January 14, 2006

Energy Impasse

A recurrent theme in arguments for a massive government R&D project in support of developing renewable fuel technologies concerns national defense and global political security. A N.Y. Times editorial highlights the vulnerability the U.S. assumes by leaving the world dependent on limited foreign fossil fuel reserves and OPEC decisionmaking. Excerpts from this column are below:


Editorial in the New York Times
Energy Impasse
Published: January 15, 2006

Iran has signed deals to provide natural gas to two emerging economic powers: China and India. India embarked last year on a gas pipeline project with Iran; in 2004, China signed a $70 billion oil and natural gas deal with Tehran. Those alliances are just a sign of things to come; as their economies grow, the Indians and the Chinese will become ever more hungry for energy resources.

That makes it much less likely that the United Nations Security Council, with China a permanent member, is ever going to agree to sanctions against Iran for pushing ahead with its nuclear program. But what if, by some miracle, America and Europe were able to persuade the Security Council to impose sanctions?

Well, slapping Iran with sanctions could very likely prompt Mr. Ahmadinejad and company to cut oil production in retaliation. Once upon a time, a drop in production from one OPEC member could be absorbed by the rest of the cartel. But today's global oil market is so tight, there is little spare capacity left. Any drop in production from a supplier can quickly send the price of oil soaring.

"There's no shock absorber left," says Gal Luft, executive director of the Institute for the Analysis of Global Security. "That leaves us with zero options when it comes to leverage against these oil producers. Why do you think Hugo Chávez is so emboldened? Why do you think Ahmadinejad is saying, 'Go ahead, make my day?' "

Clearly, becoming less dependent on foreign sources should be among the West's - and most especially America's - most urgent priorities. But not in the way that President Bush and Vice President Dick Cheney seem to prefer, which is to try to drill our way out of dependency - an utterly impossible task for a country that uses one-fourth of the world's oil while possessing only 3 percent of its reserves, and whose once-abundant supplies of natural gas are now severely stressed. A much better answer would be a national commitment to more efficient vehicles and to the rapid deployment of new energy sources like biofuels.

America cannot win President Bush's much-vaunted war on terrorism as long as it is sending billions of dollars abroad for oil purchases every day. It cannot establish democracy in the Middle East because governments rich in oil revenue do not want democracy. And it will never have the geopolitical leverage it needs as long as it is dependent on unstable foreign sources for fuel.

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