Here at Fuel Freedom Foundation, we talk a lot about “fuel choice.” This is what we mean.
Over the last month, the following incidents have taken place in the Middle East:
- On July 4, a car bomb exploded in a crowded market in Baghdad, killing nine people and injuring 24. Although no one took credit for the attack, suspicion fell on ISIS, which had been responsible for previous bombings in Baghdad. The incident was described as one of the deadliest in recent memory.
- On July 12, a series of car bombs and suicide attacks killed 35 people and injured more than 100, mainly in Shi’ite neighborhoods. In the deadliest attack in the northern Shaab neighborhood, a car bomb exploded and then a suicide bomber detonated another explosion once police and crowds had gathered at the scene of the first explosion. Once again, ISIS was believed to be responsible. The incident was described as the deadliest in recent memory.
- On July 18, a truck loaded with explosives was detonated in a busy Baghdad market, killing 120 and wounding 130. The explosion occurred while the local populace was celebrating the festival of Eid al-Fitr, which marks the end of the monthlong Ramadan holiday. The explosion destroyed 50 stores and 75 cars, and leveled two buildings. It was said to be the worst incident so far this year.
- A month earlier, terrorists struck in France, Tunisia and Kuwait on the same day, June 26. No one knows whether the events were coordinated or just occurred by coincidence. In Kuwait, an explosion at a Shi’ite mosque killed 25 worshippers and destroyed the mosque. In Tunisia on the same day, a lone gunman wielding an assault rifle killed 38 people, mostly tourists, on a public beach. ISIS claimed credit for both incidents, although it did not say they had been coordinated. In France, a lone terrorist made it past security at an American-owned chemical factory, set off a gas explosion, and then decapitated a company executive and posted his head on a gate next to two Muslim flags. At the beginning of the holy month, Abu Mohammed al-Adnani, a spokesman for ISIS, had exhorted his followers: “Muslims, embark and hasten toward jihad. O mujahedeen everywhere, rush and go to make Ramadan a month of disasters for the infidels.”
Many American think all this violence started with the U.S. invasion of Iraq in 2003. In fact, it’s been going on since the 7th century. The original argument began with the succession to Muhammad’s leadership when he died in 632 A.D. There were two claimants to his legacy. The first was the Umayyad Caliph, made up of the followers of Muhammad’s entourage in Medina and Baghdad. The second was Hussein, the grandson of Muhammad, who claimed to be his legitimate heir.
In 680, Caliph Muawiyah I of the Umayyad died and tried to pass his rule on to his son, Yazid, despite a written agreement with Hussein to honor his claim to the throne. Yazid demanded that Hussein acknowledge his rulership, and Hussein refused. Instead, he mounted an army and headed toward Baghdad, where Yazid was seated. During the march, however, Hussein’s supporters dwindled, and when he arrived at Karbala, about 50 miles south of Baghdad, he only had 75 followers left. There he was met by an army of 1,000 men sent forth from Baghdad by Yazid.
Hussein deliberated for a week before deciding once again to refuse Yazid’s leadership and join him in battle. By this time, Yazid’s army had swelled to 6,000. Hussein went to battle with about 75. Hussein’s army was slaughtered, and he was himself beheaded and his head sent to Baghdad. Hussein’s followers set up a rival caliphate in Medina, however, and the schism between the Sunni Umayyad Empire and the rival Shi’ites began and continues to this day.
The Shi’ia, who eventually established their dominion in Persia (Iran), still celebrate the holiday of Ashura, in which they flagellate themselves because they were not there to help Hussein at the Battle of Karbala. As one scholar has put it, the Shi’ia are “born martyrs.” Iran is the one country you can imagine starting a nuclear war, even if it meant nuclear suicide.
All this would be only of antiquarian interest if it were not that more than half the world’s oil comes from the Persian Gulf. And all that oil is continually riding on the chance that the two sides will not disrupt the flow of oil — or destroy whole oil fields — in their endless, ongoing battles. The stakes are only getting higher. Last week, ISIS rebels in the Sinai Peninsula claimed to have hit an Egyptian naval vessel with a guided missile offshore in the Mediterranean. How long will it be before rival factions are firing guided missiles at oil tankers sailing through the Strait of Hormuz?
It is impossible to choose sides in the Middle East. For instance, ever since the 9/11 attack, the United States has considered al-Qaeda to be its prime adversary in the world. Yet last week, Americans found themselves on the same side as al-Qaeda in backing Saudi Arabia’s efforts to expel the Shi’ite Houthi rebels from Yemen. Yet at the very same time, we were negotiating a nuclear agreement with Iran that is widely perceived as supporting the Shi’ite faction in the Middle East, in defiance of Sunni Saudi Arabia. The Saudis have said they may seek a nuclear weapon themselves if Iran is able to secure one. Imagine a nuclear-armed Iran and Saudi Arabia facing each other across the Persian Gulf while our oil tankers try to escape into the Indian Ocean.
The only reasonable strategy here is to reduce our dependence on Persian Gulf oil. We still import 20 percent of our oil from the Persian Gulf, with 13 percent coming from Saudi Arabia. This is down from over 30 percent a decade ago, but we can still go further. America’s amazing improvement in oil production has played a part, but we are still dependent on oil for 80 percent of our transport sector. Substituting other kinds of fuels to power our vehicles is the obvious answer.
The Middle East tinder box isn’t going to go away during our lifetime. The obvious solution is to disassociate ourselves as much as possible. Freeing ourselves from our dependence on oil for our transport sector is the first and foremost step forward.
This is the embedded promise for most Americans in the recent article by David Gross, “Oil is Cratering. American Oil Production Isn’t.” His optimism concerning at least the near future of oil — while a bit stretched at times, and economically and environmentally as well as socially somewhat misplaced — serves at least as a temporary antidote to individuals and firms with strong links to the oil industry and some in the media who have played chicken with oil (or is it oy little?). But in a Marxian sense (bad economist, but useful quotes), Gross does not provide a worthy synthesis of what is now happening in the oil market place. Indeed, his was a thesis in search of an antithesis rather than synthesis. Finding a synthesis now is like Diogenes searching for truth in light of almost daily changes in data, analyses and predictions concerning the decline in oil and gas prices by so-called experts.
Gross’s gist is that “Signs of the oil bust abound….The price of West Texas Intermediate crude has fallen in half in the past six months. The search for oil, which fueled a gold-rush mentality in North Dakota and Texas, is abating.” Rigs have closed down, employment is down and oil drilling areas face economic uncertainty, but, despite signs of malaise, “a funny thing has happened during the bust. Oil production in America has been rising…In November, the U.S. produced 9.02 million barrels of oil per day, up by 14.5 percent from November 2013… Production in January 2015 rose to 9.2 million barrels per day. And even with WTI crude settling at a forecasted price of about $55 per barrel for the year, production for all of 2015 should come in at 9.3 million barrels per day — up 7.8 percent from 8.63 million barrels per day in 2014…The U.S., which accounts for just 10 percent of global production, is expected to supply 670,000 new barrels — 82 percent of the globe’s total growth.”
Somewhat contrary to his facts about rigs closing down, Gross indicates that America’s oil largesse results from “American exceptionalism.” Shout out loud! Amen! American oil companies are able to produce larger amounts, even when oil numbers suggest a market glut, because they play by new rules. They are nimble, they are quick, they jump easily over the oil candlestick. They rely on new technology (e.g., fracking), innovation and experimentation. They don’t have to worry about environmental or social costs. The result? They bring down the cost of production and operations, renegotiate contracts and lay off workers. “The efforts at continuous improvement combined with evasive action mean a lot more profitable activity can take place at these prices than previously thought.” The industry appears like a virtual manufacturing and distribution version of Walmart. It, according to Gross, apparently can turn a positive cash flow even if the price per barrel stays around where it has been….from close to $50 to $70 a barrel. Holy Rockefeller, Palin and Obama! Drill, baby, drill! Just, according to the President, be circumspect about where and how.
Not so fast, according to both Euan Mearns, writing for the Oil Drum, and A. Gary Shilling, writing for Bloomberg Oil, both on the same day as Gross.
Mearns’ and Shilling’s perspectives are darker, indeed, gloomy as to the short term future of the oil market. The titles of their pieces suggest the antithesis to Gross article: Oil Price Crash Update (Mearns) and Get Ready for $10 Oil (Shilling). “The collapse in U.S. shale oil drilling, that looks set to continue, must lead to U.S. oil production decline in the months ahead…It looks as though the U.S. shale oil industry is falling on its face. This will inevitably lead to a fall in U.S. production” Mearns evidently places much less value on the industry’s capacity to literally and strategically turn on the present oil market dime.
Shilling asks us to wait for his next article in Bloomberg for his synthesis of what’s likely to happen- sort of like the trailers in Fifty Shades of Grey, except his data is not enticing. His voice through words is just short of Paul Revere’s: price declines are coming! The economy is at risk! Men and women to the battlefields! “At about $50 a barrel, crude oil prices are down by more than half from their June 2014 peak at $107. They may fall more, perhaps even as low as $10 to $20.” Slow growth in the U.S., China and the euro zone, and negative growth in Japan, combined with conservation and an increase in vehicle gas mileage, places a limit on an increase in global demand. Simultaneously, output is climbing, thanks mostly to U.S. production and the Saudis’ refusal to lower production. Shilling’s scenario factors in the prediction from Daniel Yergin, a premier and expensive oil consultant, that the average cost of 80% of new U.S. shale oil production will be $50 to $69 a barrel. He notes, interestingly, that out of 2,222 oil fields surveyed worldwide, only 1.6% would have a negative cash flow at $40 per barrel. Further, and perhaps more significant, the “marginal cost of efficient U.S. shale oil producers is about $10 to $20 dollars a barrel in the Permian Basin in Texas and about the same for oil produced in the Persian Gulf. Like Gross, Shilling pays heed to American efficiency but suggests its part of a conundrum. “Sure, the drilling rig count is falling, but it’s the inefficient rigs that are being idled, not the [more efficient], horizontal rigs that are the backbone of the fracking industry.” Oil production will continue to go up, but at a slower rate. This fact, juxtaposed with continuing, relatively weak growth of global and U.S. demand, will continue to generate downward pressures on oil prices and gasoline.
Even a Marxist, who is a respected dialectician, would find it tough to make sense out of the current data, analyses and predictions. More important, if you wait just a bit, the numbers and analyses will change. Those whose intellectual courage fails them and who generally put their “expert” analyses out well after facts are created by the behavior of the stock market, oil companies, consumers and investors deserve short shrift. They are more recorders of events than honest analysts of possible futures — even though they get big bucks for often posturing and/or shouting on cable.
So what is the synthesis of the confused, if there is one? Oil could go down but it could also stabilize in price and start going up in fits and starts. Production is likely to continue growing but at a slower rate. Demand sufficient to move oil prices depends upon renewed and more vigorous GDP growth in Asia, the U.S. and Europe. Realize that very few analysts are willing to bet their paychecks on definitive economic predictions.
Saudi reserves will likely provide sufficient budget revenues to support its decision to avoid slowing down production and raising prices at least for a year or so (notice the “or so”). Market share has supplanted revenue as (at least today’s) Saudi and OPEC objectives. But how long Saudi beneficence lasts is anyone’s guess and, indeed, everyone is guessing. Deadbeat nations like Venezuela and Russia are in trouble. Their break-even point on costs of oil is high, given their reliance on oil revenues to balance domestic budgets and their use more often than not of aging technology and drilling equipment.
As the baffled King from “Anna and the King of Siam” said, concerning some very human policy-like issues, “It’s a puzzlement.” There are lots of theses and some antitheses, but no ready consensus synthesis. Many Talmudic what ifs? What is clear is that the dialectic is not really controlled or even very strongly influenced by the consumer. Put another way, the absence of alternative fuels at your friendly “gas” station grants participation in the dialectic primarily to monopolistic acting oil and their oil related industry and government colleagues. Try to get E85 or your battery charged at most gas stations. Answers to most of the “what ifs” around oil pricing and production, particularly for transportation, would be shaped more by you and I — consumers — if we could break the oil monopoly at the pump and select fuels of personal choice including an array of alternates now available. Liberty, equality and fraternity! Oh, those French.
PUMP has landed on Amazon, so viewers now have multiple ways to watch this terrific documentary in the comfort of their homes. Or the comfort of their offices, commuter trains or coffee shops. Wherever they feel comfortable, really.
PUMP is available for download onto your favorite digital device, or for viewing on Amazon’s video streaming service. The cost for purchase is $12.99 ($13.99 for high-definition). To rent it for seven days, the cost is $4.99 ($5.99 HD).
Visit the PUMP link on Amazon to learn more. If you’ve seen the movie already, post a review!
As Chris Meloni points out, it’s important to search for the right flick: It’s PUMP the Movie, not something else. But if you want to watch that Arnold Schwarzenegger movie too, go for it.
PUMP, narrated by Jason Bateman, chronicles the story of oil and how it came to be virtually our only choice for a transportation fuel. The film shows how we can use a multitude of domestically produced fuels, like ethanol, methanol and compressed natural gas, to reduce oil consumption. Displacing a portion of the oil we guzzle will strength the economy, improve national security, reduce pollution’s impact on health, and protect the environment. There’s also cool stuff about Tesla and race cars.
PUMP also is available through Apple’s iTunes store. If the big screen is the way you’d prefer to see this important film (and hey, why wouldn’t you, with such great work by filmmakers Josh and Rebecca Tickell), there are several upcoming screenings on campuses and other venues around the country, including Arizona State University, UCLA and the Utah Film Center in Moab. You can also organize your own screening!
Visit PumpTheMovie.com for more information.
If you haven’t experienced the convenience and visual quality of Amazon’s video service, check it out. Not only can you download content onto your laptop, tablet or phone, you can add it at home using certain TVs, Blu-Ray players, gaming consoles and other devices. As Business Insider writes, Amazon is nearly as popular as Netflix.
Speaking of Netflix, PUMP is coming to that service soon. Check back for a date.
The nation is lucky to have Gina McCarthy as the head of the EPA. Her background is exquisite, her intellect is superior and her sensitivity to and understanding of the environmental issues facing America is second to none. She has been a fine EPA Administrator.
Then why am I worried when we have such a surfeit of riches in one individual leader? Long before McCarthy became Administrator, the EPA began working on a new set of guidelines governing the amount and use of ethanol in gasoline sold at the pump. The guidelines, more than likely, were ready in draft form simultaneously with Gina McCarthy’s appointment and the pressure to release them was intense, given earlier promises.
Because the positives and negatives of an increase or decrease in the RFS concerning ethanol use are imprecise, no real precise judgment can be made as to the final numbers, except the admonition, similar to the Hippocratic Oath: they do no harm and, do what the EPA suggests they probably will do, improve the economy, the environment and open fuel choices to the consumer. Sounds simple, but it isn’t! The EPA is considering modification of relatively recently determined RFS.
I understand the position of the oil companies to reduce what are effectively ethanol set asides. They have a financial stake in selling less corn-based ethanol with each gallon of gas, particularly when the content of ethanol rises to E85. Declining gas sales and prices make them eager to secure lower total annual ethanol requirements. Although the data is mixed, I also commiserate with the cattle growers who indicate they have had to pay, at times, higher prices for corn because of ethanol’s reliance on corn. Similarly, I am sensitive to environmentalists who worry that the acreage for corn-based ethanol is eating (excuse the pun) into conservation land and that total greenhouse gas emissions from production to use in vehicles of corn-based ethanol is not, generally, a good deal for the environment. I am not trying to be all things to all groups, but I am trying to weave my way through an intellectual and practical thicket.
The corn farmer’s advocacy of ethanol appears rational from an opportunity-cost standpoint. Corn-based ethanol seems, to them, to support higher prices for corn. They have done well in most recent years. While the facts remain unclear (credible researchers, such as those in the World Bank, have wavered over time on their position), the arguments made by groups and individuals concerned with what they believe is the relationship between corn-based ethanol and food supply should be debated fully. I, also, am inclined to believe those in the security business who feel that increased use of ethanol will reduce our dependency on important oil and lessen the nation’s need to fight wars in part to assure the world and the U.S. a share of global oil supply. Weaning ourselves from oil dependency is national need and priority.
It is tough to judge the efficacy of projections of ethanol sales, because of uncertain economic factors and the constraints put on consumer fuel choices by the oil industry’s almost-monopolistic restrictions at gas stations (just try buying safe, less costly alternative fuels at most gas stations) and federal regulations governing alternative fuel use as well as the sale of conversion kits. There is no free market for fuel.
Responding clearly to the conflicts over the value of corn-based ethanol and the annual total requirements for ethanol is not easy and should suggest the complexity of the involved issues and their presumed relationship to one another. Maybe increased use of corn stover and certainly natural gas-based ethanol for E85 would reduce food for fuel conflicts and lessen possible environmental problems. Nothing is perfect, but the production of ethanol using alternative feedstocks, such as stover and, hopefully soon, natural gas, could make a difference in providing better replacement fuels than just the use of corn based ethanol. Like a Talmudic scholar, I frequently, instead of counting sheep, find myself saying “on one hand, on the other hand” while trying to fall sleep. (I haven’t slept more than three full hours a night since Eisenhower was president.) I end up agreeing with the King in the King and I — “It’s a puzzlement!”
The EPA’s job is a tough one. Its lowering of the total amount of ethanol required to be used with gasoline may or may not have been the right decision. I know the EPA is considering modifying its initial estimates upward. We will have to wait and see what the Agency produces and then take part in a reasonable dialogue as to benefits and costs.
I am a somewhat more concerned about the basis used by the EPA to decide to lower ethanol requirements, at this point in time, than the new rules themselves. The rationale for the amended guidelines will become embedded in rulemaking and decisions could well generate unnecessary policy and constituent conflicts.
The Agency explained its recent decisions, in part, in terms of the absence of infrastructure and the possible harm that higher ethanol blends can do to vehicle engines. “EPA is proposing to adjust the applicable volumes of advanced biofuel and total renewable fuel to address projected availability of qualifying renewable fuels and limitations on the volume of ethanol that can be consumed in gasoline given practical constraints on the supply of higher ethanol blends to the vehicles that can use them and other limits on ethanol blend levels in gasoline (the ethanol blend wall).” Note that for the most part, the EPA does not dwell on environmental, economic or security issues in its basic rationale.
The EPA seems to mix supply and demand in a rather imprecise way. Ethanol is ethanol. Traditional infrastructure (e.g., pipelines) is not readily available now to transport ethanol from corn-based ethanol producers to blenders of gasoline and ethanol. But trains and heavy-duty vehicles are accessible and have provided reasonably efficient pipeline alternatives. Indeed, their availability, assuming modifications for safety concerns, particularly concerning trains, extends strategic options regarding the location of refineries/blenders and storage capacity to lessen leakage of environmentally harmful emissions.
The EPA’s argument for lowering ethanol requirements appears to rest, to a large degree, on a somewhat unconventional definition of supply. As one observer put it, the EPA’s regulations “muddle” the definition of supply with demand. There is an ample supply of ethanol now, indeed, a surplus. The EPA’s decision will likely increase the surplus or reduce the suppliers.
Demand for higher ethanol blends really has not been fairly tested in the analytical prelude to the recently changed regulations. Detroit and its dealers seem unwilling to clearly inform consumers of the government-approved use of blends higher than E15 in the flex-fuel cars that they are now producing and or are committed to producing in the future. Oil company franchise agreements limit replacement fuel pumps at their stations, often to off-center locations…somewhere near the men or women’s bathrooms, if at all. Correspondingly, the EPA’s regulations appear to mute the Agency’s own (and others) positive engine testing on E15 and its approval of E15 and E85 blends, within certain restrictions. Earlier, EPA studies were a bulwark against recent sustained attacks by the oil and, sometimes, the auto industry, as well as their friends on ethanol and its supposed negative affect on engines.
The EPA’s analysis of demand seems further blurred by the fact that if the Agency increased the supply of approved conversion kits, increased numbers of owners of existing vehicles would likely convert from gasoline to less-expensive ethanol-based fuels.
The EPA’s background rationale for the new RFS regulations understandably does not reflect the ability to produce ethanol from natural gas, a fuel in plentiful supply, and a natural gas to ethanol conversion process that may relatively soon be available. To do so would likely require an amendment to the RFS because natural gas is not a renewable fuel. The benefits include lower costs to the consumer, reduced import dependency and likely a decrease in pollutants and emissions. It appears a reasonable approach and provides a reasonable replacement fuel until renewable fuels are ready to compete for prime market time. Natural gas-based ethanol, as well as, as noted earlier, possible use of corn stover, would lessen the intensity of the food vs. fuel debate and the environmentalist concerns.
The EPA has tried hard to develop regulations that secure the public interest and appeal to varied constituencies. I respect its efforts. It’s a complicated task. I remember being asked by the U.S. Department of Housing and Urban Development (HUD) to develop a report on simplifying its regulations for diverse programs. If I remember correctly, my report was over 600 pages long. Sufficiently said!
I had the good fortune to meet and work a bit with Dr. Edwin Land, the inventor of the Polaroid camera. We were both on an informal poverty task force created by President Kennedy. I always admired Land. Throughout his life, his comments were always thought-provoking. His suggestion that “politeness is the poison of collaboration” really challenged, and continues to challenge, many of the facilitation and leadership gurus and practitioners who sometimes seem to have invented linguistic anti-depressants. Translated: don’t get angry, hold your tongue, mind your manners, mute some of your views or make them sound less critical, try to be nice and likeable, move toward a win-win situation, compromise and, if you get intense, take a break and go out for a while. Have a beer?
Times have changed, but only a bit, since Land died in the early nineties. Many participants still go into a collaborative and/or facilitative policy process with squeamishness about being direct and honest about their concerns. Because of this fact, it takes many sessions, rather than a few, to get real, difficult issues on the table and achieve a real meaningful and honest dialogue. Bonding and game playing (real and surreal) are often seen as more important than advocacy as well as early substantive dialogue. There is often little chance to compromise because the people at the table compromise their own views before they speak. They want to be polite. We don’t really know what they really think. Building collaboration in the hands of a facilitherapist (my own word), is regrettably, at times, using everyone’s favorite term, an existential threat. It makes collaborative victories, frequently short-term ones, in light of the fact that underlying disputes and tension were not given an airing.
With this as context, let’s look at key policy and behavioral issues now confronting the nation, concerning the harmful link between gasoline, the economy and social welfare, and the environment, particularly greenhouse gas (GHG) emissions and other pollutants. As relevant, let’s also think about why it’s been so tough to move toward replacement fuels for gasoline, even though such options would benefit consumers and the nation.
Gasoline now fuels approximately 250,000,000 vehicles in the U.S. While GHG emissions from gasoline are down because of improved technology in vehicles, gas still generally spews more GHG than alternative fuels such as ethanol, methanol, electricity or fuel cells. Gasoline also fails health and well- being tests when measured against a range of other pollutants, including NOx and VOCs (volatile organic compounds). Gasoline prices, while seemingly low (only) compared to the recent past, in some cases remain higher than alternative fuels, by a significant amount, whether based on renewables or fossil fuel. In this context, most of you reading this column are neither poor nor near poor. Imagine though, that you are, and in order to work, you need find housing at a reasonable cost relatively close to your job, see a doctor or take your family to see an aunt or uncle. But if you secure these and other basics, you have fewer choices since you have to spend from between 10-15 percent of your meager income on fuel. This is a verity now for most low- and moderate-income households. Indeed, based on EIA projections of gas prices and conservative as well as liberal economists conclusions concerning job growth and income, the percentages, likely, will increase in the future. If you were a person of very limited means, what would you limit first: travel to and from work, decent housing, health care or food, etc.?
Now, none of the replacement fuels are perfect. Most, including those based on or derived from fossil fuels such as natural gas, do emit some measurable GHG and other pollutants. This includes electric cars, particularly those that do secure their power from coal-fired electric utilities. But all are better than gasoline on environmental, economic and social welfare indices.
Why then is there not a clear movement toward transitional replacement fuels? Sure, electric car sales and CNG sales are up and hydro fuels will soon be on the market. Hopefully, they all will succeed in attracting consumers. But right now, all three together constitute from 1.5 to 3 percent of sales of new cars.
Why? Well, electric cars, CNG and hydrogen fuel cars are expensive and out of reach for many American households. For some, particularly those who purchase lower-end electric cars, the miles per charge often create road fear on the part of drivers. “What if I get stuck on the L.A. freeway?” Fuel stations are few and often far between for both electric, CNG and hydrogen fuel.
New electric, CNG or hydrogen fueled cars, at least for the near future, will illustrate for us all the comparative purchasing power of the haves, the have nots and the almost haves. Hopefully someday soon, most Americans will be able to compete — price, technology and design wise — for larger shares of the automobile market. But even if they become competitive, they will not be able to generate a major dent in the number of existing vehicles that rely on the internal combustion engine for a long time. Look at the data yourselves! Given their predicted annual sales, how many years would it take before the fleet of privately owned vehicles contained a very large percentage of electric, CNG, or hydrogen fueled vehicles (perhaps as much as 50 to 75 percent or more)? I have seen figures ranging up to almost several decades from respected analysts . Clearly, if sales of hybrid and plug-in vehicles are counted in the totals, the amount of time, it takes will be lower. However, achievement of a proportionately large share of the total number of cars will still extend out a many many years.
What can we do to achieve legitimate important national objectives concerning the environment, the economy and consumer costs for vehicles and fuel almost immediately? We can move to expand the number of FFVs (flex-fuel vehicles) in the country, first, by encouraging Detroit to build more each year and second, by asking public, nonprofit and private sectors to work together with the EPA to certify more conversion kits as well as existing in-use cars for conversion to FFV status. The net results would be vehicles able to use much higher percentages of ethanol (E85) derived from natural gas or from corn cobs, husks and stalks as well as other biofuels.
The proposed strategy is a transitional one. Clearly, electric, CNG and hydro fueled cars, when able to meet market tests concerning consumer needs, should join the mix of choices at the pump. I am optimistic. For example, twenty two states led by Colorado and Oklahoma have agreed to use CNG fueled cars to replace older cars retired from their state’s fleets. Detroit with the pool of CNG cars purchased by the states has agreed make best efforts to develop a lower cost CNG vehicle. Electric cars are coming down in costs. Hydro fueled cars will likely be produced in larger numbers soon and technology over time will reduce vehicle prices.
Now back to Edwin Land. I believe his comments about politeness, perhaps a bit too absolute, reflect his and my own views that the ground rules for collaborative efforts and consensus building may impede honesty concerning discussions of difficult topics. Being polite sometimes circumscribes and weakens important strategic dialogue. Involved participants fear being direct and sometimes avoid linking their intense feelings to their commentary. They try to avoid criticism or be seen as breaking the mythology of togetherness concerning long-term objectives and initiatives. Indeed, both objectives and initiatives are often so long term, that they are vague and don’t really matter to folks at the table. So why not go along? Individuals either avoid saying things that might lead to even temporary policy, program or behavior conflict and debate.
Politeness, certainly, is generally a virtue in most circumstances. Perhaps Land went too far in his choice of words. But the term, if used to guide collaborative efforts, often serves to mask real disagreements and necessarily blunt conversation. I have done lots of facilitative sessions on policy issues between senior officials of different nations and the U.S., as well as between community leaders on education, growth, environmental, race and poverty issues. Maybe the difference is miniscule, but I like the term being “civil” rather than being “polite;” the former presumes disagreement and allows for willingness to entertain tough dialogue and the possibility that the dialogue might step, at times, on intellectual toes; the latter, when translated into behavior, often suggests a willingness to skirt conflicts regarding ideas, if it temporarily reduces the ambience at the table.
Leaders from all sectors need to help build a collaborative “coalition of the willing” among environmental, public interest, government, private sector, nonprofit and academic leaders to push for flex fuel cars and replacement fuels. The criteria for coalition selection should be relevance to the policy and political issues related to gaining the public’s access to multiple fuel choices at the pump and to secure a much larger number of new FFVs as well as existing vehicles converted to FFV status. Identification and selection should not be limited to leaders who think exactly like us. But both should be limited to individuals who care about the environment, the economic and job growth of this nation, the well-being of consumers, particularly low- and moderate-income consumers and, although not discussed above, the security of this nation and the world. Claims of absolute wisdom should be a non starter for membership.
I suspect if the leadership group is diverse enough and if reasonable ground rules concerning structure and processes are set at the outset (ones that encourage substantive dialogue and debate ), disagreements can be bridged based on the data and agreements reached on transitional replacement fuel strategies that would influence public and private sector decision makers. A good facilitator would be needed, one weaned on policy and strategy more than psychology. A nationally respected foundation, or possibly even EPA, could either support or indeed facilitate the proposed serious exercise in collaboration and democracy. Civility, not politeness, should be a principle governing the dialogue.
Since 2009, oil prices have enjoyed a prolonged period of remarkable stability characterized by annualized volatility significantly below its long-term average. And though volatility has ticked up markedly in recent months due to the escalating conflicts in Russia and Iraq, oil prices haven’t risen much above $115 a barrel and have actually declined sharply in recent weeks.
PUMP the new documentary about America and oil to be released September 19th.
I learned from Art Laffer that government is the 800lb gorilla in the economy and that investors can profit from changes in government policies. But a practitioner has to accept the framework – that government policies drive incentives as much or more than any other single driver. The charts that follow should prove that out. They show how a proposed change to the RFS ethanol mandate drove corn prices down 30% almost instantaneously. Similarly, in 2008, oil prices plunged at the mere suggestion that a moratorium against drilling on the outer continental shelf (OCS) might end.
The ‘60s and early ‘70s were exhilarating at times and depressing at other times. America seemed angry and divided about the Vietnam War, the struggle over civil rights and equal rights for women. Many of those who were against the war and supported civil rights for minorities and equal rights for women were passionate about their views and saw themselves as change agents in an America that they viewed as perfectible but not perfect. They debated, they marched, they shouted, they irritated, and they (at times) exceeded legal boundaries. Some even took personal risks by becoming Freedom Riders in the south. By the early ‘70s, they had made a positive difference. They had become legends in their own time, capped off by Woodstock — an exotic, culture-changing, music rebellion concert. America would never again be the same!
I ask myself why the effort to break up the oil industry’s monopoly at the gas pump has won intellectual interest among some, but not the passion and the emotion of the ‘60s. No one is riding in a vehicle column through the nation, stopping at gas stations to plead for an opportunity for consumers to choose among alternative or replacement fuels. No one is shouting en masse about the extensive environmental harm and economic loss caused by our reliance on gasoline. Very few are concerned with the widening income gap and increasing poverty in America. Where is the concern about the negative impact that gas prices have on the purchasing power of the poor?
Surprisingly, very few Americans seem worried that most of the wars we are fighting either overtly or covertly involve (to some degree) our or our allies’ dependence on oil and, sometimes, lead to our becoming allied with some unsavory folks. I keep remembering a relatively recent conversation I had with a special services soldier who quite clearly indicated that he and his colleagues believed the U.S. was in Iraq not because of the quest for democracy or freedom, but because of the West’s need for oil. He indicated that it was b.s. — all this talk about building democracy. Whether it’s Iraq, Syria, or Egypt, Americans themselves are having growing doubts about why we have been, are now, or might be in the future, involved in Middle Eastern wars. Many, if not most, hope that their kids are not the first in and the last out.
What is it going to take to stimulate the adrenaline of Americans when it comes to the oil industry’s ability to limit competition at the gas pump through price management, franchise agreements, and political muscle in Congress? I suspect the draft helped energize the public’s antipathy toward the Vietnam War, but for the most part, the anti-Vietnam movement secured the intense support of only a minority of Americans. Indeed, polls at the time indicated that both the women’s and the civil rights movements also had less than majority support. Yet, in all three instances, the overlapping minorities among the population wielded a big political voice, bigger than their numbers.
Why? I suspect media-savvy, bright, and committed leadership had much to do with it. Further, they were helped by the tragic assassinations of President Kennedy; his brother, U.S. Attorney General Robert Kennedy; and Martin Luther King, Jr. Growing public distrust of politicians caused by the gap between the facts on the ground and press releases concerning Vietnam increased the willingness of the American public to support the marchers. Polls began to shift on the war, civil rights, and equality for women. All three issues won increasing numbers and granted legitimacy to efforts to end the war and to assist the “have nots” and the “have less” among us. Given the federal budget authorizations and appropriations, an argument could be made that the halcyon days of the Great Society actually occurred during the first years of President Nixon. This is not heresy. Look at the budget details from 1965 through the early ‘70s.
Can we replicate the passion associated with the Vietnam War, civil rights and women’s rights movements and focus it on more democracy and freedom for consumers concerning choice of fuels? Probably not! The issues involved are difficult to grasp for the public. It is unlikely that families will sit down at the dinner table and stimulate conversation on the benefits and costs of replacement fuels or flex-fuel vehicles. Americans are not going to “March on Exxon” as they did on the Pentagon or gather at the National Mall in D.C. in the hundreds of thousands as they did for civil rights.
The term “silent majority” has been used without a hard and sustained predictable meaning in the last four or five decades. It’s a phrase that needs amplification and definition today. It could become the missing public change agent concerning replacement fuels. Coalition building among supportive pro-environmentalists, businesses, consumers, and anti-poverty groups could lead to the development of multitasked, innovative, and interactive national education program with a broad reach (e.g., town meetings, the newspaper and website articles, webinars, Twitter, movies, YouTube, etc.). Its success could convert a now-silent majority or near majority into a thoughtful, articulate majority focused on breaking up the monopoly at the pump. Success would be reflected in poll numbers supportive of federal, state, and local leaders who are willing to push for open fuel markets and increased FFVs. There would be a coalition of the willing; that is, an increasing number of Americans who would provide backbone to public policymakers who, in turn, would commit to challenging the oil companies’ understandable desire to sustain restricted fuel markets and the status quo favoring gasoline over environmentally better, safer, and cheaper replacement fuels. Their support would be conveyed through voting, and the use of innovative communication technology, rather than marching. The results would be illustrated by new, important, expanded democratically made choices by you and me, regarding fuel and vehicles — and maybe a new Woodstock composed of music celebrating America’s new freedoms. I didn’t go to the last one, but will go to the next one celebrating expanded choice for consumers, a healthier economy, and an improved environment.
Our Mission: Fuel Freedom Foundation is working to reduce the cost of driving your existing car or truck by opening the market to cheaper fuel choices at the pump.