Thursday, October 13, 2011

Addicted to Oil? The Case against Calling it an Addiction

Can we in any way truthfully state that we are addicted to oil? It's almost turned into a cliche to say that we're addicted to oil. As if the proper response is supposed to be "Dah!"
But I'd like to step back and take a serious look at why we use the word addiction to describe our use of petroleum liquids. Once you start digging a little deeper, you'll see that all of the major arguments break down for using the word 'addiction' to describe our use of oil. And after you realize that the arguments fall apart, you might ask yourself: why would we want to stop using oil if there is so much good that comes from its use?

So, here's a list of the major arguments, and then my critique of the reasoning.

1) The money goes to terrorists...this is one of the most absurd arguments. There are terrorists in every major country. Should we stop buying anything? Or is it just Muslim terrorists that scare us? Do we boycott all products made in the Middle East?  Of course not.

2) OPEC has too much leverage over the price of oil...while it's true that OPEC is a cartel that has control of ~40% of the world oil market, we don't the stop buying cell phone just because Verizon has ~40% of the market. Same holds for Microsoft.

3) Oil is a global commodity and so we're at the whims of global demand. Local fuels like biodiesel are better because they aren't a global commodity...This is an absurd argument because if we really started using non-petroleum liquids like biodiesel or ethanol in any significant quantity, these fuels would become a global commodity. Even now, ethanol is starting to become a global commodity as now that Brazil exports some to Europe.

4) Oil spills, enough said...Yes, it's well known that oil spill can have major environmental damage. There's no denying the environmental impact. The most recent spill in the Gulf of Mexico was a major spill. 11 people died in the fire and explosion and 2 other people died from the spill itself. In addition, many other life forms were killed during the spill. We should not lightly dismiss the lives that were lost from this accident, but we also need to put this into context. The use of oil allows us to have a growing society. (everything from oil used in farm equipment to oil used as construction materials.) If we were to switch to a fuel that had a lower rate of return on investment than petroleum, then our growth rate would decrease. This means that there would be less people alive in the future than if we were to continue using oil, even if some people die in accidents. We take risks all of the time in life, and it's important to remember that we can't stop taking risks. We have to weigh the costs and benefits and then chose the path that grows society the fastest when you include the probability of large accidents.

5) Big Oil props up dictatorships...While it's clear that money from oil production goes to prop up and support dozens of dictators across the globe and while it's clear that this money is often used to purchase weapons that will be eventually used against the people within the country, most of the oil purchased in the US comes from democratic countries. Here's the breakdown of the top 10 countries that produce oil consumed in the US in 2006:  US 41% (Democracy), Canada 11% (Democracy), Saudi Arabia 7% (Monarchy), Mexico 6% (Democracy), Venezuela 6% (Democratically elected dictator?) Nigeria 5% (Democracy modeled off the US), Algeria 3.5% (Dictatorship), Angola 2.9% (One-party democracy...), Iraq 2.2% (Democracy since 2005), Russia 2.0% (One-party democracy...). So, >65% of the oil consumed in the US comes from fully democratic countries. <35% of the oil comes from monarchies, dictators or one-party democracies. Should we stop using oil in the US because less than a third of the oil we consume comes from places that we aren't exactly on the best of terms. Of course not. I'm not going to stop buying computer equipment if a third of the pieces come from one-party democracies or dictators. Think about it. We'd have to stop purchasing every product from China if we followed this logic.

6) Air pollution causes asthma...while I understand this argument (because I hate sitting behind buses and trucks that emit black crap from their tailpipes), the problem is not the oil itself, but how it's being combusted. There are ways of combusting oil that produces less particulates and ozone forming gases. I am 100% for increased air emission inspections (especially because the cities where I've lived consistently have ranked the top 3 as far as particulate emissions.) One solution that's good both for air quality and for the pocket book of the city is to purchase city buses with batteries for regenerative braking and/or converting the gas tanks to be able to storage natural gas rather than gasoline. Adding batteries to municipal buses yields an attractive rate of return on investment (>5%/yr) because of the type of stop, wait and go driving by buses. In addition, not all oil is used in combustion engines. Some is used to make plastics; some is used to make medicines; and some is used in building products. We need to separate the good uses of oil from the harmful uses of oil, and remember that it's not oil and petroleum itself that makes it harmful, but the way that we are currently combusting it.

7) Combustion of oil causes global warming...Yes, this is well established. The question is not whether combusting oil causes global warming; the question is "Is this a good or bad thing?" Depending on where you live and what your philosophy of life is, you will have a very different answer to this question. The fourteen studies done (as of 2009) on the economic impact of global warming show that rising temperatures will have a positive global economic impact until the temperature increases ~2.2 degrees Celsius above the average temperatures in 2000. After a 2.2 degree rise, the impact becomes negative, but not particularly negative (only a few percent impact on global GDP.)  (Though, the studies only show temperature rises up to 3.0 deg C.) This means that the most recent recession had a larger impact on global GDP than a temperature rise of 3.0 deg C would have on our global economy.
But even if we implemented a cap&trade system going after the high hanging fruit, such as switching from oil to biodiesel or ethanol. The low hanging fruit are: capturing CO2 from coal gasifiers, capturing CO2 from chemical plants, purchasing hybrid vehicles (gasoline-battery), sending landfill gases to reciprocating engines to generate electricity, building natural gas combined cycle power plants rather than conventional coal power plants, etc...  Switching from gasoline to alternative fuels (such as cellulosic ethanol or biodiesel) would be extremely expensive and would be not justified because the expected economic damage from global warming would be less than the added costs to switch to alternative fuels (i.e. the money spent switching to alternative fuels could be better spent trying to cure AIDS or investing in advanced desalination technology to decrease the price of clean water in places like the Middle East.)
So, even when we eventually do put a price on CO2 emission in the US, the price (based off of the estimated economic impact) will be not be high enough to cause  a significant effect on vehicle transportation even though it might be high enough to effect the choice of what type of power plant to build. A price of $15-$30/ton of CO2 emitted will force us to buy more efficient gasoline vehicles and hybrids, but it's unlikely to shift us away from petroleum products as fuels.

8) The US requires a large military in order to patrol the Middle East because of our addiction to oil...this is of course a partially true argument, but also a misleading argument. We get more oil from Canada than from the Middle East. We get ~10% of the oil from the Middle East. It's the rest of the world that gets most of its oil from the Middle East. It's just that the US has the largest military (and has had the largest military since WWII.) We also had the largest military back when we produced ~100% of the oil we consumed. While the Iraq was might somehow be linked to oil, it's a stretch to link the Korean War, the Vietnam
 War, or the pecaekeeping in Bosnia and Somolia to oil. The US would have a large military regardless of whether we imported oil from the Middle East.

So, these are the main arguments against the use of petroleum liquids as I understand them. (Though, let me know in the comment section if I've forgotten any of the major arguments.)

So, when you break down the major arguments against the use of petroleum liquids you'll see that the arguments are pretty much like swiss cheese. It's easy to think that we could live without oil, but it turns out that it would be a really bad idea to try this. Here's my reasoning:

I think that saying "We are addicted to oil" is like the brain telling the heart that the heart is addicted to pumping oxygen and fuel rich blood to the body.  (of which the brain needs to remain active)
Using oil to grow our society is a good thing in the same way that eating food is good because we use the food to grow society.

The brain requires oxygen and fuel rich blood just as our society requires the generation of electrical and mechanical work. Oil happens to be the transportation fuel will the greatest rate of return on investment. Will this always be the case? The answer is that nobody knows how long petroleum-derived liquids will be the transportation fuel with the greatest rate of return on investment. If you think you know, then invest your hard earned money and take a risk. But my guess in the short term is that you will lose your money unless you place your bet on developing oil and natural gas resources, such as the Marcellus or Bakken Shale. (Note: the production of petroleum-derived liquids in the US is increasing...not one would naturally expect now that the inflation-adjusted price of gasoline is roughly double its average price between 1986 and 2003.)

The problem with saying "We're addicted to oil" is that we require exergy to generate electrical and mechanical work. Oil and piston-based cars happen to be the cheapest way of generating mechanical work for transportation (for most US drivers.) Perhaps in the future, electric cars will be cheaper on the levelized basis, who knows??  The question is: will environmentalists in the future be stating "We're addicted to electricity" or "We're addicted to biodiesel"? Let's hope not because I'd like to live in a growing society that minimizes the emission of pollution, not a society that eliminates pollution by shrinking.

What I'd like is for there to be a healthy debate about how to grow our economy. I only rarely see healthy debates about how to grow our economy. Most of the time, we get stuck in raging debate about taxing the rich or future climate change, which causes some people to shut down and stop listening. So, I think that one way to start a healthy debate is to remove the statement "addicted to oil" and instead, I suggest for people to actually discuss and try to quantify the downsides to our current policies (such as quantifying the economic impact of the pollution from oil, coal and natural gas.) There will be solutions that are good for both the economy and the environment. We need healthy debate because we need to figure out what are the high priorities (i.e. good for both the economy and the environment) and to discard the low priorities whose benefits to the environment are scant compared with their economic damage.

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