November 08, 2024
Column

Serious oil debate needed now more than ever

Did you gasp when you sat down to pay your first home heating bill of the winter? Would you agree that it’s time to think about the future prices and availability of oil, natural gas and gasoline?

We are acutely dependent on oil and gas. Petroleum products, including oil and gas, provide 60 percent of the energy we consume within the home and almost 100 percent of the energy we use for car and truck transportation. Oil alone accounts for about 40 percent of our total energy needs.

Increasingly we are dependent on foreign supplies of petroleum. In 1940, the United States produced 63 percent of the world’s crude oil and we exported oil all over the world. In the 1950s we were still self-sufficient in oil, but now we import 60 percent of the crude oil we consume. Meanwhile, since the 1950s the price of crude oil has increased from about $16 a barrel, expressed in 2004 dollars, to around $60 a barrel.

History shows that both our national security and our needs as consumers depend on who controls energy supplies and how the energy markets function.

Since the 19th century, companies and nations have tried to control the oil market through raw economic power. Companies, starting in the 1860s with John D. Rockefeller’s Standard Oil, have tried to monopolize international oil markets and raise oil prices. In 1911, the U.S. Supreme Court finally broke the Standard Oil monopoly. In 1960 oil-producing countries founded a cartel, OPEC, to raise the price of oil, and OPEC has

succeeded in doing just that.

Countries have fought wars to control oil supplies, and often the countries that control oil supplies have won their wars.

British policy in World War I was to defeat Germany by blockading German ports to deny access to oil. The British Navy succeeded, using ships recently converted from coal to fuel oil.

A leading factor in the Japanese decisions in 1941 to bomb Pearl Harbor and invade the Dutch East Indies was a desire to secure the oil supplies it needed to wage war. Japan lost the war partly because the U.S. Navy destroyed its oil tanker fleet, starving the Japanese military of East Indian oil.

And surely one of the reasons the United States attacked Saddam Hussein’s armies, both in the 1991 Gulf War and in the present war, was to prevent Saddam from controlling the oil fields of Kuwait and Saudi Arabia.

This history shows that we cannot simply leave our energy fate to the functioning of international energy markets. Companies, oil producing nations, and potential adversaries all have their reasons for wanting to control energy.

Here is the key lesson of this history: we need a national energy strategy and a wide-ranging national debate to develop the strategy.

This debate will surely show a need to break with past practice by reducing our dependence on foreign oil and gas. Our plans for a secure energy future should not assume that we can preserve our present military dominance into the 2030s or that we can legitimately plan on putting the lives of our young soldiers repeatedly at risk.

We must reduce our dependence on petroleum for a second reason: the world’s oil fields are gradually approaching exhaustion. Even optimists suggest that starting in the 2020s, the extraction of oil will become increasingly difficult and oil prices will rise further.

A national debate should provide a strategy for producing domestic energy cheaply. Congress passed the Energy Act of 2005 to deal with this challenge, but some independent observers believe that this act did not provide a realistic long-term strategy. Some critics claim that the act was mainly a vehicle for bigger subsidies to corporations.

Should we have stronger financial disincentives to the consumption of petroleum products? Painful as this might seem, we may need higher taxes, not lower, on oil and gasoline. The oil price increases of 1974 dramatically reduced the growth of demand, showing that prices are indeed the conservationist’s most effective tool.

Renewable energy sources might be a major part of the solution. But is nuclear power safe enough to justify expansion? Can new technologies for solar and wind power really yield big increases in electricity supplies at competitive prices?

We need to be worried about global warming as well as local pollution. Is it possible to protect the environment and still increase the supplies of affordable energy? If so, what is the best way to do this?

Mainers have a special opportunity to enter this debate. The possible construction of a liquefied natural gas terminal in Passamaquoddy Bay raises concerns for the residents around the bay, but also for all Mainers. The whole state has a stake in cheaper gas supplies, and the whole state should enter the discussion. The Bangor Daily News showed wisdom by supporting a process that would objectively balance the local, statewide and national benefits and costs of a terminal.

Perhaps none of us has all the answers to this complicated problem. For the short run, we must keep on gasping and paying those high heating bills. But for the longer run, a lively national debate may yield wisdom that will help you and your children pay those bills without gasping.

Edwin Dean, a seasonal resident of Vinalhaven, writes monthly about economic issues.


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