Jan/Feb 2003 - VOLUME 24 - NUMBERS 1 & 2
T h e B u s i n e s s o f W a r
The Royal United Services Institute (RUSI) describes itself as a "professional forum for study of defense and international security."
Located in the heart of London, RUSI is an incubator for the latest defense establishment thinking. It is no great surprise to enter and find Robert "Bud" McFarlane, formerly Ronald Reagan's national security adviser, addressing a crowd of officers and bureaucrats.
The surprise last October was his message -- greater security for Great Britain and the United States will be achieved not by building and deploying more aircraft carriers and tanks in the Persian Gulf, but by increasing energy efficiency and automobile fuel economy at home.
National security would best be served, McFarlane argued, by focusing on reducing domestic demand for oil. Focusing on the supply of oil will prove "ultimately inadequate," concluded McFarlane, who once worked for the man who removed solar panels from the White House.
This is not your father's clean energy movement. At the symposium McFarlane addressed, there was little discussion of climate change or other environmental impacts of oil addiction. There was even less discussion of the human rights issues that have plagued oil projects from Nigeria to Colombia and Burma. The issue for McFarlane and the others at RUSI was simply national security.
After discussing various aspects of the costs of oil addiction, including the political and economic costs of maintaining security of supply, participants in the symposium then argued the case for a transition from oil as the principal source of portable fuels.
McFarlane and the RUSI may represent the future of national security approaches to energy, but they are not the present.
In fact, the Bush-Cheney administration is perhaps the ultimate expression of the "oil equals security" mindset. The administration's geopolitical strategy -- based in significant part on the threat or actual use of force -- in large part revolves around the perceived need to maintain access to oil reserves, particularly in the Persian Gulf, but around the world as well.
Beneath it All
The amount of oil available is not simply a function of geology, but also of economics, technology and politics. Identified, or proven, reserves refer to oil and gas that have been discovered and remain in the ground, but could be extracted quickly and economically using today's technology.
Additions to reserves can take place as technological advances allow access to previously uneconomical oil, as has happened over the last decade with deep offshore technology, horizontal drilling and the increased use of advanced seismic mapping technology. Reserves growth also occurs during the production process, through the extensions of old fields or the discovery of new pools (fields) of petroleum. The price of oil or gas also has a significant impact on reserves estimates -- as price goes up, the higher cost of extraction from smaller, more marginal finds becomes more economically viable, and those fields are added to proven reserve estimates.
Possible reserves figures, which are cited as an indication of how much oil a region might hold for the future, are even more speculative -- although recent technological improvements have improved the reliability of these figures.
To further complicate the matter, both companies and countries have financial incentives to either over- or under-estimate the amount of reserves in their possession at any given time. It is a complicated business, and outside the United States, there are no agreed standards for reserves calculations.
In The New Economy of Oil, recently published by the Royal Institute of International Affairs, the authors put forth the useful concept of thinking of all the oil in the world as an iceberg. Visible above the water line are those reserves that are proven, and economically viable to extract today. Beneath the water are the much more vast reserves of conventional and unconventional sources of oil that will become economical as the price goes up and the technology evolves.
The Saudi Advantage
And one country, Saudi Arabia, holds just over one quarter of all the oil in the world. Saudi Arabia has proven reserves of 264 billion barrels of oil, and possible reserves that are estimated by the U.S. Energy Information Administration to be as high as one trillion barrels. The Saudis have the world's largest production capacity, and the largest excess production capacity. On a daily basis, Saudi Arabia currently produces 8 million barrels per day.
Perhaps more importantly, it is the only country that can, on short notice, produce an additional 2 million barrels a day. This means that when disruptions in supply occur -- for example, when the Venezuelan oil industry shuts down -- the Saudis are the only ones who can pick up the slack.
For these reasons, the oil market revolves around Saudi Arabia. For U.S. geopolitical strategists, this dependence on Saudi Arabia is a major vulnerability which fundamentally shapes U.S. military policy.
Oil = Security
Three years later, President Carter's secretary of defense, Harold Brown, testified before Congress that "there is no more serious threat to the long-term security of the United States and to its allies than that which stems from the growing deficiency of secure and assured energy resources."
In January 1980, the lingering fear generated by the embargo, combined with events such as the Iranian Revolution and the Soviet invasion of Afghanistan, led U.S. strategists to draw a line in the sand.
In his last State of the Union address, Jimmy Carter stated that any "attempt by an outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States," and pledged to defend that interest by "any means necessary, including military force."
Five weeks later, the United States Rapid Deployment Joint Task Force (RDJTF) was formally established at MacDill Air Force Base in Florida. By the time Ronald Reagan took office, the RDJTF included 100,000 Army troops, 50,000 Marines, and additional Air Force and Navy personnel. In January 1983, the RDJTF became the U.S. Central Command (USCENTCOM), which 20 years later is overseeing the buildup of U.S. troops around Iraq.
Global War for Oil
In March 2001, newly appointed Energy Secretary Spencer Abraham unveiled the Bush/Cheney administration's process to create a new National Energy Strategy "founded on the understanding that diversity of supply means security of supply." In actuality, this strategy had been in place for more than a decade. Although energy planners know that there is simply not enough excess oil in the world to displace the central role of the Persian Gulf nations, they have sought to maximize sources of oil from elsewhere in order to diminish the power of the Gulf states.
Alternative oil suppliers immediately become, by definition, strategically important in the U.S. military calculus, and there is a striking correlation between the presence of oil and the deployment of the U.S. military globally.
Iraq, oil, war and security
One concern in any invasion scenario is that war will lead to a temporary reduction in supply, as Iraqi operations go off line. Iraq sells approximately 2 million barrels a day on the global market under the "Oil for Food" program, and temporary loss of these supplies might send oil prices skyrocketing. Three quarters of Iraq's daily production comes from just two fields -- Kirkuk in the north, and Rumaila in the south. Robert Ebel, energy program director at the Washington, D.C.-based Center for Strategic & International Studies, has suggested that if U.S. Special Forces were to seize these two fields in the opening moments of a war, 75 percent of Iraq's oil could continue to flow onto a jittery oil market -- thus keeping prices from spiking too high.
In a post-Saddam Iraq, the country would quickly be in a position to dramatically increase production. If sanctions were removed and new drilling technology was brought in by U.S. companies, Iraq's production could rise from less than 3 million barrels a day currently to 6 million or perhaps even 8 million barrels a day by 2010.
If a post-Saddam Iraq's production increases as expected over the next decade, Iraq will be an insurance policy against Saudi Arabia. Increased Iraqi production will certainly lessen the power of Saudi Arabia to manipulate the global oil market, and could even serve as a buffer in event of an unexpected loss of Saudi supplies.
U.S. oil companies will almost certainly benefit from a "regime change" in Iraq. Ahmed Chalabi, the leader of the Iraqi National Congress (the most prominent opposition group), has said that "American oil companies will have a big shot" and that he favors the creation of a consortium of U.S. oil companies to develop Iraq's oil.
U.S. officials have consistently and vehemently denied that oil is a motivation in the buildup to war. On "60 Minutes," Secretary of State Donald Rumsfeld was asked if the war was about oil and responded, "Nonsense. It just isn't. There are certain things like that, myths that are floating around. It has nothing to do with oil, literally nothing to do with oil."
But almost no one takes that claim seriously. Whether oil is the most important factor in going to war, or merely one of many considerations, it is plain that the U.S. obsession with Iraq is due in significant part to the country and region's oil reserves.
For Bush and Cheney, national security clearly involves using the military to control the global diversity of oil supply needed by the world's largest oil consumer, the United States. This view makes sense if you believe that there are no viable alternatives to oil.
Thirty years ago, when the oil embargo shocked the United States, or 20 years ago, when the Carter Doctrine was just taking hold, alternative energy was in its infancy. Today, however, auto companies are mass producing hybrid cars, and prototype hydrogen fuel cell vehicles are being driven in California. Testifying before Congress recently, former CIA Director James Woolsey spoke out strongly in favor of alternative energy technology, noting that "there is no incompatibility between being a hawk and being a green." While that may be true, it is hard to imagine that the U.S. global strategists would perceive vital national interest in the Persian Gulf or in a half dozen other places around the world if the country were fueled by solar power or hydrogen fuel cells. If the energy is limitless, the supply will always be secure.
Meanwhile, At Home: Oils Threat To U.S. Waters
In the wake of November's 2002 massive oil spill off the coast of Spain that continues to despoil hundreds of miles of undeveloped shoreline, disrupt vast fisheries and jeopardize the livelihoods of the people who depend on them, the European Union has begun to crack down on old, poorly maintained, single-hulled tankers like the sunken "Prestige."
Meanwhile, what is the United States doing to protect its waters?
The U.S. Coast Guard claims that ships like the Prestige would probably not be allowed to operate in U.S. waters -- yet on December 21 the Coast Guard permitted the giant single-hulled tanker Long Beach, the sister ship of the Exxon Valdez, to carry a cargo of crude oil up the West Coast after a temporary patch was put on a hole that its anchor had poked in its underside. After offloading oil in San Francisco Bay it was allowed to continue on to Port Angeles, Washington, where permanent repairs were completed on December 28.
Floating rustbuckets like the Liberian-registered Prestige are just one of many threats the oil business poses to U.S. waterways.
Take, for instance, the industry's likely failure to convert all tankers operating in U.S. waters to double-hulls by 2015, a deadline established under the Oil Pollution Act of 1990, which was passed after the Exxon Valdez disaster.
"People are not knocking down our doors placing orders [for double-hulled tankers]," reports American Shipbuilding Association President Cynthia Brown. "There's no sense of urgency, and if they don't order soon, shipyards won't be able to deliver on time. I think this is an intentional strategy by the oil companies to delay -- and when the yards can't deliver, they'll ask Congress for relief."
Another cause for alarm is the practice of drilling and piping oil below sea ice. Oil-spill exercises conducted in the spring and fall of 2000 by the industry, the Coast Guard, the Interior Department's Mineral Management Service (MMS), and the state of Alaska found that existing oil-spill response equipment is inadequate, and that booms (which are used to skim oil off the surface of water) and other gear fail to function effectively in conditions exceeding 10 to 30 percent ice coverage -- less than the typical coverage for the area.
Nonetheless, energy giant BP and other companies are continuing to develop offshore oil fields, such as "North Star" on Alaska's North Slope.
Drilling platforms also operate in winter ice conditions in Alaska's Cook Inlet, one of the most pristine marine wildlife areas in the United States.
These operations have resulted in widespread, documented oil leakage from aging pipelines and onshore refineries. The U.S. Environmental Protection Agency (EPA), MMS, and state agencies have all denied responsibility for oversight and cleanup of this problem, which continues to grow.
Oil carriers entering and leaving Cook Inlet, which has some of the most extreme tidal shifts in North America, also lack the escort vessels, standby oil-spill response equipment, and other safety measures that have been in effect in Prince Williams Sound since the Exxon Valdez spill 14 years ago.
Deep drilling in the Gulf of Mexico, at depths of 1,000 to 10,000 feet, now accounts for more than 50 percent of the region's oil and gas production -- and almost half of all U.S. offshore production. The government provides subsidies (in the form of royalty holidays) for this deep-ocean drilling, but largely ignores the risk of deep-ocean spills.
In 1998, the oil industry and MMS began studying the likely effects of a deep-ocean spill; conclusions from their test releases of oil in the North Sea suggest that the oil plume from a deep-water blow-out would surface hours after the disaster and miles away from the site, and would be so widespread at that point as to be uncontainable.
In September, Unocal reported that an exploratory well it had drilled in mile-deep waters off of Indonesia had been leaking for more than a month, spreading a sheen of oil across the Makassar Straits.
Continued leakage of thousands of gallons a day from the Prestige, now lying in 18,000 feet of water off Spain, demonstrates the difficulty of dealing with deep-ocean oil releases. Despite years of multi-billion-dollar profits already extracted from these depths, there are still no established spill protocols or equipment for capping or tapping a deep-water oil release.
Oil tankers known as Floating Production, Storage, and Offloading systems (FPSOs) are moored to the seafloor and equipped for oil drilling and storage. They have long been banned in U.S. waters as an environmental hazard. In the past, the offshore-production industry argued that drilling and piping oil ashore from fixed platforms was safer than transporting it in tankers. But FPSOs combine the worst risks of both production and transport, which is why many critics consider them unsafe. An FPSO ship would operate in 10,000-foot depths in the Gulf of Mexico and then regularly offload its stored oil to smaller tankers in open waters exposed to some of the worst hurricane conditions in the Western Hemisphere.
Despite these concerns, MMS has reversed its long-held position banning FPSOs and has indicated a willingness to approve future industry requests to introduce them in the Gulf of Mexico.
No one familiar with Mineral Management Service's environmental record can be surprised by this latest move. MMS has long been recognized as a tool of the oil and gas industry. Its mandate to increase production and revenue (both for industry and the government through royalty payments) continues to supercede its obligation to prevent oil-spill disasters in U.S. waters. Decisions such as whether or not to permit drilling off the coast of Florida (where the president's brother is governor) seem to be made on a political rather than a scientific basis.
When asked why MMS has never canceled a lease sale based on its own biologists' oil-spill risk assessments, Bob LaBelle, chief of MMS's Environmental Division, responds, "It's hard to make or break something as big as a lease on one issue."
There are other risks posed to U.S. waters by the oil industry as well, including the security of tanker terminals and coastal refineries, marine hydrocarbon pollution from operational leakages in the Gulf of Mexico, and the impact on sperm whales and deep-ocean ecosystems from acoustic guns used in deep-oil survey work.
None of these issues is being adequately addressed. For a long time, there has been insufficient public agency oversight on these matters; now, the Bush administration seems more concerned with maximizing offshore fossil fuel production than with protecting the United States from an environmental disaster like the Prestige spill.
And beyond that looms the even greater disaster of rising seas and intensified coastal storms linked to human-enhanced climate change from -- you guessed it -- the burning of fossil fuel.
-- David Helvarg
David Helvarg is the author of Blue Frontier: Saving America's Living Seas and the founder of the Washington, D.C.-based Ocean Awareness Project.