Petrodollar rich foreign governments buy their way into US board rooms
January 20th, 2008Setting the record straight
January 18th, 2008Fred Thompson’s otherwise excellent comments re the president begging the Saudis for oil repeated a factual error many of the candidates are making. Thompson is quoted as saying: “It’s not in the United States’ long-term interest to go hat in hand begging people to do things that in the end we know they’re not going to do…What we need to concentrate on is diversifying our own energy sources here in this country and opening up what oil reserves that we have here … using nuclear more, using clean coal technology more and all the other things that we can do.”
Here’s the error: unlike in the 1970s, today the US hardly generates any electricity at all from oil. To be precise, a mere 2% of our electricity is generated from oil (and conversely only about 2% of our oil demand is due to electricity generation.) Therefore nuclear power, while a valuable technology, has nothing to do with reducing our oil demand; we’ve already diversified our power sector away from oil. The key source of oil demand, and the source of oil’s strategic value, is the transportation sector.
If we want to stop kowtowing to the Saudis and their ilk, our focus must be on stripping oil of its strategic value, making it just another commodity We can do this through fuel choice in the transportation sector – through flex fuel vehicles and plug in hybrids which provide a platform on which fuels can compete and open up the transportation fuel market to competition. Salt, after all, was once a strategic commodity too; with the advent of electricity and refrigeration salt lost its strategic value and power to determine world affairs.
Bush begs the Saudis
January 16th, 2008(Crossposted at Middle East Strategy at Harvard (MESH))
President Bush’s appeal to the Saudis to increase oil production is more pitiful than understandable. At $100 a barrel, the United States bleeds over a billion dollars per day in order to finance its petroleum import needs. The result: ballooning trade deficits, growing unemployment, a weakened dollar and crumbling financial institutions like Citigroup and Merrill Lynch now forced to beg Persian Gulf monarchies for cash infusions. At current oil prices, the U.S. economy is melting faster than the ice caps.
But despite the president’s sweet-talk, his ridiculous appearance in a traditional Arab robe, his hand-holding with the Saudi monarchs, and even his gift of 900 precision-guided bombs, the Saudis were quick to respond with a slap in the face. Within one hour, the kingdom’s oil minister announced that oil prices would remain tied to market forces and the Saudis would not open the spigot.
This is hardly a surprise to me. The Saudis—despite their claims that oil high prices are the doing of Wall Street speculators and American SUV-driving soccer moms—are the first to blame for the current oil crisis. Their reluctance to invest in new production, their lack of transparency on reserve data and their anti-market practices, which prevent international oil companies from operating in their midst in any meaningful way, are the real reason for the quadrupling of prices in the past six years.
The Saudis are also the prime reason for the failure of the Iraqi oil industry to take off. Exactly four years ago I warned that the United States was turning a blind eye to the Saudi failure to seal its border with Iraq. This led to a migration of thousands of Saudi jihadists into Iraq, a fact that contributed to the terror campaign against Iraq’s oil industry. If not for the attacks, Iraq today could have been producing at least five million barrels per day. Instead it does less than three. Of course no one has ever held the Saudis accountable for the loss of two million barrels per day—an amount of oil that, were it in the market today, would have dropped prices by at least $30 a barrel. We’d rather beg than blame.
The truth is that the Saudis feel quite cozy at $100 oil. The world economy hasn’t come down (yet), the American public is docile, and oil-exporting countries—the recipients of a transfer on a scale the world has never known—are having a jolly time. Furthermore, the Saudis feel they have already met their obligation to the American economy by standing steadfast against other OPEC members like Iran and Venezuela, which are pushing for an OPEC decision to dump the dollar as the currency used for oil trades. Such a step could send the dollar down like a rocket.
So much of this is our own doing. Two years ago President Bush committed a major blunder, allowing Saudi Arabia’s admission to the World Trade Organization. By dint of its leadership of the OPEC cartel, no other country is more responsible for violating free trade than Saudi Arabia. Yet, its admission was not contingent on any behavioral change. Thus the Saudis enjoy the benefits of free trade while continuing to manipulate the price of the world’s most important traded commodity.
Furthermore, the United States has its own mechanisms to bring down oil prices. It owns 770 million barrels in strategic reserves. OECD countries have between them 4 billion barrels in stock. Yet, not a drop of oil has been released. Now that the Iowa caucuses are over, the United States could remove the 54-cent tariff on imported ethanol and bring billions of gallons of alternative fuel into the country almost overnight. This alone could drive down gasoline prices by at least 50 cents per gallon. And there are more strategic solutions which could remove the yoke of our oil dependence, like providing fuel choice and electrifying our transportation system. (We no longer produce electricity from oil.)
The spectacle of American presidents kowtowing to the Saudis is as old as U.S. involvement in the Middle East. Six decades ago FDR had to steal a cigarette in a stairwell of the USS Quincy in order not to smoke in King Abdulaziz’s presence. (Winston Churchill, on the other hand, had a smoke and a drink!) With growing dependence on the Saudis, our sovereignty and freedom of action have been steadily eroded. Barring some serious action, no matter who the next president is, he or she will have to ride a lot of camels and wear a lot of robes to keep the oil barrels rolling.
This is more like it: cars we want to drive
January 16th, 2008Two very sexy cars that may just have what it takes to captivate the American driver’s imagination and desire to own a next gen, fuel choice enabling vehicle:
1. Fisker Karma plug in hybrid electric vehicle (PHEV). Popular Mechanics has video. Bottom line: Fisker’s Four-Door Karma Hybrid Hits 50 Miles on Li-Ion—at 125 MPH. Have we mentioned we’d love to drive this car? (hat tip: Instapundit, whose been on a roll about new vehicle technology and especially about fuel choice.)
Several other exciting announcements about plug in hybrids at the Detroit autoshow, indicating a race to market by automakers. Here’s a roundup:
Saturn’s PHEV Vue: “Version 2 comes late this year using the more common nickel-metal hydride type battery packs in combination with the General’s direct-injected 3.6L V-6 to give a reported 50% boost in fuel economy. Version 3 comes late 2009 at the earliest and swaps the nickel battery for a lithium-ion unit. Those batteries will come with a plug that allows the owner to get a full grid charge in about 4-5 hours.”
Interview with several GM execs about progress on getting a GM flex fuel plug in hybrid on the road. Their target date is November 2010.
Cars.com test drove a plug in hybrid Toyota Prius. Note that this PHEV was made by Toyota, not converted by others like the ones Set America Free and CalCars brought to Capitol Hill – this in and of itself is progress. Toyota intends “to offer plug-in hybrid vehicles by 2010 on a lease basis to fleet customers, such as government agencies and corporations.”
Meanwhile, leaping ahead of the pack, a Chinese automaker called BYD Auto, a newcomer to the exhibition unveiled its F6 Dual Model plug-in hybrid, announcing it intends to produce the car in the second half of this year. This announcement is a strong warning of shape up or ship out to the rest of the field, along the lines of Gal Luft’s Chinese Sputnik oped.
One reporter actually got to test drive BYD’s hybrid with its chairman on the floor of the convention center: “I’m now completely taken with my good luck at getting a real test drive from the Chairman, looking back at the BYD booth now 100 feet away. I was convinced that this was the end of the trip and the car would be backed up to the booth. And then the car sped up to about 10 mph, which is an uncomfortable speed in the middle of a convention center. There was only one obstacle in the way: a press conference. Little did the ALMS people know the Chinese were on their way The American Le Mans Series was holding a press conference to discuss the environmental innovations they were making in their racing (including the introduction of E85 ethanol to the racing series). It was fitting then that the chairman of the small chinese automaker, that sells annually in China what Honda sells in a month in the US, was pointing his answer to the environmental question right at them.
“…And how was the car? I have to admit, besides it’s “heavily borrowed” styling, the F6DM was quite smooth and with a level of fit and finish that was superior to many of the other full production cars on display from China. And that electric motor? Quiet as a mouse. And though we didn’t get the high-speed tour, the car drove smoothly and easily around the floor. Is this the future? I can’t be sure. But there’s no doubt that the company’s Chairman is dedicated to proving his car works. Conventions and convention center staff be damned.”
If you will be in the market for a car in the next few years, now is the time to let your auto dealer know that you are waiting for a flex fuel plug in hybrid — automakers need to hear from you that the demand is out there, and if they want to sell you a car, they need to offer you fuel choice. Let’s get these cars on the road! As Michael Ledeen would put it, Faster Please!
UPDATE: Thanks Instapundit!
What petrodollars buy
January 15th, 2008Walid Phares explains what $1 billion dollars in Iranian oil money means in terms of reach and power for the terrorist organization Hizballah.
Nigerian rebels step up war against oil infrastructure
January 11th, 2008MEND denotated a remote control bomb on an oil tanker in Nigeria today, continuing its attacks against Nigeria’s oil infrastructure. WSJ has an email from MEND here.
Set America Free’s Anne Korin discussed MEND on ABC News last January. Watch here.
The Glenn and Helen Show: Bob Zubrin on How to Break OPEC
January 11th, 2008Listen to Glenn and Helen’s interview with Set America Free Coalition member Bob Zubrin, author of Energy Victory: Winning the War on Terror by Breaking Free of Oil .
The Powers of Petrocracy
January 11th, 2008Fouad Ajami sums it up: “Oil is the dictators’ dream and their weapon, their means of escape from accountability and from the limits societies have drawn for their rulers.”
Care about CO2? Think methanol
December 28th, 2007The report Methanol Solutions to CO2 Emerging by the Methanol Institute is an eye opener. It makes the case that converting carbon dioxide into useful products and making new clean fuel technologies is one of the best ways to address global warming in a scalable and market friendly way.
“George Olah, Nobel Prize Laureate, University of Southern California professor, and author of “Beyond Oil and Gas:The Methanol Economy,†is looking to put his concepts into action. UOP, an Illinois-based chemical producer, has announced a partnership with the USC Loker Hydrocarbon Research Institute to develop and commercialize new technology to convert carbon dioxide into methanol. According to Olah, “The development of this technology could have significant impact on global energy security and global warming by converting carbon dioxide into useful products and making new clean fuel technologies.†Under the partnership with UOP over the next three to four years, research will begin CO2 conversion to methanol from highly concentrated sources such as coal-burning power plants, and eventually work toward converting CO2 directly from the atmosphere. The USC researchers are not alone in the quest to sequester CO2 through methanol. In Iceland, Carbon Recycling International captures CO2 from industrial emissions and converts carbon dioxide to ultra clean fuel. The sources of emissions are from basic infrastructure industrial processes including aluminum smelting, ferro silicon manufacturing, cement production and coal-fired power generation. The fuel is high octane gasoline, ultra low sulfur diesel and methanol for existing automobiles and future hybrid flexible automobiles.
Set America Free has long contended that true fuel flexibility can only be achieved if we open the door to other alcohols and ethers–in addition to ethanol. The flex fuel cars currently sold in the U.S. are only warrented to run on ethanol. If we can indeed convert CO2 into fuel we must allow methanol to compete in the marketplace and make sure flex fuel cars are capable of burning the entire spectrum of alcohols.
See more here
Get flexible
December 9th, 2007The newest Set America Free Coalition member, Admiral James Lyons, writes in the Washington Times:
Terrorist training camps and insurgents in Iraq and elsewhere are funded by Saudi and Iranian petrodollars. So are bounties for families of suicide bombers. It is incredible: by buying Saudi-controlled OPEC oil we finance a war against ourselves.
But the Saudis are not alone. Iran has used its vast accumulation of petrodollars to support terrorism throughout the Middle East as well as providing funds for their drive to develop a nuclear weapon. Oil has also given Iran, Venezuela and — in the past — Libya the flexibility to ignore economic sanctions by finding amoral partners such as China, Russia and some of the European countries who are willing to trade with them. Petro revenue has provided Vladimir Putin the means to centralize his power, bully his neighbors and steer Russia on an independent course that has been unhelpful to U.S. interests.
For all these reasons, as well as for our long-term economic and security concerns, we must break our addiction to oil…
We have technology that will underpin an energy strategy that will break our petro-addiction and OPEC’s hegemony. That strategy lies in something already available: mixed-fuel technology; vehicles that use a mixture of ethanol, methanol and gasoline.
Ethanol is produced from a variety of agricultural sources, primarily sugarcane and corn, at as low as $1.50 a gallon. In 2006, methanol, which can be made from coal, natural gas and agricultural waste, was being sold without any subsidies for 80 cents per gallon.
The engineering difference for a flex fuel car requires an additional sensor and computer chip that controls the fuel-air mixture. It also should have a corrosion resistant fuel system. The overall increase in costs for a flex fuel car will average about $100 per vehicle.
This year Detroit has offered two dozen models with a flex fuel option. To accelerate this program, Congress needs to put politics aside and enact legislation to require that 50 percent of all vehicles produced by our auto manufacturers must be flex fuel by 2012. This will not be easy. However, this is a figure the Big Three auto makers proposed to President Bush when they met last year.