Oil dependence | The US as a Petro-state and gasoholic | and war

 

People crowding a train platform in Kharkiv, Ukraine

Twitter photo: Nexta_TV

The Business Week article "The Petro States of America" dating to the Obama Administration made the point that the US is a petro state too, and it has built an economy dependent on oil, especially when it comes to transportation.  More than 90% of all trips are made by car.  

The development of hydraulic fracking in oil and gas production made the US one of the world's top producers, after production had been in decline.  But in response, Saudi Arabia and Russia lowered the price of oil to drive US fracking firms out of business, because they have relatively high production costs per barrel.  So US production has dropped.

Norway shows a different way.  By contrast, Norway, in the face of new riches from oil and gas production in the North Sea, maintained its hydroelectric-based energy economy, and instead of using royalties and other revenues to lower taxes (that's what Britain did) it invested the receipts in a sovereign wealth fund.   Although the US-based Tax Foundation, an advocate for low taxes, doesn't like it ("Norway’s Addiction to Taxes on Oil").

Norway's state-owned "gasoline" brand, Statoil, is installing EV charging points at their stations.

Again, because of  hydroelectricity, Norway is an early leader in the development of electric vehicles ("Why Norway Leads In EVs—And The Role Played By Cheap Renewable Electricity," Forbes, "Environment-friendly mobility: Norway’s high-voltage EV push offers a template for India," Indian Express).

Netherlands and Denmark shift to sustainable mobility.  Similarly, the Netherlands and Denmark, in response to the Oil Crisis of 1973, recognized that they put their countries at risk by shifting to a mobility paradigm dependent on cars and gasoline.  So they instead prioritized transit, biking, and walking, and the necessary land use, transportation and energy policies to shift the paradigm.  

For example, excise taxes on gasoline and automobile purchases are high, and significant monies are invested in transit and biking biking infrastructure.

Separately, Germany is a car manufacturer, but not an oil producer.  Regardless of the importance of car manufacturing to its economy, it has never deemphasized the primacy of transit (complemented by walking, and later biking) as the optimal mode for urban mobility.  (By contrast, the US has a more homogeneous approach to mobility, abandoning transit in favor of the car, when at one time the US had the densest transit network in the world.)

A gasoline-dependent economy is susceptible to disruptions in supply.  In the US, the recent cyberattack on a gasoline pipeline ("Automobility dependence and how the Colonial Pipeline gasoline transportation failure affects gasoline supplies on the Atlantic Coast") and disruptions in gasoline supply due to weather events.

For example, as a result of Superstorm Sandy, gasoline supplies were restricted and many states declared states of emergency, not just because of disaster damage from the storm, but because of reduced access to gasoline ("After Sandy, New York will hold strategic gasoline reserves," Washington Post, "After Sandy, gas lines stretch for miles," CNN). 

A Shell station without gasoline in 1973.

A gasoline-dependent economy is susceptible to changes in world conditions.   Even though the US is one of the largest producers of oil, it is one of the largest consumers of oil too, and because oil is an international commodity, the price for oil is not set based on local production.

If it were, gas would be cheap in Salt Lake City because there are five refineries in and around the city, and it is priced the same as everywhere else.  Instead, oil is priced globally, based on international demand and perceptions of future supply and risks.

In response to the Ukraine War, gasoline prices in Downtown Salt Lake City have risen more than $1 per gallon in less than one week.  Prices are significantly higher in California.  

And governors and US Senators are calling for temporary elimination of gasoline excise taxes to reduce prices slightly ("A pair of Senate Democrats want to suspend the federal gas tax through the end of 2022," Yahoo News, "Push to Pause Gas Taxes Increases as Prices Surge Amid Ukraine Conflict," Newsweek).

Even though the US was devastated at the time by the 1970s oil crisis, which crushed US automobile manufacturers, whose less efficient cars were supplanted by foreign manufacturers, for the most part the land use and transportation planning paradigm dependent on the automobile and gasoline did not change.

The major policy change was putting energy efficiency requirements for higher miles per gallon for car production, measured against an automaker's entire fleet of vehicles ("CAFE Requirements," NAS).  

But the business model for US manufacturers doesn't favor the production of small cars, and over time, foreign manufacturers dominated the market for cars while US manufacturers shifted to SUVs and trucks.

Demand for oil and natural gas empowers producing countries: Resource Curse, Pollution Paradox.  And because most countries are consumers not producers of oil, this gives disproportionate power to renegade countries like Russia and Saudi Arabia, who end up with the double whammy of the "resource curse" and the "pollution paradox."  

The resource curse was coined to describe countries dominated by extractive industries and how few of the financial benefits from oil and mineral production end up fostering positive social and economic development in those countries, and the political structure is often authoritarian.

The pollution paradox, coined by Guardian columnist George Monbiot, describes how companies and people (like the Koch family of Kansas) all in on resources like oil and gas do everything in their power to prevent a switch to more sustainable methods of energy production or alternatives to the automobile.  

And they are super motivated, whereas advocates for change don't have the same level of self interest, and their efforts pale by comparison to the pollution caucus.  

For example, Koch interests fund organizations focused on supporting tax benefits for oil production, developing anti-regulatory state legislation, and opponents to transit and solar energy ("Charles Koch Personally Founded a Group Protecting Oil Industry Handouts," The Nation).

Energy dependence enables war: The Ukraine.  Other countries dependence on Russian oil and gas, especially European countries, is at the heart of Putin's willingness to go to war in the Ukraine.  He figured that Europe would back off because they need his oil and especially natural gas, which is the primary heating source across Europe.

Many US states show the effects of the Resource Curse and the Pollution Paradox.   In the US, many of the states that are large producers of oil and gas, California being a major exception, tend to have politics as fouled as countries like Russia and Saudi Arabia.  They too are victims of the double whammy of the resource curse and the pollution paradox.

For example, Texas has refused to winterize its natural gas production, and blamed last year's disruptions on renewable energy, even though the failures were largely due to natural gas production going off line ("Cold wave: the Texas power debacle disproportionately impacts the less well off," "Texas largely relies on natural gas for power. It wasn’t ready for the extreme cold," Texas Tribune, "One Year Later: The Texas Freeze Revealed a Fragile Energy System and Inspired Lasting Misinformation," Inside Climate News).  

And because natural gas for Texas fuels the energy grid across the midwest, consumers in many states faced massive price increases and problems because of the disruption ("Minnesota gasps at the financial damage it faces from the Texas freeze," Washington Post).  Despite last year's debacle, which killed hundreds, the state is still delaying winterization.

Electric vehicles.  At the same time, shifting to electricity powered automobiles, in combination with a rise in the utilization of wind and solar energy, reduces demand for oil and dependence on other countries for supplies.  

While the total costs for EV power in the US may be higher than gasoline when you figure in the costs of adding infrastructure, that's only true when gasoline is relatively cheap.  If priced at European levels, $7 per gallon or more, EVs are cheaper.  

Fear of EVs is another reason Saudi Arabia aimed to keep oil prices lower.  But Russia has complicated this immeasurably, by invading Ukraine.  

US bans Russian Oil/Could it be a way to foster a shift to green energy?  The US has just banned the purchase of Russian oil--not a particularly large amount, but the heavier oil helps East Coast refineries run more efficiently, and there is talk that the US should accompany the ban with a greater focus on green energy production ("What Does the Russian Oil Ban Mean for the Clean Energy Transition?," Inside Climate News).

Automobile dependence is still an economic vulnerability.   But the cost of creating a national electric charging infrastructure is high, may be less environmental beneficial without the shift to renewable energy sources, and sustainable mobility has a variety of benefits in terms of health, costs, land consumption, environment, etc., that will still be negative even with an EV centric automobile dependent land use and transportation planning paradigm.

=====

Iraq War/Middle East destabilization.  After 9/11 there were Internet screeds about how the automobile manufacturers weren't donating enough.  I scoffed.  I said it was automobile dependence that created the stage for 9/11.  

As long as the US saw the necessity of protecting Middle Eastern oil supplies, strife would obtain as the resource curse meant the US supported authoritarian rulers, which in some cases ended up with them being deposed.

Invading Iraq only destabilized the Mideast further.  And in turn, outmigration spurred by the war and other strife destabilized Europe and in some respects, contributed to Brexit, because of the rise in the fear of the negative impacts of immigration, especially radicalized Islamists.