Five Percent: Conserve Energy

Climate Change Is Important: Energy Conservation is the First Step

March 5, 2011

Democracy and Oil Do Not Mix

Category: Climate Change,Economics,Energy Independence,Policy,Political – Tom Harrison – 8:32 pm

Oil and Democracy

Oil & Democracy: A Costly Mix

We are torn here in the US.

We need the oil, and we need to support democratizing movements in the world. And these days, for the right reasons, these two goals are once again at odds.

The precarious balance between the two is getting more so. It won’t get better.

In the last Presidential election the alarmingly high price of oil was framed as energy security, but it’s not about energy. We have plenty of energy in gas and coal. And nuclear and solar and wind. Plenty or energy.

Oil is special because we don’t have easy substitutes at the moment. Liquid fuel is what we run on today. It is technically possible to convert most transportation to alternates, notably natural gas, then electric. But that is happening glacially.

By 2007 it was pretty clear that oil prices were on the rise again, and this was an issue in the election. What if we had started “doing something” in earnest then? The single thing we have done? CAFE standards coming into effect over five years. Woo hoo.

But as we’re seeing again, oil economics is non-linear. Either prices are “normal” or they are out of control. When prices rise, non-rational behavior occurs. People buy hybrids. Laws get passed. Investors invest. And after the correction, these responses seem like over-reaction.

They are. We behave non-rationally (in oh, so many ways).

These days the world is nervous about oil so prices are rising — $104/bbl last time I checked.

So if all the oil dictatorships became democracies (at least with regards to oil as a free market commodity) what would happen? I predict first a race to the bottom, with now carefully controlled reserves being exploited for cash and leverage. Then, increasing instability. Today’s prices are steady at $100/bbl because OPEC and USA set aside reserves. But new, free countries sitting on oil will liberate the oil, too.

Again: we don’t have an energy crisis. We have an oil crisis. We have a leadership crisis. We need to make more energy we can use, and that means making an actual energy policy that considers not just what is expedient now, but what is strategic. But in this absurd effort to drastically reduce government spending everywhere that helps without having the balls to address the real problem, we’re squeezing out any opportunity to make even minor incremental progress on our energy policy.

What is scary is that for these next two years at best we’ll backslide on progress made so far. To be sure, some of the forward progress will be “sticky” — CAFE standards, EPA with teeth, some progress in R&D, but at the end of 2010 many important subsidies expired. And meanwhile, voices are calling for “drill baby drill” (a pointless pissing in the ocean, hopefully not pissing oil, as with BP last summer).

What is really scary is that this current oil shock (combined with “deficit reduction”) will set back legitimate economic gains and make people think Obama is to blame. If we elect Republicans in 2012, and this seems probable, the US will take no action and watch as we slip further into reactive chaos.

Arguably, as the US becomes an increasingly secondary economy, China, which seems ironically more pragmatic about oil and climate change may lead the world out of this mess.

That’s not the route I would choose. But inaction and dithering by the US is a defacto abrogation of power and leadership.

Or, we could lead. Democracy and oil don’t mix.

Photo credit: expertinfantry via «  –  »

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