This is the first post in a series about energy.

The title of this piece is misleading, but I really liked the reference. A more appropriate title would be, “Oil Oil in Some Place, But Not Others And Even Then a Finite Supply, And Yet We Keep Drinking.” You can see why I chose the title I did.

I am currently in the research phase with the “oil issue.” There seem to be very distinct battle lines drawn over this issue and, as would be expected when battle ensues, there is not a clear picture of what the “truth” is. More accurately, both sides are right about the other side being wrong. As often is the case, each side of the debate is as bad as their enemies say and as good as their friends say. But one thing is absolutely clear, oil is a finite resource. The oil supply will dry up completely at some point. All the other issues seem to be in murky waters. I have no affiliations in this debate. I see both sides as having very good points and I am still undecided. That’s where the research comes in. I just finished reading a very interesting Op-Ed piece in the Wall Street Journal that made a great point:

This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don’t want more production to increase supply. They want oil “independence” but they’ve declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?

Election-Year-Stupid-Time

There does seem to be a great deal of confusion among the candidates. Yes, why does Obama support profit taxes in an attempt to reduce the price when it seems that that would actually raise the price? And why would he want to lower the price and thereby encourage consumption? And why would Clinton support both a windfall profit tax and eliminating the 18.4 cent gas-tax? And why does MCain support eliminating the gas-tax when it will save the average family next to nothing, but greatly reduce the monies available for highway maintenance? Oh, that’s right, they just want to be elected. It’s “election-year-stupid-time,” a time in which the candidates will say anything at all in order to get our votes. Presidential candidates are not, in general, idiotic, but for some reason they have no problem saying idiotic things to get elected. What ever happened to a candidate who just came out said what they stood for regardless of the results? McCain used to be that way. Clinton is the antithesis of such a politician. And Obama is starting to show some of his political motives as well. I want to choose between two or three or twenty candidates who state exactly what their philosophies are and what that would mean in practice. And I want those candidates to debate. Why is that so much to ask for?

Gas, Cash and the Presidential Bash

So what are the issues surrounding oil? On the one hand we hear that we need to be “oil independent,” but on the other we hear that we should not drill on the coasts, in ANWAR, etc. So why can’t we come up with legislation that will have us oil-free by X date and in the meantime try to limit consumption and draw on our own supplies? And why use a “windfall profits tax” if we are already gaining more tax revenue from the profits of these companies? These are some of the issues sticking in my head. All around you can smell the money. The oil companies are making truckloads of dough off the current demand, the politicians accept trunk loads of dough from the oil companies for their campaigns and and everyone wants to save fist-fulls of dollars at the pump. Who will best lead us in a direction that will help the American people? I’d really like to know. But I guess first we need to start at the beginning.

Why Do We Need Oil?

Before we can even begin to look at the issues surrounding oil we need to come to a clear recognition that we need oil in order to maintain our current civilization. Note that I am not saying lifestyle. I am not claiming that we need oil because we want to live a certain way. We need oil because our civilization would collapse without it… for now. Oil is not just in our cars. Oil is in practically everything. [2] [3] This leaves us with two choices. The first choice is to use up all the oil on the entire planet and after then start thinking about alternatives. The second is to find alternatives now. I will admit my bias; I think we should start finding alternatives now. In the meantime, we have no choice but to use oil. If oil disappeared from the planet earth today, our societies would seize. It is an unfortunate truth that, like our cars, oil lubricates many facets of our lives. Abandoning oil outright is not a solution. However, can we minimize our dependence on oil while making the leap to renewable and synthetic resources? And what are the issues surrounding oil that make it so volatile?

Availability and Environment

Availability

There seem to be two major areas of conflict with this issue and a number of considerations that arises from each. The first conflict is Availability. Simply put, there is not an endless supply of oil. From this conflict arise the considerations of cost and national security. As far as costs, as with all markets, a limited supply with a high demand leads to an increase in value. This shows up at the pump as $4/gallon in May 2008. The cost of gasoline trickles down to the cost of flying, transporting goods and conducting business in general. What used to cost a couple dollars to ship in 2000 ends up costing twice that in 2008. There is no way of avoiding this trickle down effect, other than by increasing the supply, which is possible, but may have consequences on the environment. We can also reduce the demand through conservation, but our ability to do this is limited to our national and state laws.

The limited supply also leads us to the problem of National Security. Some would argue that that is why we went to war in Iraq. From what I can tell, it works like this:

Thesis- we don’t have enough oil to run our country

Antithesis- we need oil from other countries

Synthesis- we get involved in the affairs of these countries

It is no surprise to anyone that we are constantly involved in the affairs of the Middle East, because that is where the greatest supply of oil is, but is that where we get our oil from? Well, yes and no. We get less than 1/3 of our oil imports from the Middle East [4] [5]. We actually import more oil from Canada and Mexico than we do from the entire Middle East. Keep in mind that imported oil accounts for 60% of our total usage [4]. This is not meant to down play the role of oil in our decision making where foreign policy is concerned. Certainly the oil from the Middle East is significant and directly effects our economy. Hence why the price rises when OPEC decreases production. That being said, we import quite a bit of our oil from Venezuela, directly funding a Marxist totalitarian, and we haven’t invaded. Though of course some argue that we were behind the attempted coup a few years ago [6] [7] (they generally don’t mention Chavez’s attempted coup in the early 1990s).

Regardless of the actual policy decisions of the US government, there is no doubt that “we” are more interested in the politics of the Middle East than Zimbabwe (for example) because we have a vested interest. That interest is, in part, oil. Some will argue that that is our only interest. Some will argue that Big Oil has its eye on the oil fields in Iraq and Iran and that the politicians are simply puppets of the oil companies. I don’t share this idea. While I think that donations from the wealthy and special interest groups does have undue influence on the policies of the nation, I don’t think that there is a grand conspiracy. While some will point to the huge profits that American companies will make from the Iraqi oil fields [9] [10] [11] [12] [13] [14] [15]. Of course others argued that the war was not over oil, but over Israel [16]. In the end, the conspiracy theorist are certain that the war is over anything but WMDs and the reality that the WMDs were not there makes Bush look all the more guilty in their eyes. Some will push the logic to include the war in Afghanistan [17]. The administration was wrong about WMDs. There is no direct evidence that they actually fabricated any information, but they were wrong and largely due to seeing what they already believed, just like the conspiracy theorists. But let’s not forget that the Dems thought the weapons were there too . It is unfortunate that the opponents to the war spent so much time arguing how there were ulterior motives instead of taking on the WMD argument directly. They were right that there were no WMDs. They should have pushed harder for the inspections to continue and spent less time drawing Hitler mustaches on Bush. But buck stops with Bush and to be fair, even Alan Greenspan thinks the war was over oil and he is far from being a conspiracy theorist. But this post isn’t about the war in Iraq, so I’ll move on. If you want to know what I think about Iraq, go here. [FYI, I am not a fan of Bush, but you don't need to vilify him to disagree with him. For some of my thoughts on the Bush years to date, go here and here and have a look at my other posts as well.]

Regardless of any “oil conspiracy” there is reason to reduce our dependence on the oil of volatile and/or unfriendly regions. Energy “independence” is something that all three candidates have supported [21] [22] [23]. How we become independent is a matter of debate. There seem to be only three options: 1) conserve enough that we don’t need it or 2) increase the domestic supply or 3) find alternative sources.

Environment

When decide which way to go in becoming “independent,” we must consider our second major conflict area, the Environment. Here we have Global Climate Change, preservation of natural habitats and the delicate balance of ecology. The Earth climate is changing. Humans may be accelerating the rate of change and there is solid scientific data to support that claim. It is possible that we are wrong about human influence, since there have been at least 4 major ice-ages on Earth, but the cost of taking action is not as great as the cost of inaction if we are indeed accelerating the process. The concern that has been raised with international agreements is that they will hurt the American economy. That is why Bush has insisted on an agreement that included developing nations. As the US seeks alternatives we must keep Global Climate Change in mind. We must also keep in mind that “small” things that we do effect the ecology in ways we never imaged. For instance, we had to reintroduce the wolf to Yellowstone National Park because they were more important than we initially understood [26]. The Earth has a delicate balance that Humans do not fully comprehend. We must be careful as we move forward so that we don’t make ourselves extinct accidentally. Keep in mind, however, that 99.9% of species that used to exist are now extinct and we had nothing to do with the vast majority of these extinctions. Someday we’ll be on the list, but let’s not hurry. So any energy sources for the future needs to take the environment into account.

Debate

A real debate of policy will have to address each of these issues (and more) or it will be incomplete. Where the candidates stand philosophically cannot be fully represented in a debate, so it’s necessary for their websites to lay out some of the general principles that they hold. Anyone interested can find the websites of Obama and McCain in my blogroll.

Three Options

Conserve Energy

Increase Domestic Supply

Alternative Fuels

Here's my guess. If the economy goes up, Obama's rating will too. If the economy goes down, so will Obama's rating. Now let's watch it right here. It may not happen immediately, but it will usually follow.

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