Transcript: Energy, Security & The Long War of the 21st Century
Introductory Remarks
Steve Wehrenberg (USCGHQ). This meeting is the first in an ongoing series for those concerned with the coming energy crises. It is the first in a series of experiments in building networks of the concerned. It is an open meeting, and the discussion will be posted on the web. The series is sponsored by the Under Secretary for Acquisition, Technology, and Logistics (USD/AT&L), Ken Krieg, and by the Office of Force Transformation under its acting director, Terry Pudas. He also noted that the prime motivator of the series has been Mitzi Wertheim, who excels in creating like-minded groups. She can get people together who don’t usually meet with one another.
Frank Anderson (President of the Defense Acquisition University). He had been discussing new ways to discuss DOD’s energy needs with senior officials. This should be a national priority. This group can help to stimulate creative energies toward finding long-term solutions.
Terry Pudas. Why is OFT sponsoring this series? Energy has enormous implications for security and for managing the process of change and the shape of the forces in the future. We hope to promote learning and literacy in the subject. We want to set up a collaborative environment for these purposes.
Mitzi Wertheim. This is the most important issue of the 21st century. The president has spoken of eliminating U.S. dependence on Middle East oil. Few people recognized that it takes energy to get energy. We need to meet and learn together.
Keynote remarks by Jim Woolsey on the current situation
The energy situation has to go right if we are to have leverage to deal with other issues. We are engaged in The Long War, beyond the Global War on Terror, against Islamic theocratic totalitarianism. It is very different from the Cold War. In the Cold War, the enemy was a large and clumsy empire. They did things in the same way for a long time [i.e., they became predictable]. The Soviet ideology was dead and became just an excuse for their maintenance of power. The intelligence we
used was sophisticated, though we lost a lot of insiders because of Aldrich Ames—like the head of their stealth program. We watched their technological development.
We understood their technology because it turned out that we had always gotten it first. We didn’t expect war here in the United States, with the exception of the Cuban missile crisis. But all these premises of the Cold War are 180 degrees off from the situation today. The Islamists have no single big empire. It is a theocratic movement. There are different parts with different states. There are fanatical Shias in Iran who were too radical even for Khomeini. They thought the Mahdi was coming. Ahmedinejad is one of them; the question is whether he believes in the coming of the Mahdi and wants to bring it about. On the Sunni side, there’s al Qaeda, which had a state (Afghanistan). Their ideological view is to reestablish the Caliphate—first in the Arab world and then in the rest of the Muslim world, and once they’ve achieved that, to impose it on the entire world. They are hostile to the whole range of Western values. They are genocidal. Their underlying views is the same as the Wahhabi ideology of Saudi Arabia. They have the same range of hatreds. It is just a matter of who should be in charge. Al Qaeda is like Trotsky, having a global view. The Saudis are like Stalin[“Socialism in One Country”?]. For this Long War, we won’t get intelligence moles like we did in the USSR. We will have to listen and keep our mouths shut. The United States is the battlefield (his son had escaped from the second World Trade Center tower 30 seconds before it collapsed). The U.S. electric grid is vulnerable. We live amidst hundreds of complex networks.Disturbances can perturb through the whole system. A tree branch falling in Ohio shut down most of the Northeast. A malignant effect can metastasize through the system. Energy is not our only problem. The terrorists are a lot smarter than tree branches. They assumed Americans would be polite to hijackers. We had flimsy cockpit doors in our airplanes. They have scientific backgrounds. They understand infrastructures. So it’s war.
Oil stands out. There’s one world market. We depend on oil for our transportation. We can substitute for it in other parts of our economy. An oil cut-off can be quick
and disastrous. There is no effective substitute available in the near future. Two-thirds of the reserves are in the Middle East. We have an elaborate infrastructure in the
region. If the terrorists were to crash into the Saudi sulfur extraction facility, they could take 6 million barrels a day out of circulation immediately. There’s also the possibility of coups in Saudi Arabia, as when radicals seized the mosque in Mecca in 1979. Iran could cut off their own oil shipments. We have special difficulties in interacting out there. The current account imbalance in the U.S. is now $800 billion. We have to obtain $2 billion a day in loans to cover it. $250 billion of that imbalance is for oil. But we can’t spend even $1 billion for energy R&D? Except for our own Civil War, this is the only war that we have fought where we are paying for both sides. We pay Saudi Arabia $160 billion for its oil, and $3 or $4 billion of that goes to the Wahhabis, who teach children to hate. We are paying for these terrorists with our SUVs. We have to make changes, not just in the mechanisms of finance. Is switching to hydrogen as a source of energy an economic dream? Fuel cells are a hundred times more expensive than oil. It would take a whole different infrastructure at stations. Who goes first? The automobile companies. Thus they move hydrogen to the back burner. We should concentrate on what we can do in the short order rather than searching for silver bullets. First, we should move from hybrids to plug-ins. Plug-in would add 150 pounds to the Prius, but increase its mileage from 49 to 135-150 per gallon. Its gas would be in reserve. Plug-ins are good because we would not need any new power plants—they would draw during off-peak hours. Moving to diesels would be only a limited step. Second, we should move to cellulose technology. We should look for greater efficiency in order to substantially reduce costs. It may be newly possible because of genetic engineering, which has already been invented. There are large amounts of cheap feedstocks. We can make fuel from commercial waste. We could use cellulosic ethanol as a liquid—now we would be up to 500 miles a gallon. Third, we should reduce the weight of cars by shifting to carbon composites, as Amory Lovins recommends. They are already used in racing cars. We need to stop relying on size for survival. Building cars with carbon composites would increase mileage to 1000. All these technologies are available now; the technology has been conquered. It is time to go beyond wringing our hands. We need to go to alternative fuels on a large scale. We would then be able to withdraw the subsidies from the alternatives—Brazil has already done that with ethanol. Five empires tried to take us on. They are now all gone—like al Qaeda will be.
Questions and Answers
Q. Should EPA lower standards in order to promote diesel?
A. From 1975 to 1985, we went from 15 mpg to 26 mpg, but we have deteriorated since then to 24 mpg. All the improvements in cars went into increased weight and
horsepower. But Europe is at 42 mpg and Japan at 47. In Europe, more than half the cars are diesels. U.S. pollution standards are higher; we could move some in their
direction with some slight relaxation.
Q. What happened to the DOD initiative in March 2005 for renewable energy sources? Was peak oil reached in 2005 or is it near? Bob Hirsch says we need 20
years to mitigate our dependence on oil, but the peak could be well at hand. Are we on the brink of a crisis?
A. We’re close. Hubbert had predicted that the U.S. would peak in 1970. He was only off by a year. Thus his approach is credible. Oil production has peaked in a
number of places in the world. The Saudis are reluctant to share information on their reserves; it will take some detective work to figure them out. See Matt Simmons’
claim that they have peaked already. Oil is cheap in Saudi Arabia, but their production costs will increase. There’s increasing demand from China, India, and
other countries. The Saudis can’t make up for a drop in production elsewhere this time as they did back in 1983. Prices will go up.
Q. You said that finding substitutes for oil is part of the Global War on Terror. Is global warming a bigger threat?
A. The supply of oil is subject to live enemies. They hit the Abqaiq refinery a short time ago and the Khobar Towers a few years back. We are one competent terrorist away from disruption. On global warming, see an article by Thomas Schelling in the Wall Street Journal. We need to take mitigating steps as insurance. It could help us against the terrorists as well. We need to buy the insurance.
Q. Brazil took 30 years to get to ethanol, and in many of those years the country was ruled by a non-democratic government. How much should be done by the
government and how much by the free market?
A. The transport of fuels is not by the free market. It receives huge subsidies. Most major improvement in infrastructure are done with government assistance. Railroads, for instance, were built on government land. Allowances have been provided for oil. See the regulation of the electricity market. We don’t have to make the same mistakes as the Brazilians. Sugar cane is ideal for ethanol. In the last three years, Brazil has gone from 15 percent ethanol to 40-plus percent. They have built fuel-flexible vehicles, which are up to 75 percent now.
Q. We have been discussing the implications of the long view, but there are immediate tensions in the Middle East. What would the unforeseen consequences be
if they lost their revenue streams?
A. The Middle Eastern countries export less than Finland other than oil and gas. It’s all they do. It is not accidental that the oil is flowing from non-democratic states. Yet two-thirds of the people in the world are now in democratic countries. If mature democracies produce oil, it’s not a problem. But tribal societies have a rentier
orientation. All the revenues flow to the governing power, so there is no other power in the country. There is no legislature. See Spain vs. England back in the 17th
century. What if we were to undermine the role of oil? Those countries would have to get work for their people, like Singapore and Israel do. But it would be difficult
and painful.
Q. Did Brazil’s non-market approach work better than our non-market approach?
A. Ethanol is cleaner, but it’s no cheaper. But Brazil is off subsidies now. If there were no subsidies in the U.S., it would be quite disruptive. Instead, we should phase
the subsidies down over time.
Q. What about nuclear energy?
A. All alternative fuels have advantages and disadvantages. Nuclear is clean, but generates a lot of waste. Wind and solar power are intermittent so they can’t be used
as the supply base and you can’t store their power. They are separate markets. They used to replace oil-fired plants, but only 2-3 percent of electricity in the U.S. is now generated by oil.
Q. Where do the petro-dollars go in Russia?
A. Russia has had four chances in the last two centuries to move toward democracy. Each time it has been undermined. Now it’s being undermined by Putin, an old-
fashioned tsar. He is seizing control of “the commanding heights” of the economy, media, and oil and gas exports, which were previously locked up by the oligarchs. They cut Ukraine’s gas and blew up the pipe to Georgia, but they haven’t charged market rates to Belarus. Putin is like Nicholas II, imposing a tragedy on the Russian people. The Putins keep winning in Russia.
Q. Don’t economic incentives for alternative fuels (e.g., tax cuts) add costs, i.e., the reverse of subsidies. Can the government seed alternative technologies?
A. It’s a useful idea. You can plan on artificial devices going away over 15 to 20 years. Putting a floor on it is a good idea. It adds to the reserves. It promotes
fundamental changes. It would thus be a counter to the Saudis dropping the bottom out of the price.
Q. On the peak of oil, the general business prediction is 2030 plus-or-minus 5 years. Large plans for gas-to-liquid conversion are being built. But the producers move
both gas and oil.
A. The question is how to trap the carbon. There are two relevant issues: (1) the cost and whether they are cost-competitive, and (2) whether you can segue carbon into
the ground and keep it there. If so, gassified coal would be good. You would have to do it for centuries vs. attending to global warming now. 85 percent ethanol/15%
gasoline is loved by all, but not the reverse. We need to set the political conditions.
Q. How far down can we go on reducing oil imports? To zero?
A. Could we replace 25 percent of imports by 2025? Or only 15 percent? Cellulosic ethanol may be the only realistic option. It is important, though, to get the curves
turning down. Those who try to exploit our dependence on imports of oil, like Russia or the Middle Eastern countries, would then change their behaviors.
Q. On educating the U.S. public, how can a strategic communications program be started?
A. See the recent CNN program on energy. The message is, “We were warned.” The key is to focus on oil since we are growing to 800 gasoline-fueled vehicles per
thousand Americans. We’re defined by our cars, not by our electric bills. We need to make the substitutes available with minimum changes of infrastructure. Plug-ins are a good example.
Q. Would individual conservation work? Would it take a bully pulpit? Tax incentives?
A. We should charge more for bad-mpg vehicles than for good ones. Let one finance the other. But we can’t go to a command economy. Less government involvement is better.
Notes by H. H. Gaffney, CNA
