The Drill Team
Washington politicians say that tapping into sources of oil that were once off-limits is good for America. Is it also good for Texas?
Despite two presidential candidates who claim to exude bipartisan appeal, our nation has come to the eve of another election as bitterly divided as ever. The real surprise, however, is that we’re no longer nursing grudges over old favorites like race and religion or the war in Iraq; even 2004’s most successful wedge issue, gay marriage, has remained on the shelf despite months of same-sex weddings that were green-lighted last spring by the California Supreme Court. Instead, in a year in which America earned a measure of redemption for centuries of racial division and injustice, we’re suddenly learning how to hate one another over energy.
At first blush, the energy issue seemed unlikely to dominate this election cycle, principally because Barack Obama and John McCain are almost two peas in a pod on global warming and its remedies. But give George W. Bush his due; when it comes to identifying the hot-button issues that divide us, our approval-challenged president is no lame duck. How else to explain the gusher of vitriol that erupted when he announced in mid-June that the first step to energy independence was lifting a ban on oil exploration in the waters off our coasts? Never mind that president George H.W. Bush had signed that ban back in 1990 and that Jeb Bush, the former governor of Florida, still supported it. Republicans rallied behind the president as if it were the run-up to the Iraq war. McCain, whose concession that “global warming is a real problem” had deeply chagrined the talk radio set, finally became a hero to the chattering right when he quickly flip-flopped on his long-standing opposition to offshore drilling. Obama, by contrast, waited more than a month, with opinion polls showing that Americans favored drilling almost two to one, before he announced he would accept a carefully “circumscribed” drilling strategy. By the time the two gymnasts had more or less landed back on the same page, Obama appeared to be out of touch with American workers fuming at $4 per gallon gas, while McCain, who angrily shouted, “We’re gonna drill here, and we’re gonna drill now!” to a revved-up biker rally, seemed to share their outrage.
If McCain does upset Obama this November, he can thank his opponent and the Democrats for their inexcusable loss of the political center on an issue that should have been proprietary after seven years of the GOP’s global-warming-denying, enemies-enriching, big-oil-coddling energy policies. But no matter who wins the election, America is going to remain a house deeply divided over energy policy. That’s because unlike all those “values” debates that don’t really affect our behavior (that’s what popular culture is for), our answer to the energy question will change everything. The policy we choose over the next few years won’t just determine whether we drive cars powered by gas or electricity, or live in larger or smaller homes that are farther from or closer to urban centers, or eat food that’s grown in our neighborhoods instead of flown across the globe. The next president is going to have to place an energy-policy wager on our future as a world power.
Of course, the American people already know that this energy crisis is different. Weeks before the president spoke, car buyers abruptly dumped Ford’s brawny F-series of pickups, America’s best-selling vehicles over the past 31 years (and a garage fixture in Texas, where trucks sell at twice the national rate), in favor of a petite new number one, the Honda Civic. This time what’s standing between us and energy security isn’t OPEC but BRIC, the muscular new economies of Brazil, Russia, India, and China. Flush with cash, consumers in these growing giants are rapidly acquiring the same peripatetic, energy-hungry lifestyles Americans have enjoyed for generations; it’s estimated that by 2015 China will have more cars on the road than we will.
World energy demand is expected to rise by 50 percent over the next two decades, but the supply of oil is at best flatlining, with only the most cockeyed optimists saying we will reach peak oil, the point where global output begins to decline, within the next three decades. Already, the remaining oil is heavier and buried deeper—often requiring costly “enhanced” recovery to bring it out of the ground—and access to it is increasingly controlled by dictatorial, destabilizing regimes, some of which sponsor terrorist groups. Then there’s global warming; despite the best efforts of the still-thriving denial industry, it’s hard to find a serious thinker who doesn’t believe that we’ll inevitably have the kind of cap-and-trade system favored by both Obama and McCain—which means that consumers of fossil fuels will soon find themselves paying a covert “carbon tax” to producers of clean energy. We’ve gone from $9-per-barrel oil in 1999—a historic low when adjusted for inflation—to an era in which $80 per barrel already represents the good ol’ days.
You’d think, then, that one thing all Americans could agree on is that we need to end the oil “addiction” President Bush pointed out in his 2006 State of the Union, in what was regarded as a striking reversal of his administration’s insistence that all those gas-guzzling SUVs commuting to outer-ring suburbs and exurbs represented a “blessed” lifestyle. Instead, in a nation where “energy independence” has become a rallying cry, we have a rapidly widening partisan divide over how we’re going to get there—and how we expect to live when we do.
The principal point of contention between the two parties can be summed up as renewable energy versus unconventional oil, a wonkish distinction that nevertheless means—literally—all the difference in the world. Democrats are essentially betting that rapid innovation, government subsidies, and economies of scale can accelerate the adoption of sustainable energy sources: wind, solar, geothermal, and biofuels. But if offshore drilling currently headlines the GOP energy strategy, in the long term it’s really just a sideshow.
As Bush noted in his June address, drilling on the Outer Continental Shelf might yield 18 billion barrels of oil—ten years’ worth of U.S. production. But he then cited “the extraordinary potential of oil shale. . . . In one major deposit—the Green River Basin of Colorado, Utah, and Wyoming—there lies the equivalent of about eight hundred billion barrels of recoverable oil. That’s more than three times larger than the proven oil reserves of Saudi Arabia. And . . . it would be equal to more than a century’s worth of currently projected oil imports.” But for the media and the public, drilling the OCS had all the sex appeal, and hardly anyone noticed that the president who wanted to end our oil addiction had just offered us a hundred-year fix.
Oil shale is a sedimentary rock permeated with kerogen, an oil precursor formed from the remains of ancient sea life; properly heated and processed, “the rock that burns” produces synthetic crude. The first patent to extract the stuff dates back to the seventeenth century, but until recently it has been much more economical to let nature cook the world’s oil. President Jimmy Carter spent billions subsidizing efforts to extract oil from the Green River Formation, most of which is on federal land, but the project fizzled when oil prices plummeted in the mid-eighties, and nobody ever came up with a commercially viable technology.
But today’s prices once again make oil shale profitable, and this time the technology may be ready. Eschewing the traditional mining approach, Dutch oil giant Shell wants to heat the rock while it’s still in the ground; after simmering at about 700 degrees for two to three years, the kerogen turns into oil and can be pumped to the surface. Shell claims its project is ready for large-scale tests, but doubts remain as to the potential environmental impact. In a cap-and-trade world, shale oil would bear a carbon tax at least half as high as that of conventional oil. Each barrel would require a couple barrels of water to produce, no small order in the parched West, and the threat that oil and chemicals will contaminate the groundwater has led Shell to promise that it won’t pursue commercial development until it can prove that it can contain the heated oil behind “freeze walls” of artificially frozen earth. Yet all that heating, cooling, and processing is likely to require building enough new gas- or coal-fired power plants to double the current power output of the entire state of Colorado.
Even in this rudimentary—and problematic—stage of development (far more so than that of solar and wind power), oil shale has been central to GOP energy plans for several years, most recently as one of the pillars, along with offshore drilling, of Senate Republicans’ Gas Price Reduction Act, introduced in late June. Not surprisingly, that bill has gone nowhere in the Senate, where neither party has a filibuster-proof majority, but Republicans have also succeeded in blocking the Democrats’ energy initiatives as well as repeatedly voting against the renewal of tax credits for clean-energy entrepreneurs and consumers—threatening to bring much of the renewable-energy industry to a standstill.
As Texas senator Kay Bailey Hutchison noted before voting against a Democratic energy bill that would have taxed oil company profits to pay for alternative-energy research: “We have [already] passed legislation that gives incentives for renewable energy: wind energy, solar power. Those are great things. They are small but they are great things.” Hutchison went on to observe that it is now past time to lend a helping hand to great big things like nuclear power plants, drilling on the OCS and in the Arctic National Wildlife Refuge, and of course, oil shale. From Hutchison’s side of the aisle, energy independence simply means freedom from foreign oil, not from dependence on greenhouse gas—producing fossil fuels—and screw the homeowner who wants to put solar panels on his roof.
But Hutchison, along with her colleague John Cornyn, also represents a view of the crisis still held by many voters who want to cling to the blessed lifestyle, albeit a mildly greener version, drilling our way to energy independence, hoping that science has blown the call on global warming or that we will come up with some technological magic bullet before the planet strikes back, not having to worry about real change until our hundred years of oil shale runs out. Democrats, by contrast, are selling a rather cerebral vision of a whole new America: a nation more powerful and secure because we’ve curbed our energy appetites, where we’ll live in smaller homes in more-pedestrian-friendly neighborhoods, driving cars powered by batteries, all the while investing our greatest resource, our creativity, into a new, green economy.
But the inconvenient truth is that the president we pick won’t have clear partisan choices. Our future is more likely to be based on a pragmatic hodgepodge of energy decisions that will nevertheless have to be carefully studied and calibrated—and often we’ll have to settle for the lesser of numerous evils. Overreliance on fossil fuels at the expense of renewables risks a ruinous triple whammy: We’ll miss the green economic boom, we’ll pay increasingly onerous carbon taxes in a cap-and-trade world, and we’ll bear the direct costs of climate change, in everything from drought and food shortages to endemic global insecurity. But the next president can’t afford to simply dismiss offshore drilling or “unconventional” oil sources like oil shale. He’ll have to weigh the national security costs of a permanent American garrison in the Middle East against the environmental costs of using both conventional and unconventional oil as a bridge to renewable-energy sources—and using our share of the royalties to finance the transition. It’s the kind of practical centrist view that finally showed up just before the Senate recessed in August, when a bipartisan “Gang of 10” proposed legislation that called for both offshore drilling and dramatically increased alternative-energy R & D, paid for by ending $30 billion in oil-industry tax breaks.
Texans shouldn’t be worried about who’s going to be our next president as much as the role Cornyn and Hutchison—both of whom were conspicuously absent from the original Gang of 10—are going to play in our state’s future; he’s up for reelection this fall, and she is a likely candidate for governor in 2010. Texas reached peak oil back in the early seventies, and our coastal waters are already entirely open to exploration. What we have going for us is a window of prosperity afforded by today’s energy prices and an almost unmatched renewable-energy potential. We’re already number one in the country in wind energy, and this summer the Public Utility Commission approved an unprecedented $4.9 billion plan for new power lines to transmit wind energy from the West Texas Wind Belt to our big cities.
So it’s more than a small problem that both our U.S. senators—one a potential governor—appear to be locked in an energy policy time warp. It’s been almost eighty years since the Texas Railroad Commission started regulating the oil industry and leading the world into a future where a cleaner, more-efficient energy source—petroleum—quickly left coal in the dust. Today there’s a new energy future ahead of us, and once again we have the opportunity and authority to lead: Look at how T. Boone Pickens was hailed as an oracle simply for saying we can’t drill our way out of this crisis. But as we did in the thirties, we’re going to need inspired public energy policy to complement our entrepreneurial élan. That’s why Texas voters should start asking Hutchison and Cornyn if our state really belongs stuck on one side of a partisan divide, instead of leading the way forward.