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Drill, Baby, Drill: THE answer to Libyan oil disruption

February 23rd, 2011 · 4 Comments

Globally, humanity faces many serious challenges that relate to resource challenges. Writ large there is a calculation: # of people * resource use per capita = demand on resources.  Very simply, that last (the “demand”) is overwhelming natural resources: we are overfishing, tropical forests are disappearing, top soil disappears in dust storms, acquifer water is being pumped ever faster, our atmosphere is changing composition (notably with increased greenhouse gas (GHG) concentrations, such as Co2 and methane), and we are burning through fossil fuels in fossil-foolish means.  As to the last, the typical term is “Peak Oil” — that, in a very simple factual statement, at some point we have used up half the reserves and that will drive a peak in production (with likely a plateauing of production for some time) that will inevitably turn to declining production year-to-year.  Yes, there are plenty of carbon molecules in the ground, but ‘cheap and easy oil’ is running short and looks likely to have already peaked (or will so in the near future).   

On the other side of supply, of course, is demand and the world’s economy (humanity) has shown an ever-increasing appetite for fossil fuels with notably fossil-foolish ways when it comes to oil.  We have, almost certainly, avoided Malthusian type predictions as fossil fuels (primarily oil) have enabled The Green Revolution globally and the globalization of food supplies.  Our transportation system is overwhelming oil based. (Especially in the developed world), a tremendous amount of our ‘daily routine’ is infused with oil-based products (not just ‘plastics’). 

Thus, oil supply growth is slowing (if not already stopped) and headed, essentially inevitably, toward decline even as demand grows (through, for example, McSUV sales leading the U.S. car market … still).  Even without turmoil, the situation is ripe for economic and other disruption. 

Into this mix, we have Qaddafi’s threat to destroy Libya’s oil infrastructure as part of his effort to maintain his (and his family’s) control. 

Oil prices are rising …  And, in the face of this, the House Natural Resources Committee majority (e.g., Republican) sent out this twitter question:

We want to know your response to the @USAtoday Headline: If Libyan unrest spreads, gas could reach $5

Well, there is a simple response: 

Sarah Palin and the Republican National Convention were absolutely right in 2008 … and absolutely wrong.

During the 2008 campaign, a Palin-McCain Michigan ad had this line:

“Offshore drilling to reduce the price of gas to spur truck sales.”

Yes, we should “drill” but how many times does it need to be said? Offshore drilling is, at best, a 1 cent, 1 percent solution 20 years off to the question of gasoline prices. According to (Bush Administration) Department of Energy analysis, offshore drilling would:

  1. Lead to a 1.2 cent reduction in gasoline prices.
  2. Provide 1 percent of today’s US oil demand and 0.25 percent of global demand (about 200,000 barrels per day of production compared to 20 million barrels/day of US demand and global demand (over 80 million barrels / day)
  3. Do this by 2030 …

Yes, a 1 cent, 1 percent solution, 20 years from now would “spur truck sales” and adequately answer today’s challenge of Libyan unrest threatening world oil supply and the world’s economy.

And, of course, without risk because (as BP told us) offshore drilling is safe and clean …

There is a better way.

Yes, we need to “Drill, Baby, Drill” … but the resource to tap is one staring them (and us all) in the face that they (and too many of U.S.) seem unable to see.

Very simply, we should drill the bottomless well of energy efficiency.  We could, with reasoned and not emergency measures, reduce our oil usage (and other fossil-foolish dependencies) five percent per year (year-in, year-out) while improving the economy, putting more Americans back to work, reducing our vulnerability to foreign disruption of oil (Libya, anyone?), improving our national security, improving our balance of payments, improving our health, improving our productivity (healthier workers and students translates, directly, to better performance), and, oh by the way, reducing the damage to our planetary climate system (and other pollution impacts). 

The world’s economy hangs on the precipice and we need to act seriously … and the first measure of ’serious’ is whether we look to identify where the real problems are and where opportunities exist to address those problems. The United States has roughly two percent of the world’s oil reserves while burning over twenty percent of demand. To accelerate drilling to pull out our own oil, faster, while it remains relatively inexpensive (compared to where it will be the day after tomorrow) is not serious action. Consider this analogy: you are driving on the highway and your empty tank light comes on. Luckily, the next highway gas station is only a few miles away but you get there and see it is closed for repair. The next station isn’t for another 25 miles and you’re already concerned that you’re driving on fumes. Do you speed up to get there faster or do you drive for optimum fuel efficiency to improve the chances of arriving there. America shouldn’t be ‘accelerating’ toward an empty tank but should focus on making the tank last longer via ever more efficient uses of these resources.

For thoughts re opportunities to cut oil demand by 5+% per year, indefinitely, see after the fold.

Thus to a plan …

Off the top of the head, let’s do some thinking about what is possible as this issue is about how much of a cut is possible, within reason, to reduce U.S. oil demand.

A rough cut at the near term …

So, if we are going to be serious about reducing our oil dependencies, to reduce the risks of yet another massive dump of oil into our ecosystem, what are some elements that could have impact in the near term that would contribute meaningfully to reduced oil use within that five years.

Here are some thoughts / items:

  • Foster greater technical efficiency in today’s / existing cars (properly inflated tires, clean air filters, weight out of trunks, etc): 10% savings or roughly 1 million barrels/day. At what cost to the taxpayer? Perhaps a few $100s of millions (let’s round off to $1 billion) for an education campaign and, for example, to help subsidize air pump operations at gas stations and put air pumps at toll booths and rest stops across the nation.
  • Get feedback systems (such as a kiwi) into all existing 1996-on cars: This will foster about 10% savings due to changed driving behaviors (while lowering life lose, crashes, etc). Benefit of roughly another million barrels per day in reduced demand. Total Federal cost, assuming that 100% of cost goes to the taxpayer, in the range of $20 billion dollars. (Note: equals impact of subsidizing natural gas in transportation at, roughly, 1/10th the cost and faster impact.]
  • Tax and other policy initiatives to foster ever more telecommuting / flexible office schedules. A worker on a 9/80 drives to the job 10% less. Flexible scheduling enables people to travel outside rush hours, saving time and gasoline. A telecommuter might reduce work related driving by 100%. As a start, 100% of Democratic Party offices on Capital Hill should strive to reduce their office’s daily commuting footprint by 10%, with an additional 10% on flexible hours putting their travel outside traditional rush hour periods. Due to reduced mileage and reduced congestion, perhaps another 1 million barrels/day in savings. Cost to taxpayer? Perhaps $5 billion / year in incentives.
  • Tax / other support for car pooling, public transport: perhaps able to support another 1 million barrels/day in terms of reductions. Cost? How about $10 billion / year?
  • A smorgasbord of other items: Conversion of existing home heating oil and increased efficiency in oil burning for heating / such: Perhaps 80,000 barrels/day (or so) improvement potential within two years. Regulations/otherwise to reduce truck idling (50,000 barrels/day); air traffic control management improvement (50 barrels/day). Mandating fuel efficient car tires and car tire replacements, alone, could save about 270,000 barrels per day.
    Etc … Total savings, perhaps 500,000 barrels/day by 2013. Cost? Perhaps $2 billion/year, with full weatherization of heating oil homes half paid for by the federal government.
  • Reduce plastics demand — putting a nation-wide 25 cents cost to plastic bags at stores would essentially eliminate them and could cut demand by about two-days of US oil use almost overnight. (No reason not to do this yourself … now!)
  • Increase assistance to home and urban farming — reducing food miles (can) lead to reduced petroleum use.
  • Etc ….

There are other things to help achieve oil reduction that might not be so easy or might not be worth the same near-term emphasis, such as increased ‘renewable fuels’ (but do we really want to be talking about ethanol) and imposing the double-nickel (55 mph speed limit) which would be a massive political battle (though, perhaps a concerted effort can develop that will — on the other hand, the terror of driving 65 mph in a 65 mph zone while truckers barrel up at 80 mph …)

But, let’s recap where we are with the points above: roughly 4.5 million barrels / day in reduced US oil demand (or between 20 and 25 percent) by 2015. Cost to taxpayer: perhaps $66 billion total over five years. Whoa, horsey, that’s a huge number.

Note that we’ve done this before, as we had about a 25 percent drop in oil consumption from 1979 through 1982. This time around, we shouldn’t stop with 25 percent and we can’t afford (on so many levels) to allow the usage curve to go back the wrong way.

Let’s look at this another way:

  • 4.5 million barrels / day
  • at $50 per barrel
  • translate to $225 million per day not leaving the United States to buy imported oil.
  • That is $82 billion per year in money that stays in the United States … per year.

Of course, oil surged above $110 per barrel (Brent crude) today, thus we’re talking more like $170 billion per year in reduced import expenditures.

Going beyond 25%

The above seem to be things that could have major impact within the next several years. These serve to foster perhaps a 20-25% cut in US oil demand, without other conservation/technologies, within the coming 2-5 years. To get beyond these ‘relatively low hanging fruit’ options require more serious investment, from smart growth to more rail/public transport to higher fuel efficiency in vehicles/electrification of cars. That investment can start kicking in quickly but the impact is incremental and unlikely to have millions of barrels per day in impact.

For example, electrification of rail over the next decade will foster a direct reduction of oil use of 250,000 barrels per day due to conversion of diesel engines. It opens up the potential for 2+ million barrels per day of converting truck transport to rail and increased passenger movement on rail. But, the impact of electrification of rail on petroleum use in the next five years would be relatively neglible in the face of 50 percent reduction target.

Electrification also provides a path for getting much of America’s trucks, buses, cars off gasoline (or at least reducing that demand). (Please note, electification of transport can occur even as we break America’s coal addiction and eliminate coal from the electricity equation.) With just $50 million per year, we could spark Plug-In Hybrid Electric School Buses, starting immediately, as the new standard for school bus purchases, halving their use of liquid fuels and reducing the health impacts to America’s youth from school bus diesel fumes.

The Federal government, under President Obama, is taking a leadership position with quite serious targets for reduced oil use and targets for introducing alternative fuel vehicles (including electric cars). And, there are the substantial tax credits for individuals and businesses for purchase of EVs and PHEVs.

The funding for the Smart Grid, with V2G (vehicle to grid) research and development, which will enable this transportation electricity to come from the grid more efficiently and enable greater penetration of renewable power is a critical enabler of electrification of transport. (Note that this relates back to electrification of rail, as the rail right-of-ways can be used for a new HVDC backbone to move renewable electricity efficiently across the nation.)

Moving off fossil fuels is not only electricity. Electricity provides flexibility in options, but other options exist. Standards should mandate that all vehicles with liquid fuel be either GEM flex-fuel (100% of all gasoline like fuels (ethanol, methanol, gasoline) can be used) or diesel flex fuel (from 0% to 100% biodiesel).

For further fuel efficiency, there should be a near-term mandate that 100% of new vehicles (of all types) provide real time and longer term feedback to driver as to gallons per mile / fuel efficiency.

We should apply resources for improving traffic management throughout America to help reduce fuel demands.

Of course, we should be investing in the deployment of renewable energy resources.

For homes, something like Architecture2030 should be made national policy, a national standard, to drive down, on a constant basis, the energy requirement for America’s building infrastructure. (And, this feeds back directly to oil — due to oil-heating of homes.)

And, across the board, energy efficiency and renewable energy should receive greater research and development resources and prioritization.

And, we must move toward more sensible development concepts / practices (”smart growth”), integrating walkable lives and public transit/rail as a core part of that development so that the necessity for vehicle miles drops with each passing year.

And, so on … (For some great thinking on this, see: Winning the Oil Endgame.)

Now … there is “conservation” and the potential to go far beyond the type of things outlined above (with the very serious consideration as whether our target should be to keep the grease in the ground). But, we can do quite a bit before we hit the wall of ‘asking for shared sacrifice’ in a society that doesn’t seem to understand the term.

Back to 50%

Cutting US oil use by 50% is absolutely achievable, but not likely within five years without significant economic disruption..

By 2020? Possibly. Even probably if we choose to do so …

And, we should not stop with 50%.

NOTE: All of the figures above are off-the-top-of-the-head ballpark figures, but they are roughly in range of what is achievable. And, a version of the above appeared on 12 Nov 2008 as Shaving away at the oil addiction. There has been progress since then, such as the CAFE standards for improving fuel efficiency. We must, however, go much further than shaving at the edges.

 

Note: This builds on This Paul Krugman’s Drilling, Disaster, Denial which was both a great OPED piece to see in the traditional media and, well, a troubling read. Great because of its focus on how one of environmentalism greatest problems might, in fact, have been its successes which could have helped lead to complacency in the public, undermining efforts to build public momentum for action on climate change (among other issues). In this vein, he points to polling showing a lowering public understanding of the urgency and severity of the climate crisis. On the other hand, troubling because Krugman failed to address energy efficiency and didn’t point toward the media’s complicity in terms of fostering an ignorant public. column, see:

terrible bargain

With this comment, Krugman is right. Drilling extensively in the Outer Continental Shelf is, according to Energy Information Administration work during the Bush Administration (thus, far from oil-unfriendly), unlikely to add notable amounts of new oil to the US production until the 2020s and perhaps cover one percent of US demand in 2030, so little that it might, at the end, lower the price of gasoline at the pump by a few cents (e.g., less than one percent) in 2030 … e.g., 20 years from now. These stark facts call out the lie of those who promoted “Drill Now, Pay Less“. That 200,000 barrels per day increase in productivity by 2030 will, as Krugman notes, “will hardly affect our dependence on imports”.

We do, however, have a ready, rapid, low-risk, low-cost drilling path that would, on the other hand, massively “affect our dependence on imports”, to drill the bottomless well of energy efficiency. A simple target, an achievable target: the 5 Percent Solution. With a variety of tools, from inflating our tires properly to electrifying rail to aggressive energy efficiency programs in all places using oil burning heating to building codes fostering mixed-use communities, the United States could reduce its oil demand five percent per year, every year, indefinitely, while fostering a more robust, resilient, and prosperous society. Unlike drilling, the Five Percent Solution would have a significant impact on reducing our oil imports: eliminating them by 2030 (the time that additional offshore drilling would add just 200,000 barrels per day in additional production).

The message we should take from the searing images and reality of the devastation caused by this manmade volcano of oil should be: it is time to end our oil addiction. The Five Percent Solution offers us a path for doing so.

Failure to acknowledge culpability

The science is clear: humanity is driving climate change and, with almost the same degree of clarity, is driving us recklessly toward a quite dangerous condition of catastrophic climate chaos. Americans understand this less than virtually any other public in the world.

Krugman comments

as visible pollution has diminished, so has public concern over environmental issues. According to a recent Gallup survey, “Americans are now less worried about a series of environmental problems than at any time in the past 20 years.”

This decline in concern would be fine if visible pollution were all that mattered — but it isn’t, of course. In particular, greenhouse gases pose a greater threat than smog or burning rivers ever did. But it’s hard to get the public focused on a form of pollution that’s invisible, and whose effects unfold over decades rather than days.

Krugman suggests two major factors for the lowering concern: successes in environmentalism reducing visible pollution and “conservative” anti-environmentalism. What Krugman fails to note, however, is the direct complicity of the traditional media in fostering confusion about environmental issues and, as a consequence, lowered concern.

As Ernest Canning put it at The Brad Blog,

While there is empirical data supporting Krugman’s suggestion of an adverse impact of anti-environmental propaganda, often funded by the likes of Exxon-Mobil and others in or connected to the fossil industry, Krugman’s analysis falls short because he fails to examine the role of the mainstream corporate media, especially television, in fostering the invisibility he decries…

While the scientific community is clear about climate change, the traditional media continues to portray a ‘he says, she says’ path of ‘faux and balanced’ reporting. The fringe of the scientific community who are skeptical of humanity’s impact on the climate (and whose work has not stood up to review in terms of providing an alternative explanation to humanity and human activities being the principle driver to accelerating global warming) represents, at most, a few percent of the relevant specialists. That fringe (or non-scientist global warming denier hacks) end up being quoted in almost article related to climate change, with a couple mainstream scientists balanced by a denier or two, which creates an impression of uncertainty and debate about the science that misrepresents what is going on in the scientific community. The editorial pages are filled with misrepresentations by the likes of George Will, Sarah Palin, and Bjorn Lomborg. To be clear, the ‘liberal bastion’ of The New York Times is far from an innocent in this regard, a prime example of culpability is the continued misrepresentations of, for example, the Times’ John Tierney.

An important point about political positioning …


Krugman commented the other day,

For the gulf blowout is a pointed reminder that the environment won’t take care of itself, that unless carefully watched and regulated, modern technology and industry can all too easily inflict horrific damage on the planet.

Will America take heed? It depends a lot on leadership. In particular, President Obama needs to seize the moment; he needs to take on the “Drill, baby, drill” crowd, telling America that courting irreversible environmental disaster for the sake of a few barrels of oil, an amount that will hardly affect our dependence on imports, is a terrible bargain.

Leadership is key. Sadly, as Krugman noted, Obama is in a difficult position to seize the mantle as

It’s true that Mr. Obama isn’t as well positioned to make this a teachable moment as he should be: just a month ago he announced a plan to open much of the Atlantic coast to oil exploration, a move that shocked many of his supporters and makes it hard for him to claim the moral high ground now.

Would President Obama (and the rest of the Administration and Democratic Party leaders) be in a better position to “claim the moral high ground now” and make the call for ending our oil addiction if there hadn’t been support for offshore drilling in the State of the Union address and, even more strongly, in the months that followed? The President was, simply put, wrong and this error makes it harder to be right now.

There are only so many words …
Krugman’s piece was just that: a piece. There is a limit to how much can make it into so few words. And, it was a piece worth reading. It was, however, a piece with significant gaps that merit filling:

1. Acknowledgment of culpability

2. Embracing The Five Percent Solution

Tags: Energy · energy efficiency · environmental · government energy policy · oil · peak oil

4 responses so far ↓

  • 1 Mark Durrenberger // Feb 28, 2011 at 9:52 am

    Can you provide the link for the oil chart showing the contribution from off-shore drilling?

    It comes from Architecture 2030. For example, here.

    Thanks,
    Mark

  • 2 bob poller // Mar 10, 2011 at 7:24 pm

    I’m amazed at the response, or lack of. Since I listened to the review of HOT on NPR the other day, I’ve talked to about a dozen people, who nod and say it’s a problem…..and just go on. Somehow, someway, interested people must motivate the uninterested, to taking action. Americans’ way of life, standards and traditions are at peril. It’s all changing, and like someone said, if HOT happened suddenly, we would all react….but it’s like cancer which grows slowly, a little every day…and we either don’t notice the little-daily-changes or just accept…..more or less rain, changes in regional weather patterns, storms, heat index, and all the effects on growing food, living patterns, water quality,and so on and so on. This is a small planet. Saving it is a major effort…
    It’s more than a logo and statement on bumper
    stickers. If 70-75% of the worlds population lives near the seas, a lotta people are going suffer real fast, real big. Noah, start printing ship plans. Al Gore, come on….leadership is needed now

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