Crude
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Then, seemingly out of nowhere, in the spring of 2003, the United States invaded Iraq on a flimsy pretext, purporting to rid the broken country of destructive weapons.
It may have been a mistake when USA Today reported on Operation Iraqi Liberation (OIL) in a March 26, 2003 story, but the oily ramifications of what came to be known as Operation Iraqi Freedom were clear nevertheless.97 As American killing machines advanced in the Iraqi desert, long lines of five-thousand-gallon tanker trucks trailed behind, stopping to refuel at military bases aptly named after Shell and ExxonMobil. “The forward bases are normally refueling points,” a Pentagon spokesperson said. “They’re basically gas stations in the desert.”98 Hundreds of airborne oil tankers refueled the Air Force’s fuel-hungry bombers, the newest ones pumping more than six hundred gallons a minute while hovering in mid-air. B-2 bombers flew nonstop from Missouri to Afghanistan and back, replenished a dozen times in mid-air by the flying oil tankers, many of which could themselves be refueled in mid-air.99
Burning over 2 million barrels of oil every week, the U.S. forces crushed the Hussein regime within weeks.100
Enraged Iraqis and others resisted the U.S. occupation that followed, felling more than five hundred U.S. soldiers between the fall of the Hussein regime and early 2004, torching pipelines and blowing up cars. Much ink was spilled detailing the U.S. concern for the Iraqi people, yet weeks after the war ended, many still lacked drinking water and electricity. They didn’t even have gasoline. Lines at the local gas stations stretched for miles and took days to inch forward. Schoolchildren waited for buses that never came. The sick died waiting for gas to fuel the cars that might take them to the hospital.101
The flow of oil from Iraq’s two giant, aging oilfields, Kirkuk in the north, discovered in 1927 and Rumaila in the south, discovered in 1953, comprised about two-thirds of Iraq’s daily oil production before the invasion, but reservoir engineers who descended upon them after the smoke cleared found grave damage. Forced to produce oil while deprived of modern technologies, the reserves had been overpumped and flooded with water, outdated techniques frowned upon by the modern oil industry. Water seeped into Kirkuk’s oil deposits, and hundreds of thousands of barrels of oil were being injected into Kirkuk’s wells in order to maintain pressure. In the south, oil experts convened by the United Nations say, less than half of the hypothetically recoverable oil could ultimately be pumped out. If the United States tried to pump more oil out of these damaged fields, they could be destroyed irrevocably, some experts said.102
Despite extreme provocation, the Iraqi regime declined to use the much-feared weapons of mass destruction that the United States had warned about, and indeed after the regime fell, none were ever found, casting doubts on whether they ever existed at all. Still, pesky Hussein was gone and the contracts that Iraq had negotiated with the Chinese and the Russians were unilaterally declared null and void.103
Immediately, the U.S. occupying forces instructed Iraq’s oil ministers not to make a move without their permission,104 installing former Shell CEO Phillip Carroll to help lead Iraqi oil development, despite an abundance of highly trained, efficient oil technocrats from Iraq itself.105 Before new oil could be pinpointed and extracted, a massive investment to rebuild the country’s oil infrastructure would have to be made, one that would net billions for Big Oil and its contractors. Halliburton alone would take home at least $3 billion in reconstruction contracts.106 Oil companies demurely pointed out how expensive and time-consuming such contracts would be for them. But given the length of time and amount of money they’d spend elsewhere, for less oil in more hostile places, it was a bit of a stretch. To put it in perspective, ExxonMobil spent close to thirty years negotiating access to a mere billion barrels in war-torn Chad; the industry was spending almost $40 billion to develop oil in Kazakhstan, despite the trouble they’d face in piping it out.107 In Iraq, the industry might have to spend several billion dollars to get the country’s oil infrastructure stabilized, but in the end, the prize would be access to the second largest proven conventional oil reserves in the world. Most, like Shell, aimed to “establish a material and enduring presence in the country,” as Shell exec Gavin Graham said in April 2005.108
The U.S. regime in Iraq promptly set about twisting the spigots off for their enemies and on for their friends. For a country that considered using oil as a weapon anathema, when given the opportunity it quickly jumped at it. U.S. soldiers cut off a pipeline carrying two hundred thousand barrels of Iraqi oil daily to Syria, in one fell swoop bleeding Syria of up to $1 billion a year.109 Discussions on how to rebuild a pipeline to pump cheap Iraqi oil to U.S. ally Israel kicked off.110
President Bush meanwhile set off on a whirlwind tour of Africa, the first time a president had visited the continent in his first term. That summer of 2003, the administration toyed with the notion of sending troops to storm Liberia. “African oil has become of national strategic interest to us,” explained one U.S. official. “The stability of West Africa”—home to the West’s new El Dorado—“is important to U.S. interests,” added national security advisor Condoleezza Rice.111
The Bush administration continued to promise the American public that sales of Iraqi oil, not their taxes, would pay for Iraq’s $100 billion reconstruction.112 But by November 2003, dogged by sabotage, United States-occupied Iraq was producing just 1.9 million barrels a day, well under the 3.5 million barrels the country proferred daily before 1990.113 The flow of Iraqi oil reached 2.5 million barrels a day a year later, but once again fell to just over 2 million by the summer of 2005.114 As the occupation of Iraq dragged on, the U.S. administration started to sow the ground for what they considered the next step for the world’s last super-power: decades of unending war, Vice President Cheney told a crowd in Los Angeles in January 2004, under the guise of a generations-long “war on terrorism.”115
In 2004, China, instead of using 7 percent more oil than it had the year before, as it had been doing for the past few years, used a bit more oil. That year, China consumed 325 million barrels more oil than it had the year before, an increase of 15 percent over the previous year. With the world sucking down oil nearly as fast as it could be supplied, the extra consumption from China sent the entire system into pandemonium.
Until the industry somehow brought more hydrocarbons online, any minor disruption in the flow of oil could now be expected to lead to regional scarcities and skyrocketing prices. A series of devastating hurricanes in the Gulf of Mexico, shutting down more than 25 percent of the U.S. refining capacity did the trick, pushing oil prices to $70 a barrel.116 American consumers accustomed to $1.50/gallon gas were shocked by prices topping $3 at the pump. The lines at the pumps lengthened, and magazine editors readied their speculative features on the end of the oil age.
The oil industry was in for an earful from politicians who complained that greedy oil barons were depriving voters of their birth-right to cheap oil. Hauled before a Senate hearing in late 2005, oil execs from ExxonMobil, Shell, BP, Chevron, and ConocoPhillips were scolded by camera-conscious senators. Build new refineries! they yelled. Drill deeper, harder, longer! they demanded. “The oil companies owe the country an explanation,” fumed senator Pete Domenici.117 But the industry execs had heard it all before. Despite record-breaking profits, maybe they would and maybe they wouldn’t. “We don’t want to build capacity without demand,” explained Saudi Arabia’s oil minister Ali al-Naimi, later.118
Saudi Arabia was the only answer to the problem, according to the International Energy Agency. Every other producing country already had the taps full on. And so, the kingdom would just have to increase its 10.5 million barrels of daily oil production to 18 million barrels a day by 2030, the agency announced. According to Fatih Birol, chief economist of the IEA, it didn’t matter whether there was enough oil in the ground to bring up. “Mr. Birol said the issue was whether investments were made, not whether reserves existed,” the New York Times reported.119
President Bush met with Saudi
Arabia’s Prince Abdullah for “a straight answer” on how much oil the kingdom could cough up. Triumphantly, in April 2005, the president extracted an assurance from the Saudi oil minister that the kingdom would, indeed, ramp up its oil flow. According to the minister, the kingdom had no fewer than 200 billion barrels of as-yet-undiscovered reserves.
That view sounded optimistic to some, who wondered how the minister could be so sure about the as-yet-to-be-discovered 200 billion barrel goldmine. The truth later tumbled out from Saudi Aramco’s former head of exploration Edward O. Price. According to Price, the source of the fantastic sum was none other than the U.S. Geological Survey’s notorious 2000 report.120
CHAPTER TEN
Challengers, Old and New
SOLAR POWER’S POTENTIAL is vast. Generally, a typical square foot of land in the United States receives, absolutely free for the taking, about nineteen kilocalories of sunlight an hour.1 If applied to all the available roofs in even a cloudy country like Britain, solar panels could generate more electricity than the entire nation consumes in a year.2 Indeed, covering just 0.4 per cent of the globe with 15 percent efficient solar panels could supply enough electricity for the entire planet’s primary energy needs.3 Where the sun doesn’t shine, the wind generally blows, and its power per square foot is about the same.4 Oil companies know this. “All the world’s energy could be achieved by solar many thousands of times over,” a Shell official said in 1995.5
Despite the promise of renewable energies, less than 3 percent of the world’s energy needs are met by solar and wind power, according to the International Energy Agency. Because the overall investment in solar and wind energy remains so small, the technologies themselves are expensive compared to mature, well-subsidized fossil fuels. Today, according to calculations cited by ExxonMobil, it costs about $100 to $200 to transform sunlight into the amount of energy in a $25 barrel of oil.6
Technological improvements rein in the price of renewable energies, but such investments must play catch-up with the R&D blitz for fossil fuels. In the United States, scientists researching and developing new photovoltaic technologies manage with about $50 to $75 million a year,7 a fraction of the $3 billion their colleagues working in oil and gas research labs enjoy.8
To date, the oil companies have not considered it in their interest to pursue renewable energies with a fraction of the zeal they lavish on their quest for oil. Some have invested, modestly, in renewable energies. In the small pond that constitutes the renewable energy market, giant oil companies can make large ripples. BP’s solar division makes it the second biggest solar company in the world. Shell is one of the world’s ten biggest wind farm owners.9 But according to the Economist, such ventures should be seen not as genuine entrepreneurial ventures but rather as hedging bets “should the transition to clean energy happen unexpectedly soon.”10
Big companies such as BP and Shell could easily make solar energy affordable to today’s consumers, triggering a switch away from fossil fuels. As Saudi Arabia’s oil minister warned his OPEC colleagues decades ago, “if we force western countries to invest heavily in finding alternative sources of energy, they will. This will take them no more than seven to ten years.”11 Today, a single large manufacturing plant for solar cells—one capable of producing one hundred megawatts of solar panels a year—would make the price of solar PV cells competitive with coal. Such a plant would cost less than a “single leg of a deep-water drilling rig,” says Jeremy Leggett.12 And yet, such a plant remains a dream. In 2004, the biggest solar-cell plant churns out just twenty-five megawatts worth of solar panels a year.13
Relative to the days when farmers scooped oil floating atop blackened rivers, bleeding crude from the Earth’s crust today has become an energy-intensive affair, requiring massive amounts of concrete, steel, earth-eviscerating machines, and armies of workers. Although industry managers affix price tags on the effort, subtracting the cost from the projected windfall of cash from the barrels of oil that might be unearthed, they don’t analyze the amount of limited energy resources their activities consume relative to the amount they provide.
Obviously society, as a whole, must invest in energy sources that provide more energy than they consume, or it will soon enough run out of energy altogether. Mining the iron, firing it into steel, crushing stone into concrete, building the rigs, feeding the workers: all of these things require vast amounts of energy, whether the oil company pays for these costs directly or not.
When the biggest and shallowest oilfields were first tapped, oil’s net energy, the amount of energy it provided compared to the amount of energy its extraction required, was around 100 to 1 or better. By the 1970s, with oilfields becoming smaller, deeper, and more remote, (and thus requiring more energy to get at) the net energy of oil dropped. By the 1970s, it was around 23 to 1 and falling.
Hydropower provides the next best return, at 11 to 1; coal 9 to 1; and nuclear power a 4 to 1 return.
Still, these energy “profits” dwarf those of more abundant energy sources like sunlight and wind. Fossil fuels concentrate sunlight; the difference in what they pack is many times greater than the difference between wine and grape juice. According to energy analysts, direct solar energy can perhaps provide 1.9 units of energy for every one it consumes in its production and manufacture. Wind energy hovers around the same return.14 Silicon for solar panels and aluminum for windmills abound in the Earth’s crust, but it takes energy to mine and process these into energy-catching contraptions, and even the best solar panels can’t convert more than 30 percent of the sunlight that falls on them into electricity.15
This reality forms the bedrock of a deep disdain for energy sources that don’t rely on giant shovels and holes in the ground, even among the more thoughtful people associated with the oil industry. Kenneth Deffeyes writes, with some finality, that neither solar nor wind energy can be an “immediate, large-scale solution to the energy problem.”16 Oil execs who presumably have some conflicts of interest on the topic are more direct. Oil companies might be expected to address some environmental impacts of their business, but “that does not mean we should accept facile suggestions about moving rapidly away from using fossil fuels to rely on renewable forms of energy,” asserted Shell’s chairman Philip Watts in June 2003. BP’s Lord John Brown concurred: “There is still no source of alternative or renewable energy that can be supplied commercially to meet mass energy needs.”17
ExxonMobil’s Rex Tillerson could barely bring himself to say the words “renewable energy.” “We expect so-called renewables such as wind and solar to grow rapidly,” he said, “although primarily due to government incentives not market economics.”18 Tillerson’s boss is even more forthright. Renewable energy is “a complete waste of money,” he told the Economist.19
It may be that price and energy analyses alone will never fairly measure the value of harnessing solar, wind, and other renewable energy sources. In one way or another, society pays the bills for the ravages of climate change, smog, gas flaring, and oil spills; the disrupted lives of people, animals, and ecosystems around oil facilities; and the violence, war, and corruption spawned by profit-seeking oil companies and their allied state interests. It is unlikely that renewable energies would impose anywhere near the same penalties. Sun, wind, silicon, aluminum: these resources are distributed more or less equally around the planet. A society run on renewable energy might be much less lavish, much more provincial, and far less elaborate, as GNP wouldn’t keep marching forward, and complex, energy-intensive industrial factories might come screeching to a stop—but a slow-growing society might also be a lot longer lasting and equitable.
If recent energy initiatives are any indication, the energy future being written today by those leading the most energy-hungry country in the world, from presidents and governors to major automakers and oil companies, will consist not of solar panels and wind farms, but hydrogen fuel cells, coal mines, nuclear power plants, and ethanol. Each, in its way, is promoted with alluring double-speak a
bout its efficiency, cleanliness, and sustainability. Yet each, in its way, will likely ensure continued consumption of oil and growing emissions of carbon dioxide into the air.
Hydrogen fuel cells produce electricity from hydrogen and oxygen, leaving behind a drip of pure water. The fuel cell harnesses hydrogen’s powerful attraction to other elements, turning it into electricity, then releases the hydrogen to bond with oxygen, forming H2O. Hydrogen is plentiful; in fact, it is the most abundant element in the universe. But, the properties of hydrogen that make it so appealing as an energy carrier also make it exceedingly difficult to capture. It is vanishingly rare as a free element. If not locked up in hydrocarbons or water, hydrogen atoms are so light they can rapidly escape out of the atmosphere and into the blackness beyond. To exploit the energy of hydrogen’s attraction to other elements, energy must first be expended prying hydrogen out of the different hydrogen compounds found on earth. Hydrogen can be extracted from water using renewable energy sources, or from “reforming” natural gas. It can also be extracted from other hydrocarbons, including gasoline.
Enthusiasm for a “hydrogen economy” has been building since the late 1990s. In 1999, Iceland announced its plan to become the world’s first hydrogen society.20 A few years later, the European Commission announced a $2 billion scheme to enable a hydrogen-powered Europe, in order to meet the region’s environmental commitments under the Kyoto Protocol.21 In Iceland, buses fill up at stations where the country’s plentiful geothermal and hydroelectric power zaps water into hydrogen and oxygen.22 The European Union similarly planned to make hydrogen using renewable energy sources.23