wooden blocks at right angles to each other and each player pulls out one block, adjusting other blocks if necessary. The loser is the one who tries to pull out a block and the tower falls over. What happens is you start with a stable structure and as each block is removed the structure becomes more and more unstable until it becomes so unstable that it fall over. It's a good way of looking at accidents. Each block is something that contributes to safety, might be procedures, situational awareness, rules, technical safety equipment. As each one of these blocks is removed the structure -- "safety" -- becomes more and more unstable until it doesn't actually matter which "block" goes net, the structure will fall. An example is the Bourbon Dolphin.

If you follow the tower block analogy, it's clear that while we may want a simple explanation for the Deepwater Horizon accident that allows us to go back to business as usual with a few modifications, what we're going to get is a long, detailed, thoroughly modern flow chart about the limits of technology, humans, geology, and regulation. As people who like simple narratives, the public and policy makers will be tempted to try to find one locus for blame -- whether it's BP or BOP's (blow out protectors) -- but that may prevent us from figuring out the deeper system of problems that lead to this accident. And we may determine that business as usual doesn't work for offshore drilling -- which leaves us unable to count on the 40 percent of domestic oil production we were expecting to get from the offshore industry in the next ten years. Rereading what's been written about offshore oil drilling over the last few years, it's obvious it was thought to be the methadone for our overseas oil addiction. Now what?

(An aside: given all the help they're getting from the Coast Guard, the military, and state, federal, and local agencies, it's a bummer that Transocean, which was a Houston-located company until the brass moved to Switzerland in 2008, has been so acutely focused on NOT paying U.S. taxes, according to this report from Portfolio.)

It's Time for a Moratorium on Oil Itself

2010-05-02T09:54:08-04:00

The oil spill in the Gulf is horrific and it's very likely it'll get worse. While locals get to work scrubbing the oiled birds with Dawn dish detergent, a fracas will begin in Washington. Generally speaking this is an opera called "The Punishment," and for the last two major oil spills of great political consequence (Santa Barbara in 1969 and the Exxon Valdez in 1989) it involved a moratorium on drilling somewhere in the US. The problem with this, as I lay out in an op-ed in today's New York Times, is that we basically shift drilling and its risks to other countries. (The figure that the Niger Delta, roughly the size of England, has suffered the equivalent of an Exxon Valdez of spilled oil every year since 1969 ought to make us cry.)

This time we need to use the political will generated by this really awful event to implement a comprehensive plan to reduce American dependence on oil.

Off the top of my head, here are a few possible places to start (and feel free to add your own
below).

We could begin to reduce oil dependence immediately with some of the measures suggested in this 2005 International Energy Agency report called Saving Oil In A Hurry. (Download a PDF here.)

A very diverse group (of which I am a recent member) called the Coalition for Mobility Choice has a 10-point plan to reduce oil dependence through various policies. Deron Lovaas of NRDC gave detailed testimony before a Senate Committee in March. (Download PDF here.) The basic package of policy changes he recommends could save 2 to 3 million barrels a day by 2020, and much more if we accelerated fuel economy standards for cars.

We could save even more if we started to use natural gas trucking, which has impressive numbers for both fuel savings and pollution in this Center For American Progress study.

What would we gain by implementing the Oil Consumption Reduction Act? (Got something catchier? Please post below.)

First, we'd stop the financial hemorrhage that oil dependence causes. Today we'll spend well more than $1.07 billion on oil. And prices are up over Tom Kloza's estimates of $2.81 to $2.885 today.

Secondly, we'll reduce the risk of spills, accidents, and blowouts that every gallon carries.

Thirdly, we'll reduce the greenhouse gases emitted by the burning oil.

Fourthly, we'll reduce the pollution, and the costs of dealing with the health effects of breathing oil pollution. See last week's report from the American Lung Association.

Fifthly, we might reduce the amount of time we spend in traffic. (Los Angeles commuters spend nearly two work weeks sitting in traffic every year. Bizarre.)

Sixthly, we'll reduce the amount of energy we spend defending oil shipping lanes and other oil related military projects.

Seventhly, we'll increase our competitiveness by increasing our ability to turn energy into GDP. We'll also start markets for energy efficient and clean technologies.

Eighthly, because times of national crisis are priceless opportunities to air a pet peeve: we could ban gasoline-powered leaf blowers, which consume 200 million gallons of gasoline a year. (Go to Table 2.10 in ORNL's Transportation Energy Data Book to geek out on energy consumption by lawn and garden equipment.)

Remembering Saddam's Birthday: April 28, 2001

2010-04-28T17:12:45-04:00

The relationship between Iraq and the US has undergone massive revisions over the last nine years, and because it's still in process it's hard to grasp how much things have changed. I always get reflective this time of year because today is Saddam's Birthday, a harsh and surreal spectacle that I attended in 2001. After Saddam took power in Iraq in 1968, his birthday became a holiday and important celebration of his cult of personality. The celebrations were massive, and by the time I saw them they were seen as mandatory by many Iraqis. (US asylum lawyers used to report that their clients who forced to flee Iraq when they refused to take part in celebrations). But some participants were so enthusiastic they are still celebrating the the birthday even though the man himself is long gone.

I'm posting the impressionistic piece I wrote on the birthday celebration, women, and sanctions for the now-defunct women's magazine Jane as a bit of history for anyone who cares to read it. For me, that trip was catalytic--for the first time I saw oil as a cultural force as well as an economic and political one. I think the piece reveals how present the US was in the daily lives of Iraqis--not just during the 11 years of sanctions and the first Gulf War, but before that as well. Yet, by the time I visited Americans were only dimly aware of Iraqis. Rereading the story, I recognize that I criticize the sanctions, but offer no alternative--that was certainly not meant as an endorsement of an invasion. Colin Powell was drawing up a list of "smart sanctions" at that time, but they obviously never went into effect. I do not know what happened to any of the women I interviewed, and some of their names have been changed to hide their identities.

***

April 26. The desert must be filled with suicidal butterflies, because by the time I reach the Iraqi border their smashed bodies and broken wings cover my taxi. Surreal doesn't begin to describe this ten hour cab ride from Amman, Jordan to Baghdad. Sanctions have stopped all plane flights. Camel crossing signs line the highway. The driver is hauling boxes of contraband SweetNLow in the trunk. He's popping some kind of pill from the glove compartment. "Me Love Saddam," he says, "You love Saddam?" He pretends to shoot a gun with his index finger.

I've been invited to Saddam Hussein's 64th birthday party as a guest of the Iraqi Photo Society. It's a propaganda junket, of course, but that doesn't make it any easier for me to picture Saddam in a party hat. I get a chill just saying his name. I'm stuck with the image of him as US Enemy Number One-- now that the Cold War's over.

By night, Baghdad glitters with streams of ragged cars zipping between walled neighborhoods. Gas is so cheap you can fill your tank for less than a dollar. Orange flames from refinery flares bloom on the horizon. Government high-rises tower above. The lights are on and TV's are showing something with Sylvester Stallone. The only noticeable reminder of the Gulf War is the smell of raw sewage. When the US bombed 18 of Iraq's 20 electrical plants, the water treatment system collapsed and the pipes burst. Eleven years later, it still hasn't been repaired.

April 27

The Photo Society has put me up in the Sheraton, which has signs reading "shoe shine machine," "ice machine," and "bomb shelter," next to the elevator. The ice and shoe shine machines, however, have long since been ripped up. I don't ask about the bomb shelter. The only place to hang out is the coffee shop, which is upholstered in blue velvet. Curls of cigarette smoke hang there permanently, like curtains. The chief attraction of the coffee shop is Madeline, who works there in her crisp white shirt and knee-length black skirt. During her twelve-hour shifts Madeline manages to flash a Mona Lisa smile--part glamour, part sadness-as she sets down each tiny coffee cup.

This was not where she planned to end up. When she was a child, a booming oil industry made average Iraqis wealthier than many of their neighbors in the Gulf. Their currency, the dinar, was worth $3. Madeline figured she would soon have a lovely house, a nice husband and few cute kids. "We dreamed of beautiful things," she says. Now Madeline is 31. What does she wish for now? "It would be nice to have dreams," she says, bending over her coffee pot, "Right now our lives are on hold."

11 years on hold. In Iraq, everybody tells the same story. When the Gulf War ended, Saddam was still in power. The US, Britain, and the 31 allies didn't want to invade Iraq and get rid of the man themselves, so they imposed sanctions: Iraq couldn't sell its oil, and it couldn't buy products from the outside world without getting permission from the UN. Sanctions were supposed to be War Lite: no casualties (for the UN) and no messy battles. "Sanctions are the new American way of war," says Robert Pape, a professor at the University of Chicago, "but most Americans are simply unable to wrap their brains around the issue." (But we should: Sanctions rarely work. Pape did a worldwide study of sanctions since the end of the Cold War, and found they achieved their objective only 5 of 115 times.)

"The sanctions changed everything," says Madeline, "My old life is gone." Take her monthly salary at the coffee shop: 2000 dinars. Now worth $1. Or a few pounds of chicken. Instead of bringing down Saddam, sanctions brought down people like Madeline: They triggered massive inflation, destroying the middle class and bringing Iraqis from a living standard like Greece to one like Mali. With unemployment near fifty percent, Madeline's lucky to have a job.

Some people, she says, have died and starved from sanctions, but now they've become "normal." Under a program called "Oil For Food," Iraq now sells 2 million barrels of oil per day, about half what it sold before the war. In return, Iraq buys food and other necessities through the UN. Normal, though, is part of the problem. A shady black market economy has become permanent. Look around the coffee shop and you'll see heavyset Russian engineers, Chinese technicians, Kuwaiti sheiks smuggling black market oil, German doctors investigating radiation poisoning, Iranian pilgrims in long black shrouds, Australian rice farmers on personal peace missions, a guy with a Van Dyke beard who wears the same Che Guevera T-shirt for days on end. Not only has nearly everyone but the US and Britain abandoned the sanctions, the black market has made a small group of Iraqis rich. Saddam himself has made 2 billion dollars smuggling oil. Virtually all of his neighbors--both friends and enemies including the Kurds, Turkey, Syria, Iran, Jordan, Qatar, and even Lebanon--have made money by defying sanctions. Add to that Halliburton, whose European subsidiaries did 30 million dollars worth of business with Iraq's oil industry.

But all of this leaves Madeline nowhere. "Oh not now," she says about marriage, "Life is very hard. It's not free." Marriage, here more than the US, it the single largest marker in a woman's life. But it has become so expensive and so rare that the government is now paying for weddings for 250 couples at a time.

April 28, Maybe he's in bad health, or he's afraid of being assassinated, but Saddam never shows up for his own birthday party. Instead, government bigwigs head for a parade ground in his hometown of Tikrit and take their seats high on a podium while thousands of people march in front of them shouting slogans like: "We love Saddam" (in English) and "With our soul and blood we redeem you Saddam" (in Arabic). Marchers are segregated by sex, so at one point I find myself trapped between a line of chanting women and children heading North and a squad of kilted Iraqi bagpipers heading South. After forty minutes of this the crowd rushes the stand in one last frenzy of adoration, and soldiers with Kalashnikovs push them back. The scene is impressive but in the distance a long line of people files back to their government-sponsored busses. The whole shebang ends precisely at the dot of noon. The dignitaries get birthday cake and the marchers do not.

The party was staged, but it had a point. Not only is Saddam still the boy with the most cake, the sanctions have provided him with an excuse to keep Iraq in a perpetual state of wartime alert. War and life in Baghdad have become so perversely intertwined that Saddam recently built a mosque with minarets shaped like SCUD missiles. A crowd on TV chants, "We promise you to confront the US and English aggression on us almost everyday and we will emerge victorious, sacrificing our souls for this." Children who say they are Palestinian orphans march around in the marketplace singing songs about Saddam the father.

This is grotesque, but I find the US view of Saddam ingenuous. The US spends about $2 billion per year bombing Iraq's "no fly zones," a policy, which US General Richard Hawley acknowledges "tends to enhance Saddam's general stature in the region."

In Iraq, I try to count Saddam portraits, but finally I give up and calculate Saddams per minute (SPM). Inside a government building it's 32 SPM. In a car in Baghdad it's 4 SPM. Inside the market, on foot, it's .2 SPM. He is not quite everywhere. But one day I'm forced to spend a whole hour staring at a wall-sized portrait: his nose and eyes are hyper real, all-seeing, a world unto themselves, while the rest of the painting is like a child's drawing-messy and abstract. This is a pretty accurate picture of what happens when Americans look at Iraq-we see a giant Saddam-- and the 24 million people of Iraq fade into the background.

Case in point: By 1996, UNICEF estimated that half a million Iraqi children had died because of sanctions. Journalist Leslie Stahl asked Madeline Albright if getting rid of Saddam was worth causing deaths. Her reply: "I think this is a very hard choice. But the price-we think the price is worth it." And to this day, even though the sanctions are giving Saddam more leverage over his beleaguered population, the American government still says the price is right. Whether or not you buy the statistics about the number of dead children, there's no denying the fact that Saddam has won a grisly moral victory.

April 30. Drew Barrymore is on the cover of the Iraqi women's magazine Ishtar. This isn't as bizarre as it seems. In the 70's and 80's, Saddam himself made speeches about giving women pay equal to men's, equal schooling, and banning polygamy. This was all in the name of giving birth to better soldiers for Iraq. But women's lives and expectations changed enormously.

These days, Ishtar's female editor wears a headscarf-a symbol of how society has changed since 1990. Many women now wear scarves and full coverings: some say religion is a comfort, others say they want to hide their unstyled hair. Whatever. Social effects of the changes brought by sanctions run much deeper. Divorce is very high. Girls are dropping out of elementary school. The number of women who die giving birth has more than doubled since 1990. And more: Ishtar now has a monthly story on women criminals. This month's headline: "Poverty was behind my crime. I'm not a thief. To whom should I appeal? Who will take care of my family?"

The relentless Iraqi propaganda doesn't explain what it must feel like to see your society dissolving. I'm drifting during yet another angry lecture at the Union of Iraqi Women when the translator whispers, "Did you know I spent half my life in Kansas?" The child of two Phd's who went to school in America on the Iraqi government's tab, Ms. L is the product of what you could call the positive aspect of the Ba'ath Regime. And, at 26, she's a lot like me: her childhood was filled with Brownie meetings and birthday parties. But I get to live in one reality, and she in another. "Those memories hurt sometimes," she says as the lecturer drones on.

In 1988, L's family returned to Iraq to repay their debt to society. Then came the Gulf War. Now they scrape by. And L, who has her masters in biology, can't publish her original research on diabetes, go abroad for a Phd, or even get a job in her field. "I feel like I can't make any decisions," she says furiously, "It's like a prison and I cannot go from the bars. I can't succeed in my life-the way is closed. I want just half a bit of this way to be open." The fine line of purple eye shadow that rims her eyes looks like a personal fortress against despair.

And forget about love. "I have to think with my mind, not with my heart," she says, "in circumstances like this you have to sacrifice." By the end of the meeting L seems sort of bubbly. She says it felt good to get all of that off her chest.

Someday, the sanctions may lead to an explosion-but not necessarily against Saddam. "Kids aren't getting educated and people aren't living a normal life," says Gary Sick, the head of Columbia University's Middle East Study Group, "the kind of anger and hatred that's building up is something the world has to worry about."

May 1 "I don't feel my age," Sundus says, "Really, I feel a hundred." Sundus is 34 and a serious painter. She has beautiful long fingers and wears a gold ring with a panther on it. Her early paintings were all women. Big women, larger than life, and almost folkloric. She says she chose women as subjects over men because women are "more militant and struggling and handle more responsibilities. Sometimes everyone ignores her dreams and expectations."

Sundus's comments confuse me. Who is it that ignores women's dreams? When I ask for more details, she and the ubiquitous minder quickly assure me that the leadership of Iraq is taking care of women but it's very frustrating to her because she can leave Iraq but nobody will give her a visa because of the sanctions. Then we get into a very uncomfortable confrontation (for me) over why the American people don't seem to care about the sanctions. Sundus starts crying at the thought of the pain the sanctions have caused her and other women. I don't doubt her sincerity--she's too incoherent to be spouting the usual propaganda--but I feel like there's something I'm missing.

Sundus lives in a large walled house with her parents and her brother, an army officer who supports the whole family with his salary. Compared to the women I see begging in the market, she has a good life. But she tells me that when women are under too much pressure they lose their femininity and attractiveness to men. She says that most men her age are dead, have emigrated, or have already married. (She doesn't mention the ones in prison. But then, she wouldn't.)

Somewhere in the midst of this mess of an interview, Sundus says that she doesn't talk about her dreams because that would ruin them. I get the feeling that it's dangerous to think too much about the future. That feeling is confirmed when Sundus, whose pale fingers are never without a cigarette, says, "Maybe you'd like to know why we are smoking. Under the circumstances we don't feel stable and our future is mysterious. We smoke for our tension. Scientifically it is not helping our situation but sometimes we try to deceive ourselves."

At eleven pm Sundus suddenly becomes anxious. She needs to go home. Now. She says her father gets "nervous" if she's out late.

Sundus's new paintings are of horses and wheels. They are about furious motion, confusion, and being caught underfoot in a stampede. She says that it takes horses and wheels to change things. Later, looking at snapshots of the paintings, I see visions of the future of Iraq. And they are all violent nightmares.

Nervous. Tension. Anxiety. Every day I hear the same words used in some new and strange way. I ask a few women what "nervous" means. One woman tells me that when the men are "nervous," they feel angry and insecure and hit women. I started to understand nervous as a code word for something much darker.

But I didn't really understand "nervous" until I got home from Iraq and made a few phone calls. No one in Iraq said it directly, but women are now a target of the very government that boosted their role in the seventies and eighties. "It's a strategy of the Ba'ath regime to create terror," says one western expert on Iraqi women, "And now they're doing that symbolically with women. What's happening now is a backlash. Partly it's because men are very frustrated and the regime is trying to play into that mood." That expert didn't want to be named in this article because of relatives still in Iraq who might be punished.

Life has gotten very frightening for women. In November, Saddam's son Uday's group (Called "Fedayeen Saddam," or Saddam's Martyrs) publicly beheaded dozens of accused prostitutes and placed their heads near their homes. One of the accused was a prominent woman doctor. Human rights groups say that "prostitute" is a label applied to women who are believed to be part of the opposition. Privately, government officials tell me that beheading has been abandoned in favor of something more "compassionate." But it's left women scared-scared to go outside, scared to be in a taxi alone at night, scared to be denounced as prostitutes.

The 70's are being repealed. These days Saddam's speeches stress the "honor" of Iraqi women. He suggests that they work at home. So-called honor killings now go unpunished-allegedly a concession to POW's from the Iran-Iraq war who came home and found their wives had given them up for dead and remarried. Women under 46 are not allowed to leave the country unless they're with a male relative. (That law was enacted when Jordan complained that there were too many Iraqi prostitutes there.) And there are rumors that the laws against polygamy will soon be removed. "Nervous" has become a way of life here.

May 2, Baida is statuesque and tough. Talking about American people's attitude towards Iraq she says, "What? You need someone to sit in front of you and cry? A person who's full can't understand a person who's starving." She flips her long hair angrily, and then she asks me to come to her house for her 30th birthday party.

The minder and I are late by the time we arrive at Baida's apartment and the birthday cake has already been put away. The apartment has two small bare rooms, and one thin mattress--for four people.

Nothing in Baida's life has been easy. Her father disappeared in the Iran-Iraq war. Last year, her mother died of cancer, which Baida says was caused by Gulf War pollution. Baida and her sister sold all of the furniture in the apartment to pay for medicine. Baida's sister got divorced, and moved back in with her 4-year-old daughter, Hata. Then Baida dropped out of teacher's college because it was too expensive. Now she's looking for a job, but she hasn't found one that pays more than the taxi fare it costs to get to work. Her situation seems exceptional, but it's probably not. One study found that sanctions in Iraq virtually targeted women and children while reinforcing the upper end of the power structure.

I sit on the bench and one sister shows me a wrinkled picture of a woman in a full black scarf. Their mother, she says. The picture looks impossibly old, as though the woman died a century ago instead of last year. Her face is withered and angry.

On a little table there are nuts, candies, and the cake. I'm worried about how much this cost. Baida's sisters look alternately anxious and exhausted. I wonder what they think of this strange American-I am the enemy, after all-- among them.

One of them leans over, motions to Hata, points at me, and says "Hata, America," and she mimes putting her fingerprint on a document. I laugh politely, but I'm sad. Hata plays with my camera. She belly dances a bit. She's a great kid. She's the first person with any unguarded twinkle I've met since the taxi ride into Iraq. And so I play with her. Hata's mother mimes me taking her to America again, I guess so she'll have a chance at a better life. Thinking about Hata's future, and what will happen if everyone-America, Saddam, fathers, husbands, and the fanatical Union of Iraqi Women--continues to vent their frustrations on this family, is beyond depressing.

And then Baida comes into the room. She's wearing a silver lame dress held up by one shoulder strap. Everyone gasps. Baida is hot. She was hot before, but now she's ridiculously hot for this tiny apartment filled with women and one middle-aged minder, who seems to be an honorary eunuch for the evening. Baida is huge, larger than life. She does a few hip rolls. It's as though there's another skin she's been waiting to step into, a new life. A life without Nervousness. And so Baida dances first with Sundus, then with Hata, and finally with me. I feel like a short, flat-footed beast from an inferior planet. This is Baida's night.

Later Baida shows me a postage stamp-sized photo of a guy with a moustache and a peaked military cap. Her fiance. They met three months ago. "Two stripes," she says, indicating he's an officer and therefore has military housing. Baida can move. Her life won't be on hold anymore. Will her marriage be a government ceremony? No, she laughs, making a face, that's for people who have no other resources at all.

At the end of the night, Baida asks me to stay, gamely saying that sleeping on the cement floor will be good for my back. I assume she doesn't want this night to end. She'd like to go out to another place, but we can't--since 1991, the nightclubs have been closed. She kisses me on both cheeks. Hata's mother offers her to me one last time.

Drill Better Baby!

2010-04-03T09:15:59-04:00

On Wednesday President Obama stole Sarah Palin's football when he spoke of a plan to open 167 million square miles of offshore territory to oil drilling. This spring, when gas prices inevitably rise, Sarah and the Republicans will not be able to demand that we "Drill, Baby, Drill," because Barack already has. In this at least, opening offshore oil was a smooth preemptive move. But if that's all it accomplishes it will have been a waste--there's no way this will lower gas prices, or make the U.S. more energy secure in the long term. Politically, offering up the coast has to be a bargaining chip to get climate change legislation--whether it brings some balky legislators to the table, or produces some income from royalties that makes the cost of climate legislation more palatable. While many environmentalists are enraged by Obama's move, I think THEY should steal Obama's football to get even bigger gains for the environment.

Personally, I can't get too upset about the possibility of drilling off the coasts. While I love walks on unspoiled beaches, I don't believe we in the U.S. have any special right to them given our current consumption of petroleum. We have less than 3 percent of the world's oil reserves, and we use 25 percent of the daily production. All that oil comes from someone else's beach: Angola, Iraq, Saudi Arabia, Nigeria, Chad, Russia, Kazakhstan-- places without our environmental protections, rule of law, or human rights record. In my mind, keeping the coasts off limits here without dramatically curtailing our consumption inevitably leads to drilling more wells in Nigerian villages, soon to be followed by spills, poverty, violence, and worse. If an oil company spills even a small amount of oil off the coast of Virginia the active citizens of the Commonwealth will force them to account for their actions and pay compensation.

(Wondering how frequent offshore drilling spills are? The Norwegians keep a database named SINTEF of all offshore blowouts from oil and gas exploration for the U.S., and the Norwegian and U.K. North Sea, showing that they're less frequent than they once were. Google that analysis, or go here to see some of the worst blowouts in history.)

The environmental community should give up its usual opposition to federal money for drilling research and instead try to change drilling itself. First, get more funding for research into how to safely get more oil and gas out of old wells in parts of the country that are already heavily drilled. One in six barrels of oil produced in the U.S. is from such old wells, but the feds spend only $1 million a year investigating how to increase that yield. For comparison, we spent more than $1 billion on gasoline yesterday.

Another opportunity to change the way drilling is done would be to put more money into figuring out how to extract unconventional natural gas with less water, safer drilling muds, and better fracking fluids. Instead of choking off funding, perhaps we should embark on a five-year plan with the industry to substantially reduce the environmental impact of such drilling. At the moment, such initiatives receive very little funding. (Though the EPA also has a program.)

Cynics are likely to argue that investing in oil and gas technology helps the oil industry more than the environment. But with many years of fossil fuel dependency ahead of us, we need to have higher expectations of the industry. Investing in the right kind of research is one way to establish those expectations.

Plus, the strongest argument against coal, nuclear power, and LNG terminals has been the discovery of massive amounts of "unconventional" natural gas in the U.S. over the last ten years. What made producing that gas possible? A modest $185 million investment in unconventional gas technology in the early 1980's, which was then modified by the gas industry itself over the years. But simply drilling for that gas will have huge environmental effects unless we can find ways to do it better.

Thumbnail credit: David McNew/Getty Images

Oil 2010: There Will be Blood (But Less Oil)

2010-01-05T12:13:26-05:00

Whew! It's been a very exciting decade in petroleum. We started in the spring of 2000 with an infamous Foreign Affairs article fretting about the "shocks to the world of cheap oil," a cataclysm they expected to set in at around $7/barrel. By summer of 2008 we'd hit $145/barrel, and now, despite falling demand and a surplus of supply, prices are about $80. We've had many exhausting years of real war in Iraq that some argue is "over" oil, and a long-running domestic political war over climate change. Yet, at the 11th hour (December 2009), no U.S. oil companies bid to drill in Iraq's oil fields and no less a climate denier than Exxon came out in favor of limiting carbon emissions with a tax shortly before buying a big natural gas company. This is not the oil world as we knew it.

So what is it?

1. Maybe U.S. gasoline consumption has peaked

For many decades increasing oil use has lubricated our far flung suburbs, our commutes, our love of farm fresh baby lettuce and products from China. But in 2009, the recession pushed U.S. gasoline demand down by 3.5 percent and diesel by 6.5 percent. New fuel economy standards for cars and trucks are likely to push that down further, and greenhouse gas emissions regulations will do more still. (The EPA will release its mobile source aka vehicles finding in March.) High oil prices will do even more. The first casualty of this trend is the U.S. refining industry, which has closed 4 refineries in the last few months and will probably close more. This is somewhat ironic. It was only two years ago that some people were demanding that the US build more refineries and supposedly box the ears of the environmentalists who were supposedly the main barrier to their growth.

The Good: Everybody from environmentalists to survivalists to Peak Oilers to tea partiers wants the US to "get off foreign oil." Here we go!

The Bad: Unpredictability. Repercussions range from the closing of the refineries (which could lead to higher prices during peak months) to declining US influence in the world oil market.

2. Oil is no longer the only energy game

Exxon's purchase of gas exploration company XTO shows how the major US oil companies may deal with the decline in gasoline use and profits--by diversifying into lower carbon fuels. That's a win for everyone, particularly people who breathe. A more interesting, and possibly more telling, example is giant domestic refiner Valero, which is closing a big sour heavy crude refinery in Delaware City while purchasing ethanol producer Verasun and buying a stake in Australian bio diesel producer Mission NewEnergy. But, as analysis by ClearView Energy Partners LLC points out, this is really greening their spreadsheets because Valero could be avoiding as much as $250 million/year in carbon costs while gaining as much as $500 million a year in biofuel tax credits and other subsidies.

The Good: The system might be working! When the carrots and sticks are in place to push fossil fuel companies in a low carbon direction, the great engines of capitalism will go to work.

The Bad: Fossil fuels are the devil that we know, environmentally and politically. The environmental costs of bio-fuels and unconventional natural gas could be very high. We'll need new bureaucracies to regulate, and new interest groups to figure out how much trading oil's environmental risks for new ones is worth to us. Also, we'll need to keep an eye on those subsidies as Doug Koplow does at Earth Track Inc.

3. Volatility

We just don't know what will happen when, but we know things will happen. No need to believe me, though. Read Tom Kloza of OPIS.

4. The curious substitution of "energy" for "power" at the gas station

For years gas stations have supplemented their declining income from gasoline by selling us soft drinks, chips and all sorts of fantastic stuff designed to fit in our cupholders. As tobacco sales slumped during the past decade, shelves became stocked with power bars and power drinks, among other things. Over the past year "power" has given way to "energy" in the form of the expected energy drinks (modeled on Red Bull) and weird permutations such as caffeinated beef jerky (one brand is Perky Jerky), potato chips, and oh, just dozens of seemingly revolting products that can be found on the blog "energy fiend." Again, the spectacle of capitalism at work! But should we think of the substitution of "energy" for "power" in more metaphorical terms? Is the U.S. slowly abandoning the old structures of its international power and starting to embrace our real natural resource--energetic creativity? Dunno, and I fear I'd have to eat a lot of Perky Jerky to believe it. But we can hope.

And finally, apropos of absolutely nothing but the concept of smoked meat, here is a guide to using a Slim Jim and a cucumber to cut through metal. Happy New Decade!

Dissecting the "Leaked" Danish Documents at Copenhagen

2009-12-09T11:33:50-05:00

I was reading a summary of the leaked supposed proposed Danish climate treaty when it hit me: This is what climate treaty porn looks like. There, in flagrant display, you can see all the shameful elements of the rich developed country fantasy of treaties: Lock poorer countries into half the per capita emissions of developed countries, move control of credits out of the willy nilly TJ Maxx of the UN and into the hushed boutique halls of the World Bank, and throw out Kyoto's enforcement mechanisms. As with porn porn, climate treaty porn is primarily an escape from reality, interesting as an anthropological phenomenon as well as an anchor for gossip, and destined to get a lot of attention briefly and then be discarded. (See Dave Robert's excellent take-down of the non-story in Grist.) And while there are reports that Copenhagen is in "disarray" and "all hell has broken loose" it's likely that developing countries are not surprised by the material in the supposed document, and may have suspected worse, including the tired contention that the only meaningful action on climate change is population control, which would obviously be implemented "over there" in "other countries" where couples are not plunking down the equivalent of an Escalade for in vitro fertilization.

But this does point out the fact that whatever comes out of the climate talks in Copenhagen are the end of the political world as we've known it since World War II, because China's emerging as a leader, not only of developing countries, but as an idea factory for the world. China's offer to reduce the energy and greenhouse gas intensity of its economy by 45 per cent by 2020 is not only a real and large commitment, it's a radical idea that combines economic growth and climate protection--the kind of idea that has not been put forward by developed countries. (And it is the very opposite of the "small shoes will make your footprint smaller" climate porn mentioned above.) In a hair-by-hair analysis of the significance of China's offer, Carnegie Endowment's William Chandler dispatches the naysayers: "Criticism of China's 2020 target is neither productive nor justified, and, if not a cynical ploy to avoid U.S. action, can be explained only by lazy scholarship or reflexive "China bashing."

But China's offer is even more radical in its long-term implications for the world order. As Chandler points out, some parts of China's economy are very inefficient and will not be able to make the average gains of 45 per cent. That means that some parts of the economy--particularly the strategic industries--will make much larger gains. And that means that China's industries will start to compete with the West on more than just cheap labor. This is a complete re-ordering of the post-post colonial world in economy and hegemony. Last week Skip Laitner, a senior economist with ACEEE.org, mused in a letter to colleagues, "China clearly sees energy efficiency as a huge productivity tool in ways that I don't believe we fully appreciate within the United States." He noted that China's new economic orientation suggests that China's efficiency gains will outstrip those of the US, adding, "They may also become the world's innovation leaders and that does not necessarily bode well for the U.S."

And all of that explains why some climate negotiators might prefer a fantasy version of a climate treaty.

Update: Azerbaijan's "Donkey Bloggers" Get 2 Years in Prison

2009-11-11T13:32:20-05:00

Two months ago I posted on the energy politics around Azerbaijan's arrest of two "donkey bloggers," who obliquely criticized the government. Today Radio Free Europe Radio Liberty is reporting that the two young men have been sentenced to 2 years in prison. The article contains cell footage from inside the courtroom as well as outside. The article also quotes a US State Department statement about the sentences:

"The State Department issued a statement calling the court's decision "a step backwards for Azerbaijan's progress toward democratic reform." The statement criticized "the nontransparent investigation, closed-door hearings, and disproportionate legal charges," saying they "raised concerns about the independence of the police and the judiciary as well as about restrictions on freedom of expression in Azerbaijan."

This is terrible news for the bloggers themselves, who were arrested for "hooliganism," after a scuffle in a restaurant which they say was politically motivated.

I think it's interesting to look at the actual video (also embedded above) that they made of a "donkey" giving a press conference. (It has subtitles) Reportedly, the government spent $41,000 per donkey to buy two foreign donkeys. And in the video, reporters ask the "donkey" about his flight and he talks about losing his luggage, and being fondled by Azeri admirers. When the reporters ask why he's worth so much money, he stands up to play the violin! It's a strangely adorable protest video, and one that says a lot about the delicate line government critics walk in Azerbaijan.

Obama's Energy Policy is Hardly Electric

2009-10-28T16:47:15-04:00

Imagine, for a minute, that you're the president of the United States and you have to deliver a barn burner of a speech about...electrical meters. It certainly helps if you can mention the $3.4 billion dollars in Stimulus Funding headed to the creation of a Smart Grid (and Whoo! Thank goodness for a snazzy term like Smart Grid, without which the president would be stuck with phrases like "real time electrical pricing" and "demand response"). We're lucky President Obama is willing to throw his oratory skills at a subject as pragmatically important and rhetorically blah as the Smart Grid. But the twin energy speeches Obama has given in the past week reveal the crushing lack of a "vision thing" in the administration's energy and climate proposals.

In last week's speech at MIT, Obama relieved many by finally coming out fighting on the topic of energy and climate change. His speech was one truism after another: The system of energy that powers our economy also undermines our security and endangers our planet." Sharing opportunities around the world means that we also share crisis.The world is in a peaceful competition for new sources of energy. For younger people, this is the challenge of a generation--a clash between innovative futurism and pessimism. Lisa Simpson, the cartoon goddess of wonky types, couldn't have written a better, smarter analysis of our energy issues herself.

Unfortunately, the speech was all analysis and no vision. Green jobs, new technology, "room for debate on how we do it," and, "no silver bullet," blah blah. The speech revealed the truism that the Stimulus is the bedrock of the administration's reform of energy policy--doling out $80 billion across the landscape is the most powerful tool they have--and the one that's least likely to be set upon by naysayers.

Later in the speech Obama took forceful aim at the people who will oppose changing energy and climate regulation. He said we're all "complicit" in "the pessimistic notion that our politics are too broken and our people too unwilling to make hard choices for us to actually deal with this energy issue that we're facing. And implicit in this argument is the sense that somehow we've lost something important--that fighting American spirit, that willingness to tackle hard challenges, that determination to see those challenges to the end, that we can solve problems, that we can act collectively, that somehow that is something of the past."

All true. And yet. And yet. Where IS Obama's vision? In his Smart Grid speech, he compared the electrical grid to the U.S. highway system before Eisenhower. But the reform of energy and emissions is a bigger project than the Interstate Highway System, bigger than the TVA, and will create more domestic enemies than the Space Program. (Space was a famous last frontier--no one was there. In energy, lots of big players have been here for a century, paying off their infrastructure investments, like pipelines, refineries, power plants, many times over.) It's bigger than all of these combined with the Anti-Trust movement of the early 1900's. But we don't have a story for it yet.

The key to Americans meeting all of the challenges of the past has been our willingness to believe in a Great Narrative to justify risk and sacrifice. We all know that Obama can tell a heck of a narrative, but it will mean he has to take a stand, and risk making mistakes, which he hates to do. Starting today, he needs to stop talking about the comfortable stuff like Smart Grids, and start talking big...and risky.

Photo Credit: Flickr User Ian Muttoo