It's Not Just the Environment, Stupid


Facing generational, interlaced challenges -- oil addiction and global warming -- it's pathetic that the debate among policymakers isn't about solving these issues, but about fringe issues like domestic drilling. I'm grateful that some friends are speaking their minds, laying bare some of the problems with this reductionist debate. At NRDC we are of course concerned about the environment, but we know that's not all that's at stake here.

First, what about future generations? As my friend Gal Luft points out in a Baltimore Sun op ed yesterday, we're in a rush to drill now, but our kids will pay for our rash actions later. Here is the key passage from his piece:

Upon recent discoveries of oil in the kingdom, King Abdullah ordered that those new finds be left untapped to preserve the nation's oil wealth for future generations. "When there were new finds, I told them, 'No, leave it in the ground, with grace from God, our children need it,'" the king said.

Behind the king's statement lies a plain truth: The Saudis prefer to sit on their oil, while we are rushing to deplete ours. The Saudi reserve-to-production ratio - an indicator of how long proven reserves would last at current production rates - is 70 years; Iran's is 82; the United Arab Emirates' is 90; and Venezuela's is 91. Iraq and Kuwait are at more than 100. How long does the U.S. have left? Eleven years.

The upshot is that the faster we deplete our share of this resource, the more we'll be hostage to other nations later. We should be saving our oil, not burning it as quickly as possible and thereby consigning our kids to a future of greater addiction.

Another friend (Jason Wells) reminded me of the utility of looking back at historical trends in order to gauge possible effects of new policy. Using data from the Department of Energy and, Jason examined the relationship between real oil prices (i.e., adjusted for inflation) and U.S. production levels. What he found is startling, especially in light of all the "drill drill drill" bluster: There isn't a clear relationship!

Meanwhile, as my colleague Andy Stevenson notes in a recent blog entry, prices have dropped in the past few weeks thanks to reductions in demand as consumers have changed their travel habits and switched to more efficient cars. Cutting domestic demand works. This is especially so given that we are by far the biggest kid on the block on the demand side but have less and less clout as a producer.

The good news is that we're capable of making this a long-term trend, particularly with automakers who are finally hustling to provide high-quality fuel-efficient vehicle choices for us. In fact, over the course of several decades we lowered the oil intensity of our economy (how much oil we use to increase GDP), as shown in the graph below.


However, you will notice that the slope eases toward the right end of the graph. A couple of years ago I crunched some numbers for two key sectors -- transportation and electricity -- to verify this trend. The results are below: Year-to-year reductions in oil intensity have slackened. With vehicles, fuel economy stagnated. With electricity, there just isn't much more we can do to wean that sector off oil: Only about two percent of the oil we use goes there (which means alternatives like wind and nuclear can't help us much with our oil addiction, at least not before we have pluggable vehicles and a lot more electric rail).


But we can and must turn that trend around, slashing the oil intensity of our economy, as my ally Tom Friedman discusses in his new book Hot, Flat and Crowded.


I have just bought the audiobook, and am looking forward to hearing it based in part on the favorable review in the Washington Post, in which Joseph Nye describes how Friedman again lauds "green hawks" who not only value a clean environment, but are also fans of energy security and economic competitiveness. This is the concept underpinning the Set America Free coalition which Tom has reported on in the past. I recommend that everyone check his new book out, since I'm certain it does a superb job of framing the generational challenges ahead, which (as Tom would hasten to add) are really opportunities in disguise.