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Let’s Bring Oil Back Into the Energy Debate

Macha Levinson, Director for Energy at the World Economic Forum, 1991 – 2003 Published Huffington Post 3/4/2011

Oil prices started to surge even before upheaval in the Middle East had spread to oil producing states. Now the specter of civil war in Libya is intensifying fears of spiraling prices, shortages, pipeline stoppages and, above all, of contagion.

This stark reminder of the impact of oil on the global economy should bring a timely dose of reality into the U.S. energy debate. That debate is distorted by the glaring disconnect between the way we use energy and the way we talk about it. The talk is only about the future. It’s about clean technologies and tackling climate change. It’s about investment in energy efficiency and in bio-fuels.

But the way we use energy is still mired in oil, which together with natural gas and coal, make up more than 85 percent of U.S. energy consumption. That reliance on fossil fuels is likely to increase over the next two decades. But, oil is not part of President Obama’s energy future. In the State of the Union address, he called oil “yesterday’s energy.” It has been exorcized from the energy vocabulary unless connected to the words “spills” or “foreign dependency.” It is also in solitary disgrace. All other types of energy pass muster. “Some folks want wind and solar. Others want nuclear, clean coal and natural gas. To meet this goal, we will need them all,” said the president, slightly contradicting an earlier vision of an economy without fossil fuels.

The president’s words correctly echo mounting sentiment that has tipped opinion towards clean or cleaner energies. We can now imagine a future without oil, and the experts agree that future may be only a few generations away. But as today’s crisis shows, that still leaves a long time to worry about adequate oil supplies at stable prices.

It is the nasty addiction to foreign oil (way over half of US consumption) that makes it a major foreign policy issue and one that the president should address quickly before the U.S. is again pilloried for supporting non-democratic regimes. At a time when the region with the world’s largest oil reserves is in political turmoil, the U.S. needs to talk clearly about its energy imports and how they fit into the energy security paradigm It must be prepared to answer for the politics of the oil-producing countries that supply the U.S. and its allies and deal with the consequences if the politics blow up.

This will not be an easy task. The geopolitics of oil is hard to explain, but the picture is not all black. The U.S. does import oil from some democratic countries and would clearly prefer not to deal with disreputable or unreliable suppliers. It has stood up for the interests of the NATO allies when Russian gas cut-offs to Ukraine threatened their energy routes. It also actively supports pipelines that avoid Iran or Russia, although it does rely instead on what may be only temporary allies in Central Asia. But extricating ourselves from foreign oil will take more than a pledge to kick the habit. It raises some tough political and moral questions that must be confronted.

Oil exports have become the lifeline for many developing countries, posing threats to traditional industries as well as to the environment, but bringing economic boon. The U.S. currently benefits from the oil rush in Africa where Nigeria is now the fifth largest exporter of oil to the U.S. and the U.S., in turn, is by far Nigeria’s largest market. But it is also vulnerable to charges of encouraging oil exploitation in developing countries where standards are much laxer than at home. As the U.S. imports increasingly more oil from this continent, it will have to find the moral high ground in the face of glaring headlines about corruption and theft.

And if we look into the really distant future and imagine a world with clean energy and without oil, could exporting countries start demanding compensation for lost income? Ecuador, one of Latin America’s largest oil producers, which sends about 60 percent of its oil exports to the U.S., recently agreed with the United Nations Development Program to hold off drilling in the Amazon rainforest in return for creation of a trust fund in the amount of half the foregone oil profits. The money has yet to be collected, but the principle has been established. Other countries may want to follow suit. Could the idea of paying for keeping oil in the ground gain traction?

Whether the U.S. likes it or not, foreign oil will remain part of energy security for the foreseeable future. With a global oil market fired by furious demand, pressure and cascading geopolitical unrest, the U.S. must set forth its thinking about “yesterday’s” fuel or risk being lumped together with the oil dictators of this world. It can no longer ignore the contradiction between the domestic discourse and policy overseas.

(Disclaimer: Masha Levinson is also the mother of my very good friend Marissa Levinson)

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