John Hofmeister on BP Oil Spill and Obama’s Katrina
Yes, the oil spill is a crisis, but let’s not pretend that we can just stop drilling for oil without hurting our economy and getting it from somewhere else, says former Shell Oil executive John Hofmeister.
Every morning Americans need 20 million barrels of oil to get through the day.
Whether we like or hate oil, its effects and affects, it matters not. Every day of President Obama’s tenure in office will still require 10 thousand gallons per second. Ninety four percent of all daily commerce takes place because diesel and turbine engines deliver the goods. Two hundred and fifty million cars, tens of millions of trucks, thousands of planes and ships use only oil, with perhaps a drop of biofuels. If we wish to keep those vehicles in motion this year, next year and through their normal mechanical lives, we must have more oil. And since no alternative non-oil vehicles are ready for market, at least not on a scale that makes a material difference in overall demand for oil anytime soon, we’d better get over our distaste at producing more oil. Further complicating things is the fact that the Chinese now buy 13 million additional cars each year. We compete for access to oil every day, as the thirst in China rises to U.S. levels.
We may not have a lot of fuzzy feelings toward oil right now. But we can’t stop drilling. Doing so is what will truly make this Obama’s Katrina.
The new energy policy, as the president described it last week, will hardly scratch the surface, even if he can see it through during a second term. It’s not that we shouldn’t make that start. But we must look realistically at the limits of what it can accomplish.
• Full coverage of the oil spillWhy, then, has the president ordered a moratorium on deepwater drilling, and de facto stopped shallow water drilling to impose new regulations, in the midst of an economic growth cycle? Is it really due to the Deepwater Horizon tragedy and an unwillingness to risk more of the same on 33 additional rigs? Or is it a greater (political) need to subdue a range of increasingly unruly constituents who are unimpressed with the president’s handling of any number of issues in the run-up to the November elections, and especially aggravated by his seeming lack of control of this most obvious crisis?
The evidence increasingly points to the Deepwater Horizon explosion as a human-caused, horrific incident akin to a plane crash. Decisions, individually sub-optimal, uninformed or even reckless, were sufficient to overwhelm all the technology, equipment, systems and processes that have protected more than 35,000 wells in the Gulf for over 40 years. And when the Macondo blew, there was nothing to stop it. Even the contingency blowout protector seems to have been compromised and not replaced.
But here’s the thing—when an airplane crash kills its passengers we don’t ground all similar planes. They keep flying, because people need to get where they’re going. People also need oil. How can we stop drilling?
We’re in a national war of words over the future of our energy system. Regrettably, our national leaders are turning it into an “either/or” proposition—the old ideas versus the new ideas—which is wrong. It can’t just be wind, solar, and biofuels versus coal, oil, and gas. The former simply cannot be produced in quantity cheaply enough to even approach covering our national need. Variable supply can never replace constant supply. We must have a combination of “both/and.” The president knows that; he’s said it on more than one occasion. So why does he change his tune now?
For whatever other opinions people hold of President Obama, all acknowledge his intelligence. But that doesn’t mean he knows everything. I wrote Why We Hate the Oil Companies: Straight Talk from an Energy Insider because people like President Obama and his colleagues in the Senate and the House, and the previous seven presidents and 18 prior congresses, have lacked the knowledge to properly deal with our energy system. We had an energy nirvana going for us until 1973, the year of the first Arab oil embargo. That wake-up call stirred a siren call for “energy independence.” But all of the powerful and talented people who have led our nation since then have fundamentally failed to understand what it takes to get to a 21st-century energy system. They’ve misled with misinformation, manipulated with political symbols, and now they want to charge us high gas prices to pay for stopping drilling.
The moratorium under appeal following a New Orleans federal judge’s decision, unless cancelled now, will not last a mere six months. Such an estimate was conditional on a presidential commission resolving the future for drilling. Whatever it recommends, there is no assurance that we pick up where we left off. Meanwhile the rigs will leave the Gulf for destinations abroad, likely long-term assignments, so that the international oil companies can drill more oil to replace the decline of current production.
Through the rest of this year and the next two, domestic drilling might have opened up as much as a million or more new barrels of oil per day for domestic consumption. Instead, we will see domestic drilling decline just as the economy demands more oil. That means more imports to procure our daily rations.
It also means the return of triple-digit crude oil prices. We’ll see gasoline at $4.00 to $5.00 per gallon by the summer of 2012. Long before then, the nightmare well will be shut and the Gulf cleaned. The multi-year moratorium takes us to 2012 and a national election. Unnecessary pain at the pump is a weak platform to offer a nation of consumers.
The new energy system I propose can’t be Democratic or Republican. It must be American. It must transcend presidents and alternate majorities in congress if it is to have impact. It needs short-, medium- and long-term pathways. It has to include all forms of energy, technology for efficiency, increased environmental protections, and more infrastructure. We may not like how much it takes. And we may not have a lot of fuzzy feelings toward oil right now. But we can’t stop drilling. Doing so is what will truly make this Obama’s Katrina.
John Hofmeister is the former president of Shell Oil Company and author of Why We Hate the Oil Companies: Straight Talk from an Energy Insider (Palgrave Macmillan, 2010). He is the founder and CEO of the not-for-profit Citizens for Affordable Energy, a public policy education firm that promotes sound U.S. energy security solutions for the nation.