by Ashley Braun.
Are farmers markets not fresh enough for you? Is the urban farm down the street too full of dirt? Do you love the experience of walking up and down aisles of artificially lit food which the grocery store can offer but cringe at the miles and minutes it took for your dinner to reach you?
Then Agropolis may be for you!
It’s the soil-free, pesticide-free, and travel-free concept grocery store, urban farm, and restaurant, all rolled into one. Peruse the produce growing up the walls and pick what you like, while you have visions of tilapia dinners dancing in your head—and swimming in the aquaponic floor tanks under your feet. The high-tech team behind Agropolis envisions “a world where your food is not transported a single mile to get to you.” The only food-miles will be between the store and your dinner plate.
The concept sounds a step or two down the line from Gene Fredericks’ start-up, Big Green Boxes, which also aims to aqua-, hydro-, aeroponically grow food but in abandoned K-Marts. And just like when the spaces were K-Marts, you’ll still get what you want “Right Here. Right Now.”
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by Randy Rieland.
Ready for your morning bowl of crazy? Five years ago, Congress set aside millions of acres of public land in the Southwest for the development of solar farms. This was primo real estate for solar, considered one of the best spots in the world. So far not one solar panel has been erected.
Oh, you want us to build something? This discouraging news comes courtesy of the AP’s Jason Dearen, whose investigation shows that the understaffed U.S. Bureau of Land Management (BLM) focused almost all its time on approving oil and gas projects and leased the land on a first-come, first-served basis, often to outfits with little or no experience in actually building solar farms. Case in point: Cogentrix Solar Services, a subsidiary of Goldman Sachs. Cogentrix had zero solar experience, but holds leases on nearly half the Nevada acreage for which applications have been filed. Another sickening stat: In the last five years, the BLM has approved more than 73,000 oil and gas leases on public land, but hasn’t given final approval to one solar lease. Not a one. Writes Dearen:
BLM’s solar leasing system ended up allowing developers to lay claim to prime sites—many located in the deserts that span California, Nevada, and Arizona. All developers had to do was fill out an application, pay a fee and file development plans. But many were so vague that it was difficult for BLM to separate the serious projects from the speculative ones.
The oilman cometh: Bad enough that Sen. Lisa Murkowski’s (Alaska) primary loss to Joe Miller likely means another Republican climate change denier ranting in the Senate. Another negative ripple effect is that Murkowski’s place as ranking Republican on the powerful Senate Energy Committee probably will be taken by North Carolina’s Richard Burr. You may remember Burr. He was one of the senators singled out in a League of Conservation Voters video campaign this summer as particularly chummy with Big Oil. A fan of off-shore drilling, Burr has earned a dismal 7 percent voting score from the League. He also ranks eighth in the Senate in terms of receiving oil and gas money—almost $220,000 in this election cycle alone. For a good cry, look at his track record on climate and energy.
This party’s over: Not that it did a lot of good, but the short run of Democrats as the ruling party in Congress looks to be coming to an inglorious end. The latest Gallup Poll of registered voters shows Republicans with a 10 percentage point lead. That just happens to be the largest margin since Gallup started tracking mid-term elections. It gets worse: a USA Today/Gallup Poll released yesterday suggests that when it comes to handling the economy, the top issue for most Americans these days, 49 percent think Republicans would do a better job, compared to 38 percent for Democrats.
A big sucking sound: All of which means, as Grist’s Dave Roberts elegantly concludes, things are pretty much going to suck for the next few years, with Republicans staging a boatload of bogus hearings and silly fishing expeditions. Some Republicans are already looking forward to an attitude change on Capitol Hill by which, for instance, members will stop “demonizing” oil companies, to quote Texas Republican Kevin Brady:
This White House and this Congress is demonizing them—the new drilling moratorium, the new energy taxes—all of that is costing us tens of thousands of jobs in the middle of what’s supposed to be a recovery, but it’s a very poor one.
Class dismissed: One thing you can say about Tea Partiers—they know what they want in a candidate. To help decide on endorsements, a Tea Party group near Sandusky, Ohio asked local candidates whether they agreed or disagreed with position statements on issues ranging from gay marriage to shutting down the Federal Reserve. Global warming also made the hit list. Here’s the survey’s climate change statement that candidates responded to:
The regulation of Carbon Dioxide in our atmosphere should be left to God and not government and I oppose all measures of Cap and Trade as well as the teaching of global warming theory in our schools.
With friends like these: It’s one thing for Greenpeace to battle with a company drilling for oil in the Arctic. But Facebook? Isn’t the site just trying to get everyone on the planet to hold hands? Well, it turns out that the giant social network plans to build a huge data storage center in Oregon. Two-thirds of the power for that operation will come from coal. Not only has Greenpeace cried foul, but it says it has rallied 500,000 people to join Facebook groups that are insisting the data center use only renewable energy.
Air transplants: How bad is the smog in Hong Kong? So bad that a green group is now selling fresh air. For just 25 cents, the Fresh Air Network will sell you a baby-blue canister that comes with a breathing mask and a hit of air. Plus, you have a choice of flavors, like vanilla or beach.
And you don’t even get sand in your teeth.
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by David Roberts.
Y’all know I love The Avett Brothers something fierce. (See Friday Music Blogging here and here.) It’s rare that they wander into Grist’s purview, so I don’t usually get a chance to write about them. However!
On Monday, they planned to be passing through Portland and wanted to do a show, so they looked around for a worthwhile cause for which to play a benefit. They heard about Terra Nova Community Farm, a project whereby Terra Nova High School students grow and sell organic produce to local businesses. That sounds like something our own Tom Philpott would love! And it justifies me writing this post! The brothers thought Terra Nova sounded worthwhile, so they played a benefit for it, at Portland’s Crystal Ballroom, to a small crowd of 500. If this rapturous review in the Oregonian is any indication, it was a humdinger:
A month ago, after the Avett Brothers played Edgefield, I wrote this:
Seeing the Avett Brothers in 2010 has to be a little like what seeing Springsteen was like in the late 70s, early 80s. They’re that good.
As I revere Springsteen, I grappled with the audacity of that statement and have tried since then to walk back, at least in my head. After last night, forget about it. They’re that good.
I agree. If you haven’t seen these guys, you’re missing something special—it’s a meaningful experience in a way that’s tough to describe without sounding treacly. Just go see them, they’re at the peak of their powers right now. And start a community farm of your own. Maybe they’ll play for you!
Here’s a Avett song from a recent album of John Prine covers that I just can’t get enough of these days. “Spanish Pipedream” is about self-reliance and small-scale agriculture:
Here’s a video of the first song in their Portland set, Derroll Adams’ “Portland Town.”
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by Tom Philpott.
Egg prices are on the upswing in the wake of the massive salmonella recall. Wright County Egg and Hillandale Farms, two of the ten largest egg U.S. producers, have been pushed out of the fresh-egg market pending investigation. With fewer eggs available, the wholesale price of a dozen eggs has risen dramatically since the recall, as much as 40 percent in some regions.
But even with the recent hikes, eggs are really, really cheap. Just last week, the Walmart in Boone, N.C., was selling an 18-pack of eggs for $1.86—about a dime an egg. In normal times, a Boone-based Walmart employee told me over the phone, the retail behemoth sells a dozen eggs for as low as $0.89, or less than 8 cents an egg. I imagine when the salmonella-choked dust clears on the recall, prices will quickly revert to the mean.
What Walmart hails as “everyday low prices” form the foundation of our food system—the cheapest one on the planet in terms of food expenditures per capita as a percentage of income. The company itself has perfected a business model predicated on making money by selling high volumes of dirt-cheap food.
In the past couple of years, a growing literature has documented how Walmart’s meteoric rise to near dominance of the U.S. grocery market has helped transform the food system into a cheap-food machine dominated by a few companies. Barry C. Lynn’s 2010 book Cornered: The New Monopoly Capitalism and the Economics of Destruction is probably the best account. (His discussion of Walmart’s role in the food system was first published as a luminous 2006 Harper’s piece.) As recently as 1998, Walmart was a bit player in the U.S, grocery market, responsible for less than 6 percent of total grocery sales. Today, its market share stands at 23 percent—higher than the combined share of its three biggest rivals, Kroger, Safeway, and Supervalue. Lynn documents how Walmart uses its might to squeeze its suppliers, forcing them to slash costs and scale up to remain profitable.
The current egg recall, which grew out of filthy conditions on factory-scale Iowa egg facilities (detailed in my last post), can only be fully understood within this context. Profit margins on eggs that retail for 8 cents apiece are nano-thin; in order to make money, producers have no choice but to think in terms of massive volume. And they have to be ruthless about controlling costs.
In a market predicated on cost cutting, the winners aren’t the players that produce the highest-quality eggs or maintain the best production standards. Instead, the spoils go to the ones that produce the most eggs at the cheapest price. And that means severe pressure to cut corners on food safety, building maintenance, working conditions, etc. As the career of Wright County Egg Owner Jack DeCoster shows, fines from violations of worker-safety, sanitation, and water-quality laws become a mere cost of doing business.
If a piston in a car factory wears out on the production line, your car won’t catch a contagious disease. But when laying hens are routinely left to die slowly in cages in close quarters with other birds, all in proximity to vast piles of manure, all products that emerge must be treated as biohazardous material.
Indeed, the conditions the FDA discovered in Wright County Egg’s huge laying house are disgusting, but not particularly remarkable. Just this past spring, Humane Society of the United States (HSUS) representatives infiltrated operations run by two of Wright County Egg’s largest rivals, Rose Acre Farms and Rembrandt Enterprises. What they found were birds stuffed into cages and treated not as productive living creatures, but rather as cheap, disposable inputs in an industrial process.
It’s worth quoting HSUS’s findings at Rose Acre Farms at length:
Prolapsed uteruses: Hens in intensive laying facilities often suffer from “blow-outs” (when the uterus collapses and protrudes from the body) that go unnoticed and untreated due to the cage crowding.
Trapped birds unable to reach food and water: Battery cages can trap hens by their wings, necks, legs, and feet in the wire, causing other birds to trample the weakened animals, usually resulting in a slow, painful death.
High mortality in layer and pullet sheds: The HSUS investigator working in the Winterset pullet sheds pulled dead young hens, some of them mummified (meaning they’d been rotting in the cages for weeks), from cages every day.
Failure to maintain manure pits: According to one worker, the manure pit under a pullet shed had not been cleaned in two years. The ammonia levels caused the investigator respiratory distress despite the painter’s face mask he wore. Rose Acre workers claimed that some hens are blinded because of excessive ammonia levels.
Abandoned hens: Some hens manage to escape from their cages and fall into the manure pits below.
Now, one obvious problem of treating birds like cogs in an egg machine instead of living beings is that mechanical objects don’t breed microbial and viral pathogens. If a piston in a car factory wears out on the production line, your car won’t catch a contagious disease. But when laying hens are routinely left to die slowly in cages in close quarters with other birds, all in proximity to vast piles of manure, all products that emerge must be treated as biohazardous material.
And indeed, the HSUS delivers overwhelming evidence that salmonella infection rates are significantly higher in caged systems than in non-cage systems. Even in normal years without a spectacular recall like the current one, some 140,000 Americans fall ill with salmonella from infected eggs. This system, predicated on high volume and low operating costs, is what’s responsible for pathogen-friendly conditions within egg factories—not just a few rotten eggs like DeCoster.
As the current salmonella scare plays out, you can bet techno-fixes to the problem will be proposed: stuff like vaccinations and increased use of anti-microbials. But in the end, the effectiveness of those measures will be outweighed by the economic imperative to stuff as many birds together as possible to keep production costs at rock bottom, and the biological reality that pathogens tend to mutate faster than technological responses to them can keep pace.
The real solution to chronic food-system problems like salmonella-riddled eggs is to reform the economic structures that cause them. The U.S. Justice Department and the USDA have been holding public hearings on consolidation in the food system—the effects on farmers when fewer and fewer companies process ever-greater shares of the food that ends up on people’s plates. Those talks should be broadened to include consolidation’s effect on food safety.
And, as the United Food and Commercial Workers Union argues in an incisive recent report, Walmart should also be on the discussion table for its role in driving food-system consolidation.
Related Links:
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by Randy Rieland.
Once upon a time in the wonderful world of oil, the crude guys took care of the government guys. They gave them expensive presents. They partied with them. They were a team, a family. Not ... any ... more.
Culture shock: Michael Bromwich, head of the Bureau of Ocean Energy—the agency formerly known as the infamous Minerals Management Services—sent an email to his employees laying out new rules for doing business. No more winks and back-scratching, no more revolving door between the regulators and the regulated, and no more inspections on companies where family members or close personal friends work. Oh, and definitely no more sex and drug parties. That sounds righteous and all, but Bromwich’s policies have a long legacy to overcome. As Stephen Power, writing in the Wall Street Journal, notes:
Rig workers and agency employees in the Gulf Coast “have often known one another since childhood,” according to a report published earlier this year by the Interior Department’s inspector general. The same report found that at one agency office in Louisiana, employees accepted sporting-event tickets, lunches, and other gifts earlier this decade from oil and natural-gas companies.
Oh, so it was a teaching moment: BP says that it’s learned many lessons from its disastrous summer in the Gulf—now, there’s an understatement. A report BP is delivering to Department of Interior officials today says the company is now much better equipped to deal with deep water accidents. Call me crazy, but wouldn’t it make more sense to be equipped to deal with a deep water accident before the deep water accident. Another BP report expected soon makes the oil giant look even worse. According to a version leaked to Bloomberg’s Joe Carroll, BP’s internal investigation found that company engineers aboard the Deepwater Horizon rig misinterpreted test drilling results in the hours before the well exploded.
It’s nature way: Sen. Lisa Murkowski’s days as one of Big Oil’s best buddies in Alaska are over. The senator from Alaska conceded to her Republican primary opponent Joe Miller last night when it became clear that she wouldn’t get nearly enough absentee ballot votes to prevent an embarrassing upset. But the fossil fuel folks are shedding no tears. Miller, who’s well ahead of his Democratic opponent in the polls, insists that the science supporting climate change is in “serious question.” And if global warming is actually occurring, he sure isn’t about to blame humans. Proclaims Miller:
We know the temperature change is part of the process of our existence, but we haven’t heard there’s a man-made global warming.
Bake it to the limit: Not that Joe Miller’s worried, but it seems worth noting that it was 96 degrees F in New York City yesterday, making this officially the hottest summer in the city’s recorded history. From June to August, the temperature averaged 77.8 degrees F, breaking the previous high mark set in 1966.
Plastic not-so-fantastic: California’s reputation as an environmental trendsetter took a hit yesterday when state legislators rejected a proposed ban on plastic shopping bags. Enviros argued that state residents go through 19 billion plastic bags a year and a big load of them end up as litter. But the American Chemistry Council, which represents plastic bag manufacturers, spent millions to hammer home this year’s surefire anti-green message: This will cost jobs! The tactic worked again.
Go with the floes: They haven’t even discovered oil off the coast of Greenland yet—only natural gas deposits—but already Greenland has become an enviro battlefield. Yesterday, four members of Greenpeace stopped exploratory drilling by the Scottish company Cairn Energy by climbing on its rig and attaching a platform to it. Writing in The Guardian, John Sauven explains why drilling in the Arctic is different than anywhere else.
Anyone who has seen the remarkable images coming from the Arctic over the last few days will know how unusual, dangerous and extreme this business has become. While icebergs the size of football stadiums are towed out of a rig’s path, ships equipped with high-pressure water cannons blast smaller chunks into submission. And all the while the clock is ticking. As the winter freeze edges nearer, this frantic exploration company rushes to finish the job before sheet-ice cuts off the region completely.
Take the money and shun: Can banks have a conscience? According to a report by Tom Zeller, Jr. in the New York Times, at least some have become more wary about investing in nasty practices such as mountaintop removal mining. Their concern likely has more to do with avoiding unnecessary risks and legal entanglements. Or maybe they’re just trying to greenwash their reputations. Whatever. It’s a start. Writes Zeller:
... banking analysts and others suggest that heated debate over climate change, water quality, and other environmental considerations is forcing lenders to take a much harder—and often uncomfortable—look at where they extend credit, and to whom.
Some like it bot: In the oil spills of the future—and there will be some, let’s not kid ourselves—companies may not need to rely on a fleet of civilians using equipment that hasn’t been updated in decades. Instead, they can call out the robots. Researchers at MIT have developed a solar-powered robot prototype equipped with nanotechnology. They claim that a small army of the devices, dubbed “Seaswarm,” could clean up an area the size of the Gulf of Mexico in a month.
And no one has to worry about getting their life back.
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by Mary Bruno.
Hello and welcome to Grist Talks. I’m your host Mary Bruno, and I’m joined today by my guests:
Lisa Margonelli, author of the 2007 book Oil on the Brain and currently the director of Energy Policy Initiative at the New America Foundation where she explores the promise and possibility of a post-oil world.
Severin Bornstein, an economist and professor of Business Administration and Public Policy at the University of California, Berkeley, who studies renewable energy, economic policies around reducing greenhouse gases, and equity in the pricing of electricity.
And Geoffery Styles, a chemical engineer, MBA, and former longtime Texaco executive, who is now the Managing Director of his own consulting firm—GSW Strategy Group - which specializes in energy and environmental strategy.
Welcome to all of you and thank you for joining us.
We’re going to be talking today about—you guessed it—oil. Specifically, about the status of our transition away from this powerful, efficient, valuable and, let’s face it, addictive source of energy. The world has been running on oil for about 150 years now. It’s the source for nearly 40 percent of America’s power. But oil is also a finite resource and it comes with some pretty sobering downsides: environmentally devastating leaks in the Gulf of Mexico and in Michigan’s Kalamazoo River, greenhouse gas emissions that are altering the Earth’s climate and, now and again, wars fought to secure oil fields around the world. So, let’s start with Lisa Margonelli.
Mary Bruno: Lisa, fossil fuel critics talk about oil as a dwindling resource found only in ever harder to get at places, hence deepwater drilling rigs and tar sands. But where are we really in the lifespan, if you will, of oil? Is it a middle-aged resource, or a doddering senior resource?
Lisa Margonelli: We’re probably in the late middle age of oil, but that doesn’t mean that we don’t have a very extended senior moment coming. I’m just going to back up and say where I think we are.
For many years, the oil price was very predictable. Up through the early ‘70s, gas prices were literally rusted to the signs at gas stations in the U.S. That’s how rarely the price changed.
Then we went through a period—during the 1980s, ‘90s, and early 2000s—where the oil market basically fluctuated in long waves over a long period of time. In the early ‘80s, we paid around $70 a barrel, in the equivalent of today’s dollars. By 1998-99, it went all the way down to $9 a barrel. Then it slowly crawled back up.
Now, prices are a lot more volatile. Price can go very high very quickly, because a Nigerian warlord made a phone call.
We’re also in a time of political volatility. Reserves in non-OPEC countries—countries that have not nationalized their oil resources—have peaked, which means the balance of power has shifted to countries that have oil resources which they control. You have more countries thinking in terms of maximizing revenue for themselves. And this behavior is not particularly predictable.
So we are in a time where oil is going to cost us more environmentally, politically, strategically and, of course, economically.
As the price gets higher, or fluctuates more frequently and wildly, we will start to feel that we are going through a transition to less predictable oil, regardless of how much actual oil there is on earth. And I think we are in the midst of that transition now.
MB: Severin, where are we in oil’s lifespan?
Severin Bornstein: I am an economist. I don’t do geology. I’m not a supporter or proponent of the peak oil folks. I do know history. There’s been lots of discussion over the years about running out of oil, and it hasn’t born out. Yes, we’re running out of conventional oil. But the technology is getting better at reaching oil. When people ask me [whether we’re running out of oil], I look at history and at the oil futures market, and they both say “no.”
MB: But we take more risks to get that oil, don’t we?
SB: We are tilting more and more towards the Middle East and towards unstable governments for oil supplies. That creates real geo-political and macro-economic problems for the United States, because we’re producing less and less of our own oil. Realistically, we’ll never be able to produce enough oil to come close to the level of demand we’re at right now.
As long as we’re using oil as a primary transportation resource, we’re going to have to rely on imports from economies that are quite separate from ours. So when the price of oil goes up, a lot of wealth flows out of our economy. And then of course, there is an environmental impact.
I don’t think finding oil is going to be the constraint that moves us away from oil; I think it’s going to be all of these other factors that are going to make us face up to the fact that we need to find a different resource to power our economy. That’s not going to happen overnight. It’s going to happen over many decades. We’re starting to move in that direction. But it’s going to be a very long change.
MB: So, Geoff, it seems we’re not in imminent danger of running out of oil. But Lisa and Severin both mentioned some powerful incentives to convert to a different source of energy, including environmental risks and economic security issues. You worked in the oil industry for many years. Does the industry feel the need to diversify into other sources of energy? If so, what are they doing?
Geoffery Styles: It’s important to note that production rates are actually much more important than the amount of oil that’s physically in the ground. If you subscribe to the analysis of the Hubbert Curve, we have about as much oil left as we’ve used to date over the last 150 years. So there’s still decades worth of resource there. The question is: Can we produce it rapidly enough to meet the world’s growing needs at an acceptable price? That’s where you get into difficulties.
There’s really no clear consensus. [The answer] really goes to the heart of how an oil company looks at that world and decides where to invest its money. Oil is still an attractive resource, as long as you have access to it. From that standpoint, I would say the transition is already underway.
U.S. companies are already well on their way towards natural gas, a fuel that’s abundant and, most importantly, a fuel to which they have greater access. You also see a lot of companies investing in R&D for renewable energy. But renewables are still nowhere close to the scale of the oil and gas industries. A typical ethanol plant in the U.S. is 30 times smaller than a typical oil refinery. In addition, many of the most promising [renewable] technologies are still in their R&D stage.
Ultimately, it comes down to returns. Returns [for renewables] are really not comparable yet. And it’s not just whether oil company shareholders—of which I am one—are going to get an attractive financial return. It really goes to whether energy consumers are going to get the energy they need. You could invest Exxon’s entire capital budget—I think it was $27 billion in 2009—in alternative energy. Not only would you make a lot less money than Exxon made in oil and gas, you would also get a fraction of the useful energy.
MB: Severin, how have other industries facing similar situations taken action? Are there any lessons we can learn by studying those examples?
SB: I will redirect the question a bit, because the idea that the oil industry will or should be expected to bail us out of this is really misguided. The oil industry is an industry that takes oil out of the ground and makes it into transportation and other fuels. So the idea that the oil companies should be expected to change their stripes and to do something to get us out of our oil dependence isn’t realistic.
Oil companies do have some important infrastructure, and probably will get involved in distribution and possibly refining. But they are going to work as oil companies, and what they’re going to do for many decades to come is to produce and refine oil. While oil is going to decline, it’s going to happen very slowly.
LM: The oil industry has already made all sorts of investments that reach back a very long way. All this infrastructure that we have in place for oil—some of it goes back many, many generations. If you go to the Carson refinery in Los Angeles, it was built in the 1920s by my great-grandparents’ generation. When they dug underneath it they found mule bones, because mules were used to construct this thing.
One of the issues for anybody trying to break into the energy sphere is how do you develop this infrastructure when it’s such a long-ago, written-off cost for much of the [fossil fuel] industry. We have real competitive issues facing us if we want other fuels to come into the arena and compete, both in the market and in physical terms. I agree with Severin: it’s silly to think that the oil industry is going to develop the means to compete with itself. It’s already paid off all these investments.
MB: So, we can’t and shouldn’t expect the oil industry to bail us out of the problem. What about government? The U.S. isn’t the only country grappling with this issue. Are there other countries—China, for example, or the European Union—that we can look to as models for transitioning from oil?
SB: They’re doing things that we can look at as a starting point. But frankly no one’s really making a good effort in getting off of oil. It is true that gasoline costs three times as much in Europe as it does in the United States, but that’s not because Europeans are greener than we are, it’s because after World War II they adopted gasoline taxes as a major funding source, and they continue to use them that way.
They do have a carbon market in Europe, but the price in that market is so low it’s really not changing behavior.
China has two sides to it. On the one hand, they say they’re going to get greener. They mean that they’re going to get greener in the sense of using less energy per dollar of GDP. But their GDP is growing so rapidly that they’re going to continue to increase their emissions of carbon. Likewise, they continue to build traditional coal-fired power plants, and those are putting out a huge amount of pollution.
I’m actually not optimistic that we’re going to see a model that really can be carried to the United States.
At the same time, we have to recognize the biggest barrier in the United States is not the politicians, it’s not the oil companies—it’s the electorate. You get elected by telling people things like we want to give you a gas tax holiday, not we need much higher gas prices. Bill Clinton tried that in 1993, and it was a political disaster. Obama has not really tried that; even the [failed] cap-and-trade program would have raised gas prices by somewhere around 12 or 15 cents a gallon, an amount that most of us wouldn’t notice.
GS: There’s another aspect to this that we haven’t really talked about. The current issue of Science has a whole special section on the transition to alternatives. One of the issues it addresses head-on is that at their current level of development, alternatives still are simply not as good as what we have.
When you think about transitions that have taken off rapidly—the transitions from whale oil to kerosene, from wood to coal, and from coal to oil—they’ve really presented the market with something that was truly better, faster, cheaper, something that had superior attributes at a lower cost, did things that the old technology simply couldn’t do. If we’re really looking for a rapid transition, the technology needs to improve to the point where it is actually better than what we have now. That doesn’t mean that you can’t have any kind of a transition until you have [reached that point]. It just means the transition ends up being pushed rather than pulled.
SB: I agree with Geoff entirely, and I find that very depressing, because the reason we need to get off oil is not because it’s too expensive. It’s because of all these other externalities that oil creates. The way you solve those externalities is through public policy. Unfortunately, public policy isn’t going to be effective, because people aren’t going to be willing to stand for much higher prices or more inconvenience in order to get off oil. That may mean we won’t get off oil until oil actually gets extremely expensive, or until we run into some extreme environmental or international crisis. Which is definitely not the path I’d like to see.
MB: Lisa, you’ve talked about how the price of oil is sort of a shell game. That it’s kept artificially low, and as a result we’ve created a non-responsive consumer market, which makes it difficult to develop the political willpower necessary to make change. If that’s the case, then how can this transition from oil happen?
LM: We really need the political will to make the change. We already have this preponderance of information about greenhouse gas emissions and climate change. And we had this very weird, disastrous summer—this enormous oil spill at one of just 50,000 wells that are in the Gulf of Mexico, which is just one of many, many regions of the world that supplies oil to the United States. We’re going to need to think out the implications of where we’re going, and really make the decision that we’re going to change policy. Waiting for the oil to run out, or for some sort of signal to arrive, saying “the oil is running out” is a) not going to happen, and b) not going to give us the time to change in the way that we need to.
The E.U. does have some interesting greenhouse gas policies in place. I believe that by 2030 many of their vehicles are going to need to have zero emissions. That, combined with the high gas prices there, is ultimately creating pressure to supply vehicles that can meet those needs. In the U.S. we don’t have similar pressures. A sort of high-efficiency vehicle here is basically a vanity project—a Tesla for the high rollers, and a Prius for the medium-rollers. So we’re actually going to have to decide that we have to do this. The idea of waiting for another huge disaster [to motivate change] is rather scary given that we got almost nothing done policy-wise out of the massive [Gulf oil] disaster this summer.
MB: So we have to make major political decisions in the absence of normal market pressures, such as soaring oil prices?
LM: Yes.
MB: You’ve all talked about how any transition from oil—whenever it begins—will be long and gradual. If you had the power to make that transition happen, what would you do? And what would your solution mean to the average American consumer?
GS: I tend to shy away from grand plans, but if you made me king for a day, I would set goals but not be prescriptive. I think we focus far too much on pathways, and not nearly as much as we should on outcome. We need to reward people for achieving what we want to achieve, not for achieving it the way we want them to achieve it.
We need to recognize where current technology is good enough—and there’s a number of areas where that’s already happening—and where we just need to wait for a big improvement. I want to see fewer handout grants to unproven companies and technologies. It’s very much up in the air whether electric vehicles are at the point where they’re good enough. We’re going to find out shortly whether people will be satisfied with a vehicle that can only go 100 miles before you have to recharge it for many minutes, or more likely, many hours. The market is going to have to render judgment on that, rather than experts and lawmakers. I would focus on the goals, on the outcomes, and worry much less about telling people how to get there.
MB: How about you, Severin? How would you make the transition happen?
SB: It has to be based on government policy. You need to recognize the real cost of using oil in the price, which would mean a much higher price for oil and gasoline. Politically I don’t think it’s feasible, but I would increase gas taxes by 50 cents every year until they’re about $3 or $4 higher than they are right now—at least. And looking at Europe, even that isn’t really going to make the change we need.
At the same time, we need to invest in the basic science. Not the roll-out of one technology over another, but the basic scientific research we need to bring biofuels to market, to bring batteries to market, to bring all of these alternatives to market. We haven’t been doing that for the last decade. We’re starting to now, but of course, that’s basic science so it’s a long process.
Putting those together would move us naturally off of oil over the course of decades. Would it be electric cars? Would it be biofuels? I don’t know. It would be important to do careful analyses of their impact on geopolitics, on the environment, and on macroeconomics. For instance, we may run into a lithium constraint if we start relying on lithium-ion batteries. So thinking carefully about those is going to be very important. But we’ve got to get started. We are starting to see greater investment in R&D. The public seems willing to tolerate that up to a certain point. But we certainly aren’t seeing accurate pricing of conventional energy. And I’m not sure how to make that start.
MB: Lisa? Thoughts on how to speed the transition from oil?
LM: We need to raise the gas tax. At the same time, we can’t do it too quickly, because it’s really going to clobber the lower-middle class people who are commuting to three jobs in an old car. So there’s a couple of things we need to do. One would be to raise that gas tax very slowly and incrementally every year. Also, do some sort of advertisement on the pump or on the receipt that talks about the external costs of gas and why we need to cut back. So you’re raising consciousness at the same time you’re raising the price.
At the same time, we have a lot of perverse policies in place. We have air traffic control policies that waste hundreds of millions of gallons of fuel a year. We have a one-size-fits-all insurance policy so that a person who drives 15,000 miles a year pays the same as someone who drives 2,000 miles a year. We have, as they say in the mortgage business, “drive until you qualify,” meaning that you drive farther and farther out into the suburbs until you find a house where you can qualify for the mortgage. All of these policies incentivize the extra burning of gasoline. And the National Academy of Sciences estimates that every gallon of gas you burn in a passenger car creates 28 cents in pollution and medical care costs.
We also need new ways of getting people to work. Whether that means giving large tax breaks to employers for vanpools and carpools and incentives for working from home, I don’t know. But all of that needs to be incentivized and encouraged because it’s not about just changing the vehicles and changing the technologies, it’s about changing the modes we use.
MB: Whatever happens vis a vis our energy transition, it will involve a long time and lots of moving parts. But what about the near-term? Can we expect to see any changes, energy-wise, in say the next two years? The next ten? Severin?
SB: I don’t think we’ll see an increase in energy prices from taxes by any substantial amount. Natural gas and coal prices are unlikely to rise very much. Oil prices might rise again for the same reason they rose in 2008, which was a short-run production constraint. Geoff made this distinction, quite rightly, between the ability to produce oil and the amount in the ground. And if we see a vast [economic] recovery worldwide, we might see oil prices go back up again. Futures prices tell us that they are going to drift up and that’s probably the best guess. Which means gasoline prices will probably go up a bit from where they are right now, but won’t skyrocket. And we’ll probably continue what we’re doing.
MB: Geoff?
GS: In the short term, we’re not going to see very much different. Certainly continued volatility. If you look 10 years out, people are going to be noticing renewable energy cropping up all around them. If it hasn’t already come to your neighborhood, it’s going to. At the same time, people are going to be frustrated and disappointed at how reliant we still are on fossil fuels.
MB: Lisa, anything to add?
LM: There is a lot of unpredictability. We haven’t decided what sort of climate change regime we are going to use and that keeps the industry in the U.S. trying to second-guess, especially in the refining industries. We have the whole issue of storms coming in and hitting the part of the country where we produce a third of our oil, refine half of it, and keep all of our strategic petroleum reserves. We have had the experience of Katrina hitting and prices going up. We have this political insecurity in the Middle East. There are a lot of things that could actually give us another Black Swan event. We just had one with the [Gulf] spill.
It’s very difficult to predict what’s going to happen, except that the American population does seem to be a bit numb to this. The predictability of that numbness, and the fact that there are actually many and increasing risks in the supply chain is what bothers me. Those two things are kind of out of sync.
MB: Speaking of risks, while we’re trying to set a safer, more logical course for our long-term energy future, what do you think about the short-term issue of offshore drilling: necessary and safe? Yes or no. Geoff?
GS: Absolutely necessary unless we just want to continue importing more and more oil from OPEC.
MB: What about safe?
GS: If you look at what happened in the Gulf as a statistical event, with a very low probability, and if you look at the response that the industry is putting together—a billion dollars to create these marine well containment systems and things like that—then [offshore drilling] is prospectively much safer than it has been in the past. At the same time, if we end up with something that looks like a moratorium, a lot of that R&D won’t happen.
MB: Lisa, offshore drilling necessary and safe?
LM: All oil is risky. You bring it in on a tanker, there’s a chance something happens with the tanker. Offshore drilling is necessary if we are going to continue to use the amount of oil we use, which is enormous. Is it safe? It’s as safe as we are willing to regulate it to be. There are obviously problems in the safety arena, but everything I’ve read about the Deepwater Horizon disaster suggests that there were a cascade of bad decisions.
MB: Severin, what do you think?
SB: I can’t really comment on safety. But [offshore drilling] is not at all necessary. In fact, it [doesn’t produce] enough oil to substantially change either the world price of oil or our trade balance. The reason you should allow drilling for offshore oil is because you think the value it creates is greater than the environmental risk. And I don’t know if that’s true or not. But the idea that drilling in the Gulf is going to substantially change our oil position when we are talking about a drop in the bucket in terms of the world market, and even a pretty small share of U.S. consumption, is just getting the economics wrong. We have to recognize that offshore oil drilling should be regulated and determined by the economic value it creates.
GS: I would disagree with that for equally sound economic reasons, having traded this stuff for many years. Basically the price is set at the margin. You’re dealing with OPEC, which basically controls the global price. But the price tends to go up when non-OPEC production doesn’t keep up with demand. The price goes down when non-OPEC production exceeds demand. Take a million barrels a day out of U.S. production and you’ve significantly shifted the market power towards OPEC. So, big impact on prices.
SB: If you took a million barrels a day off the market over 15-20 years, it will have no noticeable effect.
GS: Not over 15-20 years. But if you’re looking at three, four, five years, the depletion rates are pretty high.
LM: From a moral perspective, I don’t believe it is right for the U.S. to simply import oil when we’ve decided that it’s too risky to drill off our own coast. To be importing from countries like Nigeria and Angola, and even countries in the Middle East where there are not the same sort of environmental standards or where there is simply not the same accountability, I don’t think that’s right. The moratorium on drilling is in many ways an easy way out for Americans—we don’t want the environmental effects on our own shores, and we’re going to let it go to somebody else’s. And it’s a relatively easy political victory, when in fact what we really need to do is work on reducing our demand dramatically.
MB: We’ll have to end it there. I’d like to thank my guests, Lisa Margonelli, Severin Bornstein, and Geoffrey Styles. It’s been a pleasure speaking with you. This is Mary Bruno for Grist Talks. Thanks for listening and please tune in next time.
Related Links:
The Climate Post: Will the “Dead” Climate Bill Become a Federal Renewable Energy Standard?
Oil slick spreading after rig explosion forced 13 workers into the Gulf
Oil-platform explosion in the Gulf. Yes, another one.
