By Jamie Glazov
FrontPageMagazine.com | Friday, May 02, 2008
What is the best way for us to achieve energy independence? What is the urgency for us to do so in terms of our conflict with Islamo-Fascism? To discuss this issue with us today, Frontpage Symposium has assembled a distinguished panel. Our guests are:
Robert “Bud” McFarlane, Ronald Reagan’s National Security Advisor. Currently, he serves as Chairman and CEO of McFarlane Associates Inc., developing energy projects in third world countries and working to develop alternative fuels so as to reduce US reliance on foreign oil.
Robert Zubrin, the president of Pioneer Astronautics and also president of the Mars Society. For many years he worked as a senior engineer for Lockheed Martin. In addition, he is the author of the critically acclaimed nonfiction books The Case for Mars, Entering Space, Mars on Earth; the science fiction novels The Holy Land and First Landing; and articles in Scientific American, The New Atlantis, The New York Times, The Washington Post, Mechanical Engineering, and The American Enterprise. He has appeared on major media including CNN, CSPAN, the BBC, the Discovery Channel, NBC, ABC, and NPR. He is the author of the new book, Energy Victory: Winning the War on Terror by Breaking Free of Oil.
Gal Luft, one of America ‘s most influential energy independence advocates. He is executive director of the Institute for the Analysis of Global Security (IAGS) a Washington based energy policy think tank and co-founder of the Set America Free Coalition, an alliance of national security, environmental, labor and religious groups promoting ways to reduce America’s dependence on foreign oil. He specializes in strategy, geopolitics, terrorism, energy security and economic warfare.
Anne Korin, Chair of Set America Free Coalition.
Daveed Gartenstein-Ross, the vice president of research at the Foundation for Defense of Democracies and the author of My Year Inside Radical Islam, which documents his time working for the extremist Al Haramain Islamic Foundation.
FP: Daveed Gartenstein-Ross, Robert Zubrin, Gal Luft, Anne Korin and Bud McFarlane, welcome to Frontpage Symposium.
Robert Zubrin, let’s begin with you.
What kind of policy do you favor to create energy security?
Zubrin: I’m glad you used the words “energy security,” not “energy independence.” While admittedly, being energy independent would be an improvement on our current position, it is not good enough, because if the oil cartel still controlled the world market, they could still collapse our economy by collapsing that of our allies and trading partners like Japan and Europe, and they would still be harvesting trillions that they could use to finance jihad and the takeover of our corporations and media organizations.
So even if it were possible, walling ourselves in a defensive “energy independent” position would not suffice. Rather, we have to take the offensive and destroy the power of the oil cartel internationally. The key to doing that is to destroy the vertical monopoly that they have on the world’s vehicle fuel supplies. The US Congress could strike a devastating blow in this direction simply by passing a law requiring that all new cars sold in the United States be flex fueled — that is able to run on any combination of gasoline, methanol, or ethanol. Such cars are existing technology and only cost about $100 more than the same vehicle in non-flex fuel form.
If such a law were passed, it would make flex fuel the international standard for cars, as not only the Detroit Big 3, but all the foreign manufacturers would shift their lines over immediately in response. This would put 50 million cars on the road in the USA within 3 years capable of running on alcohol fuels, and hundreds of millions more worldwide. With such a market available, alcohol production and distribution facilities would multiply rapidly, and gasoline would be forced to compete at the pump against alcohol fuels produced in any number of ways from any number of sources everywhere in the world. (Methanol, for example, can be produced from any kind of biomass, without exception, as well as from coal, natural gas, and recycled urban trash. There are many starchy or sweet crops that can be used to make ethanol, with cellulosic options increasingly viable as well.)
This opening of the fuel market would put a permanent constraint on OPEC’s ability to raise fuel prices. Instead of being able to raise oil prices to $200/barrel, which they are already discussing, prices would be forced back down to $50/barrel, because that is where alcohol fuels become competitive. Then, once such an alcohol fuel infrastructure is well in place, we can proceed to roll the oil cartel right off the map by instituting tax and tariff policies that favor alcohols over petroleum. That’s how we beat the Islamists.
If we don’t do that, with our current imports of 5 billion barrels per year, they will use a $100/barrel price to tax us $500 billion per year (and rob the world at a rate of $1.2 trillion/year). The NY Times today had a front page article quoting leading economists as saying that this huge tax (more than triple the size of the current economic stimulus treasury give-back) is grinding our economy into recession. So it is, but it is worse than that. If they are allowed to keep taxing us in this way, they will use that enormous monetary power to not only massively grow their jihadi movement, but to take over most of the major corporations and media organizations in the US, Europe, and Japan within a decade.
So not only our economy, but our independence is at stake. We need to break the oil cartel, and forceful action to create fuel choice internationally is the way to do it.
Luft: I share Robert’s sense of urgency about reducing the strategic value of oil by opening the transportation sector to healthy competition, and fuel flexibility should indeed be the first item on our agenda. There is no reason why the $100 addition which allows cars to burn alcohol should not be – just like seat belts, air bags or rear view mirrors – a standard feature in every car sold worldwide. This would be a low premium insurance policy against future supply disruptions and a Band-Aid to stop the bleeding of our economy. But flex fuel alone would not be sufficient to solve our energy problem. In the U.S. today we use annually roughly 140 billion gallons of gasoline and additional 60 billion gallons of petroleum diesel. We simply don’t have the resource base to replace all of this with alcohol and bio-diesel, even if we tapped into our vast coal reserves and diverted all of our food crops into fuel production. So we need solutions beyond liquid
In order to achieve significant petroleum displacement we must begin to electrify the transportation sector by speeding the commercialization of plug-in hybrids and fully electric cars. Unlike in the 1970s, today only 2 percent of our electricity is made from oil. Almost all of our electricity is made from domestic energy resources like coal, nuclear power, natural gas and hydro. In other words, on the electricity front, unlike the Europeans who rely on imported natural gas for their light and heating, Americans are already energy independent. Using electrons for transportation, instead of gasoline, essentially means shifting from an imported resource which poses a national security threat to an array of abundant domestic energy sources. In addition, electricity is cheaper and cleaner than gasoline. It costs about 3 cents per mile to run a car on electricity–roughly one fifth of the cost of driving the same mile on gasoline. This cost differential protects us from a counterattack by OPEC.
Korin: The goal is indeed independence, not in the sense of autarky (not importing any oil) but in the sense of regaining ability to act independently, without need to kowtow or defer to petrodictators chief among them the Saudi royal family, a family which controls a quarter of the world’s oil reserves and essentially all swing capacity on the global oil market (the mafia never had it so good.) To regain our independence we must strip oil of its strategic value. Salt presents a compelling historical parallel. Salt was once a strategic commodity, control of which determined geopolitical power and ability to sway world affairs. With the advent of electricity and refrigeration salt lost its strategic status as it was no longer the only option for preserving meat. Oil’s strategic value derives from its domination of the transportation sector, which in turn accounts for two thirds of oil consumption – as Gal noted, we essentially no longer use oil to generate electricity (an inconvenient fact that renders bizarre the protestations of many politicians that solar, wind, or nuclear can reduce oil demand.)
Stripping oil of its strategic value will require fuel competition in the transportation sector. Flexible fuel vehicles, as Robert noted, provide a platform on which fuels can compete. For a very modest premium, they enable a driver to choose amongst a variety of liquid fuels, made from a variety of feedstocks, from coal to agricultural material. It costs 50 cents a gallon to make methanol from coal. Methanol has about half the energy of gasoline, so that’s one dollar per gasoline equivalent gallon. The US is the Saudi Arabia of coal. China and India also have a lot of coal, and indeed China is rapidly expanding its coal to methanol capacity.
We need to remove the ridiculous 54 cent a gallon import tariff on sugarcane ethanol – we don’t tax oil imports, so why are we taxing imports of an alternative fuel? It’s not because of the oil industry, it’s because of corn ethanol protectionists who’d rather be big fish in a small pond than open the dam and turn the pond into a sea. As Gal notes, it is also critical to get electricity into the transportation fuel market. Flex fuel plug in hybrids will mean the Saudis will need to figure out how to monetize sand. Perhaps they can learn to blow glass.
Gartenstein-Ross: I am of the opinion that energy security is the most pressing challenge we face. It should be the top issue in the current presidential campaigns because our oil dependence is without a doubt our Achilles’ heel, yet no candidate has been seriously pushing the issue. This comes on top of the systemic failure of our political leaders, including the Bush administration and the presidential administrations that preceded it, to curtail our dangerous dependence on oil. (Interestingly, the one real exception was the Carter administration’s Fuel Use Act, which is a major reason that, as Luft and Korin note, only 2 percent of our electricity comes from oil today.) Energy security has a cognizable impact on virtually all the other major issues that our country now faces.
There is the economy. Today, more than three out of four Americans believe that the country is in recession—and it is not difficult to recognize that high energy prices are a primary driver. Oil prices have more than doubled in the past fifteen months, rising from around $50 a barrel in early 2007 to about $110 a barrel today. Such a dramatic rise in energy prices will of course harm the U.S. economy. As Zubrin stated, this equates to a $500 billion per year tax on the U.S. economy, affecting all sectors. We depend on long supply lines to transport agriculture to consumers, as well as the vast majority of products that you can buy off store shelves. All prices—the price of food, the price of consumer goods—are pushed upward by the rising price of oil.
There is terrorism and our international political adversaries. One distinctive characteristic of Islamic terror movements is that they explicitly find religious sanction for their actions. Their interpretation obviously is not shared by all Muslims, as the world would look much different if we were at war with over a billion people. What helps extremist interpretations of Islam gain a foothold? One clear answer is petrodollars. Numerous analysts have connected radicalization in various regions to extremist charities, mosques, and madrasas funded by oil money. Some of the charities funded by petro-dollars are “dual-use,” not only propagating an extreme interpretation of Islam but also directly funding terrorist groups. Venezuelan president Hugo Chavez famously declared in his opening address to an OPEC conference in 2006 that “the American empire will be destroyed.” Do we want to be dependent on political leaders like that because of their oil resources?
The Bush administration has had more than seven years to steer the country’s energy policy, yet its combined policies amount to slapping a few Band-Aids on a hemorrhaging wound. (This is of course not just the Bush administration’s fault: as a country, we have had more than forty years to address this issue since the dangers of our oil dependence became crystal clear.) For example, the primary strategy of the Energy Independence and Security Act of 2007 is a new national mandatory fuel economy standard that, in President Bush’s words, “will save billions of gallons of gasoline.” But as Zubrin shows in his commendable book Energy Victory, conservation-based strategies are not, and will not be, sufficient. If we could duplicate the technical success that Corporate Average Fuel Efficiency (CAFE) standards achieved from 1975 through 1990, Zubrin writes, we would not cut our oil consumption at all. Instead, it would reduce our expected rate of increase of oil usage by only 2.2 million barrels a day, during a period when the world as a whole is likely to raise its consumption another 30 million barrels per day. Whatever demand we eliminate would be replaced fifteen times over.
President Bush has also congratulated himself on the ethanol policies that his administration has undertaken, but they are a far cry from the large market for ethanol that Zubrin’s policy recommendations would spur. (By Bush’s account, we produced 6.4 billion gallons of ethanol in 2007 versus the approximately 200 billion gallons of gasoline and petroleum diesel that we use annually.)
But fortunately, while our oil dependence is currently causing great harm, I don’t think the immediate solutions are mysterious. I agree strongly with the recommendations put forward by Zubrin and Luft in this symposium. Fuel flexibility should be the first major policy we push for because it provides immediate relief from this grave problem, but we should also move toward electrification of the transportation sector. The bottom line is that we are worse off, and our enemies in a better position, for each day that action is delayed.
McFarlane: As the panel has made clear, we have the means at hand to overcome the vulnerability of our economy and the challenge to our very way of life that is posed by our reliance on foreign oil. It starts with mandating that all cars and trucks sold in the US be flex-fuel, and then that we accelerate the production of plug-in hybrid-electric and all-electric cars and trucks, and that we build them out of carbon composite materials as Boeing is doing today in its new 787 Dreamliner.
We cannot consider this as nice-to-have, P-C, green “someday” matter. This is a matter of grave urgency. Today if an attack on any of a dozen very vulnerable Saudi oil processing facilities were successful, we would be facing oil at $200/barrel overnight. That would lead within weeks (not months) to the collapse of the Japanese economy, and before long to those of our European allies and ultimately of our own.
And even if such an attack does not occur, consider the price we are paying for our reliance on foreign oil. Last year we spent over $300 billion on foreign oil. Think for a moment of what $300 billion could buy in terms of better schools, health care, highways and bridges, law enforcement, a partial solution to our sub-prime mortgage problems, and a dozen other domestic priorities. But that’s just the beginning.
Think about the half trillion dollars we spend every year — yes, ‘trillion’ every year — on the defense budget, and that doesn’t count the supplemental appropriations for the war in Iraq. At least $200 of that $500 billion pays for forces that are deployed in the Middle East or to protect lines of communication between here and there and to our allies in Europe and Japan. Add it up — $500 billion for defense, another $300 billion to pay for foreign oil, and with the price now above $100/bbl, the total from now on will be at least 1 trillion every year — yes every year — until we start changing our ways.
Of course the foregoing costs are just the financial dimension. Far more important are the costs in human lives, families shattered by separation, and the loss of loved ones. This is truly an intolerable condition — one that is all the more unconscionable considering that we have the means at hand to overcome it.
Zubrin: I would like to make an additional point. As bad as $100 per barrel oil is for us, it is much worse for the poorer nations of the world. It is one thing to pay $100 per barrel for oil when you live in a country where the average person makes $40,000 per year. It is quite another if you live in a country where the average person makes $1,000 per year. To many third world countries, particularly in Africa, the effects of OPEC looting are not merely recessionary, but genocidal. Indeed, the jacked up oil price is nothing else than a huge regressive tax levied by the world’s richest people on the world’s poorest people.
Consider this: This year, Saudi Arabia’s high-priced oil business will reap that nation’s rulers over $300 billion. Much of this bounty will be wasted on a wild assortment of narcissistic luxuries. The rest go towards funding of network of over twenty thousand Wahhabi madrassas worldwide. There, millions of young boys will be instructed that the way to salvation is to kill Christians, Jews, Buddhists, animists, and Hindus, all as part of a global campaign to create reactionary theocratic states that totally degrade women and deny all political, religious, intellectual, scientific, artistic, or personal freedom to everyone.
Simultaneously, Kenya, a nation whose population of 36 million is half again as great as that of Saudi Arabia, will scrape up around $3 billion in export earnings, and use these funds to buy badly needed fuel, farm machinery, and replacement parts for equipment. (Kenya, incidentally, is not one of the world’s fifty poorest nations. There are many others much worse off.)
Distributed elsewhere, the loot garnered by the Saudi terror bankers could triple the foreign exchange of 50 counties comparable to Kenya. Distributed elsewhere, the $1.3 trillion per year taxed out of the world economy by the all the OPEC tyrannies could lift the entire third world out of poverty.
By shifting to alcohol fuels, we can shift a very substantial amount of capital flows in precisely such a direction. Many third world countries are tropical nations with very high agricultural potential. Within a few years of the establishment of a flex fuel mandate, we will have a much larger domestic market for agricultural produce to make ethanol than American farmers can deliver to. That is a very GOOD thing. It means that we will be able to give them all the business they can handle, and still have market share left over, which we could open to Latin American and Caribbean ethanol, but dropping the current tariff. So countries like Haiti, which desperately needs an export income source, will be able to get it by growing sugar ethanol for export to the USA. In the same way, Europe would be able to drop its agricultural trade barriers, and open itself up to ethanol exported from Africa, and Japan likewise from south Asia. Effectively, we would be able to redirect about a trillion dollars a year that is now going to OPEC and send it to the global agricultural sector instead, with about half going to advanced sector farmers and half going to the third world. This would create an enormous engine for world development.
Ethanol has been criticized by certain opponents who have alleged that its production from corn takes away from the food supply, and that large irrigation requirements draw power that exceeds that provided by the ethanol. Such analyses, however, are false. When ethanol is made from corn, all of the protein in the corn is preserved for use as animal feeds, and virtually no ethanol corn grown in the USA is irrigated. In fact, for the expenditure of a given amount of petroleum, nearly ten times as much ethanol can be produced as gasoline.
World food prices have been rising recently, at a rate of 4 percent a year, and oil cartel propaganda organs have been quick to place the blame on bio-fuel programs. But these are false accusations. Despite the corn ethanol program, US corn exports have not declined at all in recent years, and our overall agricultural exports this year are up over 23 percent. So its not corn ethanol that is driving up global food prices, including those for fish, fruit, and every kind of crop. Rather it is high fuel costs, which have risen 40 percent over the past year due to vicious OPEC price rigging. Not only that, these high fuel costs are driving up the cost of not just food, but nearly every product that needs to be transported anywhere in the world. And again, the hardest hit victims are the world’s poor.
For the sake of social justice, OPEC must be destroyed.
Luft: Since we all seem to agree that fuel flexibility in our cars is the lowest hanging fruit, let’s talk about how to make this happen. In the past two sessions of Congress there was strong bipartisan support in both the Senate and the House for flex fuel legislation. More than 30 senators from Sam Brownback on the right to Ted Kennedy on the left co-sponsored a bill including a requirement that at least 50 percent of new cars be flex fuel.
Presidential candidates are also in agreement. Both Barack Obama’s and John McCain’s energy platform include strong flex fuel provisions. Obama campaign pledged that an Obama Administration would ensure that all new vehicles have FFV capability by the end of his first term in office.
Less clear is how the automakers would respond. While it is true that the Big Three previously pledged to make 50 percent of their cars flex fuel by 2012, no industry likes to be told what to do and we should not expect the automakers, to embrace a full mandate without a fight, particularly after their recent defeat in the battle over mandatory fuel efficiency standards. (The Big Three also resisted other mandated low cost features like seat belts and airbags.) The Japanese automakers who don’t have experience with this technology are likely to be even less enthusiastic.
But considering the low cost of fuel flexibility and the simplicity of retooling the production lines, this is certainly something they can live with.
So it’s basically in the hands of Nancy Pelosi and Harry Reid to make this vision of fuel choice come true. Instead of complaining about the “insane” profits of oil companies the Democratic leadership in Congress could serve America best by pushing a flex fuel legislation and bringing it to a vote before the elections.
It is important to ensure that the legislation doesn’t enable automakers to get away with making E-85 cars that can only accommodate ethanol. True fuel flexibility is one that enables all alcohols to compete. The cars should therefore be warranted to run on both ethanol and methanol. With such legislation presented before the Senate all three senators who are running for president would be forced to endorse it, which means that the next president would be on board.
Extra $100 per car is less than the price of one barrel of oil, and equipping every car in the US with the feature would cost roughly $20 billion over the next two decades, much less than what the Fed forked over one weekend to save Bear Sterns. The same Congress that spent billions on regulating an open standard for high definition TV should be able to give us an open fuel standard for our cars.
Korin: The Arab oil embargo in the Seventies led to massive Japanese automaker entry into the US market. While US automakers were building huge cars, the Japanese had the more efficient vehicles that appealed to consumers at a time of high gas prices. Today, other competitors waits in the wings should US autos stall on the road to fuel choice. Not so long ago a Chinese automaker showed an under $10,000 family sedan at the Detroit auto show. Take that car, make it a flex fuel plug in hybrid, and you have an under $20,000 fuel choice enabling family sedan. Coming soon to a Walmart near you.
The Chinese are not waiting for us to move toward alcohol fuels or electrification of transportation. We can lead the train or we can run after it, and absent the policies discussed above and summarized below, the latter is more likely every day.
To summarize, the three key policies for breaking oil’s monopoly in the transportation sector, the sector from which oil’s strategic value is derived, are: an Open Fuel Standard so most new cars sold in the US will be gasoline-ethanol-methanol FFVs; repeal of the 54 cent a gallon tariff on ethanol imports; consumer tax credits for plug in hybrids (this is the policy that helped hybrids move past the early adopter hump.)
Gartenstein-Ross: There is broad agreement on this panel about the significance of the energy security problem that we face, as well as the steps that the government needs to take to address this critical issue; thus, I will keep my remarks atypically short. I offer an apology to Jamie if he’s disappointed that this symposium lacks the fireworks of some of the previous symposia in which I have participated—but I don’t think that’s a terribly bad thing in this case, since energy security is an issue where acting in the near-term is more important than lengthy debate.
I will follow Luft’s suggestion that we discuss how to make the fuel flexibility mandate happen. I agree with him that automakers are likely to fight against a full mandate, and also think it likely that iterations of this legislation will be offered that involve E-85 cars rather than true fuel flexibility. So it is critical to ensure that any legislation on fuel flexibility that is signed into law not be watered down through the legislative process or subjected to the kind of bureaucratic capture that too frequently occurs in this country. I know that a large number of conservative activists read FPM (although I do not see energy security as an issue that should break along partisan lines). Informed members of the public should serve as energy security watchdogs, demanding of our politicians the full implementation of policies necessary to counter our dangerous dependence on foreign oil.
McFarlane: Gal and Anne often make the point that we ought to be realistic politically in structuring our approach to new legislation — as is required to mandate Flex-Fuel vehicles. It does not good to be doctrinaire — and lose. Or as President Reagan once told me, “Bud, if you go over the cliff, flags flying, you still go over the cliff.” Specifically it does no good to take on the major oil companies. Indeed our point is not anti-oil, we will need oil for a long time and it is in all our interests for American oil companies to produce as much oil as they can for as long as they can.
Rather, our approach to the public and to members of both parties ought to be cast in terms of the political, economic and security costs of doing nothing — losses which are measured in trillions of dollars, thousands of lives, and the gradual control of American industries by foreign sovereigns.
We must also stress that the global war against Islamism — especially as its financial support grows in proportion to oil revenues flowing to the Persian Gulf — will someday go nuclear. Unless we get serious toward moving our four-part agenda, we may run out of time.
FP: Daveed Gartenstein-Ross, Robert Zubrin, Gal Luft, Anne Korin and Bud McFarlane, thank you for joining Frontpage Symposium.
Jamie Glazov is Frontpage Magazine’s managing editor. He holds a Ph.D. in History with a specialty in U.S. and Canadian foreign policy. He edited and wrote the introduction to David Horowitz’s Left Illusions. He is also the co-editor (with David Horowitz) of The Hate America Left and the author of Canadian Policy Toward Khrushchev’s Soviet Union (McGill-Queens University Press, 2002) and 15 Tips on How to be a Good Leftist. To see his previous symposiums, interviews and articles Click Here. Email him at [email protected].