Could the Qatar clash push gasoline back above $4?
Could the Middle East’s dispute involving Qatar and several of its neighbors lead to higher prices at a pump near you? Absolutely. Read more →
Posts
The connections between oil and terrorism
Our over-reliance on oil has dangerous consequences. When you pay at the pump, your hard-earned cash isn’t just going to oil companies — it also fills the pockets of terrorists and hostile regimes that harbor dangerous ideologies. Read more →
Oil, petrodollars and war. Does the U.S. need to permanently police the Middle East?
The U.S. interest in going to war or supporting war efforts on behalf of our “democratic” allies like Iraq, Qatar, the United Arab Emirates, Egypt and Saudi Arabia is not based, as said by some political leaders, on converting those countries to democracies or providing their citizens with increased freedom. Neither is it, primarily, aimed at reducing terrorism possibilities here at home. For the most part, it is instead aimed at protecting the U.S. and our allies’ interests in oil and stability in some of the most corrupt, autocratic oil-producing states in the Middle East.
Surely, recent history indicates that use of patriotic and compassionate language reflecting America’s historical ethos to justify our actions often wins initial public support for “Operation This” or “Operation That,” but as conflicts drag on and U.S. soldiers, sailors or marines suffer physical and emotional wounds, the gap between articulated justifications and reality becomes clearer to the public. When the fog of war or near-wars lifts a bit, support for U.S. military activity, often becomes muted among the citizenry.
Concern for protecting oil resources, production and distribution has been, and is currently, a paramount objective of the U.S. The U.S. and its allies have helped overturn governments, remake global maps, redefine national or tribal borders, create new nation states and abandon old ones and dispatch national leaders. Contrary to Gen. Powell’s admonition, we sometimes have failed to own the disastrous results of the wars that we have fought (Libya, Iraq, etc.). Based on our own desire for oil, we have tolerated sometimes exotic and many times terrible behavior among private oligarchs and despotic rulers, which, regrettably, often, escapes coverage in text books and in the media. Clearly, the link between our large-scale addiction to oil and its negative political, social and economic consequences in several Middle Eastern countries lacks sustained attention in our public policy dialogue.
The importance of oil and the U.S. willingness to go to war or engage in covert activities to protect it has been intensified by the relationship between petrodollars and the U.S. economy. Since 1944 at The Bretton Woods Conference, the global reserve currency has been the good old U.S. dollar. First, gold was the back-up to the dollar. As reported by the Huffington Post, the dollar was pegged at $35 to an ounce of gold and was freely exchangeable. “But by 1971, convertibility of gold was no longer viable as America’s gold resources had drained away. Instead, the dollar became a pure fiat currency (decoupled from any physical store of value) until the petrodollar agreement was concluded by President Nixon in 1973. The essence of the deal was that the U.S. would agree to military sales and defense of Saudi Arabia in return for all oil trade being denominated in U.S. dollars.” We as a nation committed to go to war in return for ostensible economic benefits and access to oil.
Was it good for the American economy? Sure, at least in the short run. The dollar became the only currency for energy trading. All foreign governments desiring to secure and trade for oil had to hold U.S. currency. The dollar was easily converted into barrels of oil. As the Huffington Post indicated, the dollar costs for oil flowed back into the U.S. financial system. What a deal!
Recently, lower U.S. interest rates, a troubled, slow-growing U.S. economy and the rise of oil-shale production in the U.S. has muted the almost-absolute, four-decade direct relationship between the dollar, and other nations’ need for oil and or export of oil. Instead of “next year in Jerusalem,” some nations like China, Russia and even France and Germany have indicated next year either a return to gold or the use of their own currencies as a peg to trading. However, the petrodollar still plays an important role in the exchange of oil in the global trading system. Its demise, as Mark Twain suggested about reports of his death, is, if not greatly, (at least) somewhat exaggerated. I suspect the petrodollar will be with us for some time.
Our nation’s willingness to militarize support of countries that depart radically from supposed U.S. norms of global behavior (encoded in the U.N Charter and other international agreements), because of their oil resources and the post-World War II emergence of dollar-based trading in oil and its benefits, has muddled U.S. foreign policy. Critics have questioned our not-so benign initiatives in countries throughout the Middle East and, as a result, they have raised issues concerning supposed American exceptionalism.
We have more than just a Hobson choice (that is, there is no real choice at all) if we choose to break from oil dependency. Increased U.S. oil production to secure profits and reach demand will still require both importing and exporting oil. This fact, coupled with the desire to keep the dollar the key oil-trading denomination, will sustain U.S. entanglements and the probability that we will continue to play oil policemen in many places.
A different future could be achieved if we took the president seriously and tried to “wean” ourselves off of oil. Paraphrasing liberally and adding my own meaning, Léon Blum, former French leader, “Life doesn’t give itself to one [nation] who tries to keep all of its advantages at once…morality may consist solely in the courage of making a choice [between energy sources and fuels].” The U.S. has not had the political guts yet to really focus on converting from an oil- and gas-based economy and social structure to an alternative energy and fuel-based one (e.g., natural gas, ethanol, methanol, biofuels, electricity and hydro fuels). Such a strategy would allow consumers greater freedom at the pump. It would be fuel agnostic and let consumers pick winners and losers based on cost, and impact on the quality of their lives and the nation’s life. We know that if we do make alternative energy and fuel choices now, based on equity, efficiency, GHG emissions and pollution reduction criteria, we can secure important environmental, economic, social and security benefits. To fail to act is an act itself, one that will harm the nation’s efforts to become the country on the shining hill and pave the way for other countries and itself to access a better, more peaceful future for present children and their children.
Photo Credit: www.defense.gov
Ruminations on oil donations, foreign nations and replacement fuels
The “Old Gray Lady,” The New York Times, did it again….its recent article indicating the extent of government funds from foreign countries supporting so-called independent think tanks and universities in the U.S. was enlightening and was also clearly in the public interest. Most of us policy wonks suspected or knew what the Times indicated on September 7. “More than a dozen prominent Washington research groups have received tens of millions of dollars from foreign governments in recent years while pushing United States government officials to adopt policies that often reflect the donors’ priorities…” The money is transforming the once-staid, think-tank world into a muscular arm of foreign government’s lobbying in Washington. And it has set off troubling questions about intellectual freedom — some scholars say they have been pressured to reach conclusions friendly to the government that is financing the research.” In this context, NATO, European, Middle East and Asian nations (e.g., Norway, Germany, Qatar, Saudi Arabia, United Arab Emirates, Japan, etc.) have been visible funders according to the Times and other media..
Before readers become holier than thou about the perception of perversion in foreign governments that link their support to what they want done regarding research and lobbying (implicit, if not explicit), they should know that the grant system in the U.S., in general, is not free of, at times, donor efforts to influence and/or sometimes pressure, whether it involves foreign governments, all levels of government in the U.S, business or foundation grants. Both have been and will remain the way of doing business.
I suspect attempts to influence or pressure research institutions or scholars are sometimes worse in social science research than in the sciences or engineering, where data, analysis and results can often claim at least some visible and quantifiable correlation or causation relationships. A donor’s ideological commitments also may predetermine and lessen the need for donors to try to negotiate the outcomes of grants or gifts. Not many liberal academics will apply for research money from the Koch Family Foundations, not many conservatives will likely go to the George Soros Open Society Foundations (OSF) for money.
Life is complicated for donors and recipients. Free speech and the free flow of ideas are embedded in the U.S. creed and the nation’s constitution. Truth in advertising in research grants and their products, a mythological spin-off, is often muted by the overwhelming influence and importance of money and the need for it, in light of fund shortages. However, the American public, for the most part, cannot easily separate the respected status of the Brookings Institution, the University of California, the Center For Global Development, the Center for Strategic and International Studies, etc. from their willingness to accept what seem clearly donor advocacy grants and subsequently to participate in what appears, to many, to be advocacy research and lobbying. The involved leaders, not always the researchers, of recipient institutions will deny the fact that research money sometimes comes with a price concerning legal, moral and often spoken words in grantor testimonials or contracts concerning obligations to search for the truth and increase wisdom concerning policy and program options.
Oil and oil-related companies and Middle Eastern nations seem now to be among the biggest givers and perhaps receive the biggest “take back” benefits. They fund schools and centers as well as analyses in and at major universities and independent think tanks, both within and outside universities. They have also funded “independent” scholars, chairs and specific RFPs (Request for Proposals) describing general and sometimes relatively specific areas of energy or transportation and fuel-related research. Significant oil and foreign money for policy-related research is also funded through third-party groups, which often mask the source of donations. Donors, understandably, expect benefits from supported research — at least consistency with and, in some cases, advocacy for their economic, social welfare and environmental objectives.
Perhaps one of the more egregious relationships concerning policy or program research involved the Coordinating Research Council (CRC), generally a mouthpiece of and also funded by the oil and automotive industry. Its relatively recent study debunking of E15 reflected the views of their sponsors — again the oil and auto industries. It indicated that E15 significantly harmed engines of many vehicle classes. The study was legitimately criticized by the EPA and others concerning methodology and content. Indeed, it and its implications concerning use of E15, was refuted in part or whole by the EPA’s more extensive analyses, by the National Renewable Energy Laboratory (NREL) and by other respected groups and individuals, some even associated with the auto industry. CRC’s efforts stimulated analyses and similar findings by groups like AAA— again based on even weaker methodology and unknown funding (likely mostly membership dues). Critics have pointed to AAA’s tenuous policy links to members and its long-time support by and of the auto and oil industries. Remember, more cars result in more gasoline use and increased ownership secures more AAA memberships.
Forget the legitimacy or illegitimacy of the proponents and critics of research concerning E15, or for that matter E85. At most times, policy choices and behavior are not based on perfection concerning data and analysis.
What concerns me the most is the predominance of oil and its friends’ money and the lack of transparency concerning funding sources and grant and gift requirements or constraints — both informal and formal.
Like the Times, I am also concerned about the dividing line between education and lobbying concerning grants and gifts provided by oil companies and, foreign nations. Lobbyists are required to register as such. Most think tanks and universities do not see themselves as lobbyists and do not register.
Industry, some foundation and even government-supported research grants sometime come with strings attached. Even if they didn’t, the results of paid research into complex issues are generally not conclusive and can be helpful in stimulating dialogue, if it’s matched by research initiatives funded by donors with different perceptions. Bad, or mediocre research funded by advocates, like speech, shouldn’t be countered by censorship, but by efforts to execute better research and by initiatives to provide to policymakers and the public with countervailing views and analysis to generate dialogue and debate.
I am not a purist. There is no chance in hell that the basic system of what I call advocacy grants and gifts now in existence will end. But public policymakers should insist on transparency as to funding sources and research methodology. Key advocacy studies likely to affect public sentiment and decision maker views concerning replacement fuels and gasoline should be granted, at least some form of even informal refereed reviews. If I could figure out an easy way to do it, I would define alternatives that would provide some reasonable equivalency concerning research funding. They would assure Americans that all key replacement fuel options are examined fully and are compared to gasoline. The research on replacement fuels should not be submerged by foreign nation or internal U.S. oil interest funding. But I don’t get paid enough nor am I smart enough to think this one through, at least until the next column. Maybe you can help me? Paraphrasing my favorite oil scholar, Socrates, unexamined studies funded without independent review, only by the oil industry or its Middle East friends and colleagues, are often not worth having or debating. Peace.
