Oil & Climate—What's the Connection?
March 6, 2010. Checking the Vets' YouTube Video
Is it true? "Oil goes up a $1—Iran gets another $1.5 billion to use against us."
Not quite. The US DOE says Iran had net oil export revenues of $55B in 2009, and their average price was $60 (DOE ). So they make only $0.9B not $1.5B extra per year when the price goes up $1/barrel. Did the Vets lie? Not really. They forgot that Iran does not profit from the oil it uses domestically. But with oil up $40/barrel in a bit over a year, that's a lot of money.
Also, Iran doesn't use all that money against us. A lot goes to buy votes to keep Ahmadinejad and Supreme Leader Ayatollah Khamenei in power. That money is used, more or less, against the whole world.
Is it true? "Break our addiction by passing a clean-energy climate plan."
The basic idea is right. Cutting oil use helps the climate. Cutting oil use takes money back from OPEC -- Saudi Arabia, Iran, etc. The crazy part is that the environmentalists hate to admit this. Instead we find James Woolsey, the former director of the Central Intelligence Agency and a staunch backer of the Iraq war, driving a 58-miles-per-gallon Toyota Prius. Why? For the same reason as the Vets give on YouTube.
How does it work?
Not like people think. Iran will sell its oil one place or another. The trick is that, when we use less oil, it actually reduces the world price of oil. That shouldn't be so surprising, because OPEC has be doing the reverse to us, on and off, for 37 years. Right now the Saudis are cutting back their own production by 27 percent. That's much of what's driven the price up from below $40 to about $80/barrel in the last year.
Has cutting oil use ever been tested?
Yes. Between 1980 and 1985 the world cut back, because OPEC drove the price of oil up. But that high price caused the world to conserve, and the Saudis had to cut production ever more deeply. By 1985 they had cut their output down to 25% of what it had been. Even then, price fell by about 1/3. Finally, the Saudis cried uncle and cut the price by one more third. For 18 years the price stayed low, but now OPEC is back and more unified than ever.
Carbonomics: How to Fix the Climate and Charge it to OPEC (Amazon) explains how to do what the Vets suggest—make energy security and clean energy work together. It also predicted the Copenhagen debacle and tells what to do about it.
Right wing nuts:
They are out in force saying: Global warming is a hoax so down with the Vets. Scientists have been studying global warming since 1856. I learned about it in 1965, well before Al Gore was on the scene. The UN report concludes correctly that we still don't know the answer -- it only says there's a 90% chance that more than half the warming since 1950 is man made. But I'm a skeptic. Climate science is tough. Sometimes scientists go off track for a few decades. So let's say it's not 90%, there's only a 50/50 chance the earth is in big trouble.
What should we do? Well the chance you'll have a house fire this year is 1/2 percent. So you do nothing. Right? No. Everyone buys fire insurance. So with a 50% chance of serious damage to the earth -- we buy insurance. And as a fringe benefit we recover some of the money OPEC is picking out of our pockets.
Carbonomics calculates that the present level of proposed climate policies could actually pay for themselves by taking our own money back from OPEC.
Left wing nuts:
They are just as bad. I've read them saying the Vets are just trying to start a war with Iran. What? So we let OPEC pick our pockets because taking our own money back might start a war? Good energy policy would reduce the chance of war and weaken the Iranian tyrants.
Sensible climate policy (not the cost-doesn't-matter type) and sensible oil security policy (not the coal-into-oil type) are both inherently non-partisan issues. It's the opposite of conservative to risk our home planet. It's the opposite of liberal to oppose taking our own money back from mid-east religious tyrants. The polarization we see is the worst side of American politics. There is a middle path that is not a compromise wishy-washy position but rather a smart and powerful answer to the two biggest risks facing our country. No, scientists are not sure of the climate or the terrorists — but that's no reason to sit around waiting to see what happens to us.
P.S. Who's for OPEC?
I suspect, but cannot prove, that the real reason the US has never defended itself against OPEC is because it's an inside job. OPEC has the most powerful lobby in Washington and almost no one sees it. In fact one arm of that lobby, the National Petroleum Council, is actually a part of the Dept. of Energy — but funded almost entirely by the oil industry. The trouble is fundamental. Whenever OPEC raises its price—the world price of oil—all oil companies profit. In fact Big Oil does better than the Saudis because they need not cut back production to raise the price. OPEC does their dirty work. Exxon made roughly $30 billion off the last OPEC price spike. That's enough to buy quite few politicians. Naturally, though they will never say it, big oil companies are OPEC's biggest fans.