BEGGING, WHINING, AND GETTING SENSIBLE ABOUT OIL
What an upset! Oil-burning New Englanders watch their heating bills
double.
Truck drivers protest higher diesel costs by jamming Washington streets with
their rigs. Congress, in its wisdom, offers to combat a sixty cent jump in
gasoline price with a four cent tax cut. Our Energy Secretary runs
around the
Middle East begging for just a measly couple of million more barrels a
day of
oil, none of which can arrive in time to ease heating costs, or even in
time to
bring down the cost of driving SUVs on summer vacations.
What pain! What agony!
OK, I'll stop; there's no need for me to be sarcastic. Plenty of other
commentators are doing it for me.
They're pointing out that present prices look bad only because we got
way too
comfortable with an unexpected drop over the past few years to prices lower
(after correction for inflation) than the younger generation has ever seen.
They remark that these prices we're whining about are still less than
half of
what our colleagues and competitors in Europe and Japan have been calmly paying
for decades.
They tell us that we use twice as much oil per capita as any other industrial
nation. Our growing population, multiplied by increasing miles driven per
person, multiplied by vehicles that get fewer miles per gallon, means
that our
oil consumption rose last year by the same amount as all of Asia, which
has ten
times as many people.
If, they say, you're a homeowner griping about your fuel bill and also a driver
of one of those gas-guzzling SUVs, stop blaming the Arabs. You're doing
it to
yourself.
The truth is, it took a combination of ourselves and the Arabs to make this
price spurt.
OPEC energy ministers, as opposed to our own, have a sensible long-term
policy.
Their aim is to keep oil price as steady as possible, right around $25 per
barrel. That keeps their revenues rolling in and their governments
funded.
Furthermore it's a high enough price to keep consumers from gobbling up SUVs,
raising oil use, and draining OPEC reserves too fast -- OPEC energy ministers
want to be sure their governments will be funded long into the future.
At the
same time it's a low enough price to keep energy-conserving and solar-based
alternatives uncompetitive.
Very smart. If you were an OPEC energy minister, that's exactly what
you would
do.
But OPEC doesn't control all the world's oil, only about a third of it,
and it
can't always maintain discipline among its own members. So over the
past few
years too much oil was pumped worldwide. Prices fell to those
historically low
levels we accepted as if they were our birthright. Last March OPEC
finally got
it together to reign in the pumps by 1.6 million barrels per day (mbd)
-- that's
in comparison to the 74 mbd the world was using at the time. Just a two percen
t
cutback. A minor price correction.
It took all this time -- about eight months to the heating fuel tanks,
about a
year to the gas pumps -- for that small cutback to percolate through the
refineries and the delivery and storage systems so we finally noticed and
panicked. Of course anyone who was paying attention could have known a
year ago
that it was coming. And any production increase now will take equally
long to
work its way through the system.
What neither OPEC nor anyone who was paying attention could have known a year
ago was that OPEC overshot; it cut back too far. The price went up over
$35 a
barrel this March, higher than OPEC intended. That was largely because of
America's orgy of SUVs and light trucks, spurred on by those low gas
prices.
While OPEC cut back by 1.6 mbd, our oil consumption soared in just one
year by
0.6 mbd.
The price would have soared even higher, but for the fortunate fact that our
friends in Europe and Japan cut their oil consumption a bit last year.
They did
so because they never saw that low price. Their governments, as opposed
to our
own, have a sensible long-term policy. They maintain a high oil tax in
order to
keep the price high and steady, balancing out the world market's ups and
downs.
That gives corporations and consumers a predictable energy cost. It
makes that
cost high enough to encourage the very technical adaptations -- from energy
efficiency to wind power to hydrogen fuel cells -- that will lead their
economies to the post-petroleum future.
That is the only policy that can foil OPEC. Our own policy, in
contrast, tosses
us around with the market, induces us to make very wrong decisions about energy
technologies, and brings our Energy Secretary begging to OPEC's doors.
Why is our government the only one in the civilized world with a stupid,
short-term energy policy? Why do our elected officials consider a
European or
Japanese-type energy tax not only unpassable but undiscussable?
Because our politicians are owned and operated by, among others, oil and car
companies who pay for campaign costs and profit by the consequences.
It's just incredible how much it costs us not to get serious and tough about
campaign reform.
(Donella Meadows is an adjunct professor at Dartmouth College and
director of
the Sustainability Institute in Hartland, Vermont.)
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