Wednesday, February 17, 2010

"The Plan" by Black (2008)

Author Edwin Black's niche is to, assisted by dozens of volunteers, sieve through libraries and archives and write extremely well-researched books. He usually spends a couple of years doing research before he cranks out a new book, but he made an exception for the sleek, no more than 130 pages long "The Plan: How to rescue society when the oil stops - or the day before" (2008).

A little more than a year ago, I wrote [in Swedish - not yet translated to English] about his first oil-related book, "Internal Combustion: How corporations and governments addicted the world to oil and derailed the alternatives" (2006). Here I review the 2008 "sequel".

The book's starting point is America's (in)ability to cope with an acute fuel crisis. It does thus not start off with the “ordinary” peak oil scenario based on a relatively slow decline in global production but rather takes as its starting point a rather sudden change for the worse. "Oil will ’peak‘ [...] the very hour a person cannot pump a gallon of gas or buy bread on an unstocked supermarket shelf because someone thousands of miles away has cut the lines of supply".

Although the book does not primarily deal with what exactly caused this sudden decline, it starts by giving an overview of how dependent and vulnerable the U.S. is if the daily supply of oil from neighboring and more distant countries would suddenly decline (the three largest exporters of oil to the United States are Canada, Mexico and Saudi Arabia).

When it comes to Saudi Arabia, Black points out that the oil from the world's largest oil field, Ghawar, must pass through three vulnerable choke points on its journey to the U.S. and other export markets. At Abqaiq, two thirds of Saudi Arabia's oil is processed and prepared for shipment by tankers before the oil is sent to the port of Ras Tanura. Subsequently, all oil tankers have to travel through the 50 kilometers narrow Strait of Hormuz in order to reach the oceans. Of all the oil in the world that is transported by sea, approximately 40% has to traverse the narrow Strait of Hormuz, and Black calls these three choke points "the solar plexus of the planet." If any of these three sites were to be knocked out, the world would immediately go down for count.

In 2006, an attack by al-Qaeda against Abqaiq was averted, and Iran has threatened to block the Strait of Hormuz if the country is invaded by the United States or Israel. For Black, the question is not if, but when a collapse of the oil supply (of some kind) takes place.

What then constitutes an acute oil crisis? At a 5% decrease in the oil volumes that are accessible to the Western world, the U.S. President may give permission to release oil from the strategic oil reserve. A decrease of 7% would trigger an "international crisis under emergency treaties", and a decrease of 10% would be a disaster which, according to an energy expert, would be "so off the chart that we cannot even model it". That does not sound very reassuring, does it? “The Plan” is Black's answer to what the U.S. needs to do to cope with a prolonged (more than 30 days long) reduction in the availability of oil by 5-10%.

After stating that some (few) Western countries have plans for how to handle such a situation, Black makes a point of the fact that the United States Does Not Have a Plan - beyond letting the (marvelous, magical, miraculous) market handle such a never-occurred-before situation. To Black, his own book is right now the plan - the manual - for how to face such a crisis. In fact, the book is partly written as a manual, and therefore in places tends to become a rather dry read. The book's longest chapter is structured in the form of 18 regulations, and each regulation is followed by a discussion of the necessity and consequences of the regulation in question. Some of the regulations are quite formally written - ready to be immediately implemented in a real crisis:

"Regulation 15: Marine Restrictions on yachts, speed boats and non-commercial pleasure craft. Within one week of an oil supply emergency declaration, all non-commercial marine craft, including but not limited to private yachts, speed boats, recreational vessels and personal watercraft, shall be unable to refuel in the Continental United States, except in an emergency, until retrofitted to accept alternative fuel or propulsion system."

These 18 regulations govern everything from prices and rules about the sales of refined petroleum products, to how to deal with the strategic oil reserve, carpooling, speed limits (55 mph or 90 km/h, except "in the countryside"), idling, public transportation (very cheap or free), trailers, the black market and so on. Petrol price are set to a predetermined level that does not price the poor out of the market - since everyone must have the chance to get to a hospital or to work (for example as a cleaner in a hospital). The price of petrol will thus remain "reasonable", but the amount you will be able to buy will be rationed.

One of the regulations states that a car’s fuel economy will determine how often the car may be driven; if a car cannot be driven at least 15 miles per gallon (mpg) - 6.3 kilometers per liter of gasoline – it may not be driven at all before it has been rebuilt/retrofitted. Cars with a fuel economy of up to 25 mpg may be driven one day per week, up to 35 mpg may be driven every second day, and for cars that have a fuel economy of 36 mpg or better (15 kilometers/liter) there will be no restrictions.

All these regulations are short term measures which are to be implemented during the very first week. Eventually, all cars and other vehicles must be rebuilt so that they may be driven on fuel other than petrol. Regarding alternative fuels Black is agnostic – he thinks that people should use whatever works best in different parts of the United States and lists the available options: hydrogen, ammonia, alcohol (e.g. ethanol), biofuels, compressed natural gas (CNG) or electricity. Unfortunately, in the U.S. today it is very difficult to get around the rules and "upgrade" a car to drink other beverages than gasoline, so the starting position for the future growth industry if retrofitting cars is poor. The rigid rules of the Environmental Protection Agency (EPA) have prevented the commercialization of alternatives to gasoline, thus nurturing a small (illegal) underground culture where people upgrade their cars at their own risk and using equipment from abroad.

Who is to blame for the vulnerable situation that the United States and the rest of the Western world now finds itself in? Black identifies four main culprits:

- OPEC bears some responsibility but gets off lightly; it was the West who invaded their territories after the First World War and created vassal states which supplied cheap oil, and, it was also the West who voluntarily made themselves dependent on OPEC’s oil.

- The second scapegoat is the public and their (spineless) representatives among politicians.

- Oil companies (Big Oil) are according to Black more blameworthy than OPEC and the general public. They have enriched themselves while they have made society more dependent on oil, and have at the same time delayed and discouraged all possible alternatives. In the second quarter of 2008, America's largest oil company, Exxon Mobil, made an astronomical profit of 11 680 million dollars. If you remove all oil companies from the list of America's 500 largest companies (Fortune 500), Exxon earned more money than all the other companies combined during that period.

- Black though reserves the greatest blame for Detroit and the American car companies. Already in the childhood of the automobile, the nascent automotive industry sabotaged and manipulated the alternative, better solution - the electric car. From a long history of "subversive activities", Detroit becomes the main scapegoat for its recent 35 year long campaign of obstruction and foolish decisions. The automotive industry has repeatedly made the wrong turn ever since the first oil crisis in 1973 made it clear that the U.S. was vulnerable due to its dependence on oil. Despite this obvious vulnerability, Detroit has since then built, sold and exported many millions of gas-thirsty cars which have exacerbated and already-bad situation. Actor Alex Baldwin (no kidding) reflects on Detroit's burden of debt:

"The heads of [US automakers] did not spend the last thirty years lying in bed each night, sleepless. They did not turn their spouses in the wee hours and say, "How do I serve the automotive needs of the American public and better protect their health and safety AND help them conserve energy?" [...] Instead, they spent billions of dollars attempting to bribe the Congress to avoid putting in seat belts and air bags, installing catalytic converters and reaching more ambitious fuel efficiency standards. For the most part, they succeeded."

Based on all of this, Black concludes in his 18th and final regulation that the oil and automotive industries must absolutely not be involved in any discussions about how to solve the oil crisis:

”Iowa corn producers, Detroit carmakers, oil companies and other forces of petroaddiction must be kept out of the fix. They will destroy it, dilute it, distract it, dismantle it, or divert it. […] if lobbyists are not excluded from the rescue plan, then any plan will be doomed.”

Right now, two out of the three major American car companies are down for count (General Motors and Chrysler). In a way, they have thus been "punished" for their sins. But from another perspective, they have instead been absolved and have left their sins behind them, because it is no longer possible to claim compensation from them - and especially so if the compensation should be proportional to the harm these companies more or less deliberately have inflicted upon society.

In some ways Black may come acress as extreme. His answer would be that a major threat must be countered with measures that (to some) may seem extreme (today). In other ways, however, he is moderate in his approaches and assumptions. Something I find to be a weakness is that he never criticizes or even reflects upon fundamental assumptions about the American way of life based on cars and long distance transportation, despite the fact that he clearly makes an effort to think about the ‘real’ price of gasoline:

”The true price of every gallon of gasoline, adding in expenditures for tax subsidies and government programs, harm to our health as a result of toxic emissions, environmental damage and military operations to protect the supply, is almost impossible to reliably calculate […] But some of the most quoted and informed studies conclude the true cost of oil to be more than $15 per gallon”

The claim that oil and gasoline actually cost much more than what you pay at the petrol pump is in line with the contents of a report ("Powering America's Defense: Energy and the Risks to National Security") from the military think tank CNA. The report, written by CNA's military advisory board (consisting of 12 retired generals and admirals) states that the real cost of providing U.S. military with fuel is between 15 and hundreds of dollars per gallon (!), depending on the need for security and logistics to ensure that the fuel is in the right place at the right time. These prices for example include costs to protect maritime transports and to station troops and maintain numerous military bases abroad.

A concrete example is a specific study from Iraq, where only 10% of the fuel for ground troops is used by tanks and other vehicles that "deliver lethal force". The remaining 90% is used by armored vehicles, trucks and helicopters that deliver and protect fuel and troops. Another example is the estimated cost of $42/gallon for aerial refueling of fighters. Of course, these calculations do not include "softer" aspects such as pollution of the environment or poor health among military and other personnel mentioned by Black above.

When the gasoline price skyrocketed in 2008 and many Americans were brought to their knees, the price of a gallon of gasoline in the U.S. reached unheard-of levels of $4 per gallon. This price is not at all high from a Swedish perspective where we have to go back to the end of the 1980's to find such "bargain" prices! But, a $4 per gallon price tag on gas in the U.S. is two to three times as much as the price during the period 1990-2004. Today, in the midst of a raging recession, the price of gasoline is slightly higher than $2.50 per gallon, and already that price is too much for many (un- or underemployed) Americans.

Although The Plan is a crisis plan, Black would prefer for it to be implemented already before a major crisis arises. A nice thought, but don't hold your breath waiting for it to happen – the ideas are far too rational to be taken seriously.

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