Rogue Nation: American Unilateralism and the Failure of Good Intentions (2003) (15 page)

Interestingly, there was no mention of mass transit or railroads. But if there had been, it probably would not have survived. As it turned out, Congress eliminated the gas tax and the high mileage car rebate, while the nuclear accident at Three Mile Island in 1978 essentially killed any expansion of nuclear power by making construction of a nuclear plant in the United States prohibitively expensive as a result of new and extremely rigorous environmental requirements, not to mention the liability of lawsuits. Still, the Carter program did add important incentives for greater efficiency and for a shift from oil to other energy sources. And there were results. Along with millions of other Americans, I took advantage of the tax credits to double the insulation in my house and to equip it with a solar water heater, and the paper company for which I was working took important steps to increase efficiency. Auto gas mileage had doubled by 1985, and energy consumption per dollar of GDP fell from 18,400 BTU to 13,400 BTU (compared with Japan’s decline from 5,000 to 3,946).
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At the same time, supplies rose as Alaskan oil came on line, and higher prices and other incentives sparked more discovery of oil and natural gas in the United States.

But the advent of the Reagan administration marked a shift in U.S. policies that was more in line with the underlying populist ethic of the country. I was Counselor to the Secretary of Commerce at the time, and I remember the frenzy to dump things like the Synfuels project, which had been pilloried during the election campaign as a government white elephant. (Canada, an oil exporter, persevered with its project, and today 20 percent of the oil it produces is synthetic.)
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Federal funding for energy conservation was cut by 70 percent, energy R & D was slashed by
64
percent, and proposals for higher efficiency standards for new vehicles were dropped.
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The emphasis was all on the supply side: Tax incentives and regulations were used to spur drilling and enhanced production. Supplies did increase but mostly because of the Alaskan pipeline, of the Saudi policy of keeping prices low enough to make investment in alternative energy unattractive, and of major expansion of production in the North Sea, Malaysia, Nigeria, Mexico, and elsewhere.

As prices fell and leaders ridiculed the need for any kind of government industrial policy, consumption trends began to reverse. The energy required to produce a dollar of GDP continued to decline as old cars were gradually replaced with new and as the effects of the new building standards and new industrial processes continued to work their way through the economy. But the decline was slowing, even as the United States remained far less energy efficient than other industrial countries. Per capita energy use had fallen from 366 million BTU in 1973 to 314 million BTU in 1983, but it was back to 352 million by 1997 – more than double the rates for Japan and Europe, which were 165 million and 170 million BTU, respectively.
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The gas mileage of new cars, light trucks, and SUVs peaked at 25.9 in 1988 and then declined as real retail prices for a gallon of gasoline, $1.08 in 1972, rose to $2.05 in 1981 and then fell to $1.15 in 1997.
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After falling from 1977 to 1987, oil imports resumed a steady climb and topped the 1977 level in 1997.
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The average horsepower of new vehicles rose steadily after 1982.
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Renewable energy use fell from nearly 10 percent of total U.S. energy consumption in 1984 to
7.6
percent in 1997, while the real retail price of electricity, which had risen 53 percent between 1973 and 1982, fell back to nearly the 1973 level in 1997.
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Coincidentally or not, refrigerators achieved a 294 percent improvement in energy efficiency between 1972 and 1993, and then, once the mandatory standard had been reached, the curve turned completely flat.
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No nuclear plants have been ordered since 1978, and the existing ones are aging. Meanwhile, the size of the Strategic Oil Reserve fell from a high of 115 days’ supply in 1985 to 52 days’ supply at the end of 1999.
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In short, as the United States entered the twenty-first century, its energy picture was looking increasingly like that of 1973.

TO THE GULF AND BACK: THE 1990s

O
n September 22, 1980, OPEC ministers were gathered in Vienna making plans for the organization’s twentieth anniversary celebration later in the year, scheduled for Baghdad, the city in which OPEC had been founded. The party never happened. On that same day, long-simmering hatreds between Iraq and the new revolutionary Iran of the Ayatollahs erupted into war with a massive Iraqi attack on Iran’s oil facilities. Led by President Saddam Hussein, of whom the world would learn more later, the Iraqis anticipated a quick victory. But the war lasted seven long years, during which it virtually removed both Iranian and Iraqi production from world markets. It was a measure of how markets and the mechanisms for handling crises had changed that the world avoided another panic, although prices did rise. More importantly, however, the United States was forced to put the U.S. flag on Kuwaiti ships and convoy them in order to prevent the Iranians, haters of the Great Satan, from dominating the Gulf. When the Iraqi military used poison gas (later termed a weapon of mass destruction) in the spring of 1988 to gain the upper hand and force an armistice, there was no outcry from Washington, the United Nations, or the media. Although another oil shock was avoided, this war marked the beginning of a massive buildup of U.S. naval forces in the Persian Gulf. By 1985, it was costing the United States about $50 billion a year just to keep the shipping lanes open.
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Five years later, however, happy days seemed to be here again. The Berlin Wall had come down and so had oil prices. Americans were paying less for gas than at any time since the late 1940
s
.
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Nor did there seem to be any long-term concern. World oil supplies had increased by about 50 percent, from around 600 billion barrels in 1985 to more than 900 billion in 1990.
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Few stopped to note that the additions to reserves had occurred mostly among the major producers of the Persian Gulf.
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In fact, if you looked closely, the picture resembled the 1970
s
more than the 1980
s
. Global demand was growing rapidly, most of the lines on graphs of U.S. consumption had turned up, American production was in free fall, and there were no major non-Gulf oil sources waiting to come into the system. But no one was looking closely.

Except, that is, for one key person. At 2 o’clock on the morning of August 2, 1990, America’s erstwhile ally Saddam announced he was back by sending 100,000 troops to occupy neighboring Kuwait, only recently his supporter in the battle against Iran. Two weeks later, in a coincidental but revealing juxtaposition, the front page of the
Wall Street Journal
of August 17 carried a story saying the Bush administration was stoutly resisting a major energy conservation effort for fear of reminding voters of the Carter years, when lights were switched off at the White House.
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Although the United States bought only 12 percent of its oil in the Gulf at that time, a takeover of Kuwait would have given Saddam direct control of 25 percent
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of world oil reserves and put him in a position to threaten Saudi Arabia, which held another 26 percent. He might then move on to settle accounts with Iran, which had another 9 percent of world reserves. While Saddam posed no direct threat to the United States or its allies and would in any case have to sell the oil to gain any benefit from it, President Bush responded in the most forceful manner. ‘Our jobs, our way of life, our own freedom and the freedom of friendly countries around the world would all suffer if control of the world’s great oil reserves fell in the hands of Saddam Hussein,’ he declared.
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The president, of course, gathered a great coalition and launched Operation Desert Storm, in which 500,000 troops, under the command of General ‘Stormin’’ Norman Schwarzkopf, decimated Saddam’s forces within one hundred hours, restoring the independence of Kuwait and an uneasy peace in the Gulf. Amazingly, the victory was achieved with just over six hundred casualties, and although the war cost $61 billion, $54 billion of it was paid by Japan and other allies, in lieu of their sending their own troops.
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Of course, the Gulf now had to be patrolled even more vigilantly.

None of this brought any change in U.S. policies or attitudes about energy. The curves on the consumption graphs kept moving smartly upward, and although Secretary of State James Baker told the House of Representatives in February 1991 that ‘we must do more to reduce our energy dependence,’
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the president, when presenting his new energy strategy in March, made no mention of conservation or efficiency. The plan called for drilling for new oil in the Arctic National Wildlife Refuge, but it cut spending for mass transit and rejected any increase in auto fuel efficiency standards.
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While President Clinton resisted the push to drill in the Arctic and other national parks and tightened many environmental controls, he did not significantly change the nation’s energy policies and practices.

The Gulf War did, however, bring one very significant change. The scion of a wealthy Saudi family, one Osama bin Laden, became extremely upset by the establishment of a huge U.S. airbase and the deployment of a major U.S. force south of Riyadh on the sacred soil of Saudi Arabia. Taking this as an outrageous insult not only to Arabia but to Islam itself, he vowed jihad (holy war) on the United States. Unlikely as it may sound for even a very rich man to imagine that he could defeat the world’s only remaining superpower, bin Laden’s experience with another American war gave him reason for confidence. In 1979, the old Soviet Union invaded and occupied Afghanistan. Fearing the spread of communist influence, the United States helped organize and arm the mujahedin, the Islamic Fighters of God who would wage jihad against the Godless Soviet communist armies and, with the help of Allah and American money and Stinger missiles, defeat them. Bin Laden was one of those fighters, and he became convinced that the subsequent fall of the Soviet Union had been a direct consequence of its humiliation in Afghanistan. This further convinced him that if Allah was with him no one could successfully stand against him. Thus when he decided in the wake of the Gulf War to take on the remaining undefeated superpower, he had complete confidence in ultimate success.

Saddam, a real rogue with no saving ambiguity at all, is, of course, back again today. Or perhaps it is we who are back again, since Saddam never went away. In any case, we say the issue today is not oil but weapons of mass destruction. While that has its truth, you have to wonder whether Saddam would matter so much if his coffers were not filled by the world’s need for his oil, or if he did not sit on top of and next to 70 percent of the world’s petroleum reserves. Our attitude reminds me of the definition of insanity – someone repeating the same procedure over and over and, each time, expecting a different result. With many developing countries, including China and India and their huge populations, on the road to energy-intensive industrialization, demand for energy is expected to triple over the next fifty years.
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At the same time, declining production in the North Sea, Alaska, and elsewhere, combined with big new finds in the Middle East, mean the world’s dependence on Persian Gulf oil will almost certainly grow. That implies further conflict and entanglement in the dangerous politics of the region.

CHANGING BUBBA’S WAYS

A
s I write this chapter, in the fall of 2002, my neighbor has just fired up his leaf blower to get the late-falling leaves off his lawn by Thanksgiving. He is a little paunchy and raking would probably be good for him, but using the blower is easier, and it only costs pennies after all. Convinced that abundant, inexpensive energy is part of its birthright, the American public resists any restraint on its ‘freedom’ to consume and disbelieves any suggestion of crisis or need for even minor changes in the ‘American way of life.’ Energy use per capita has resumed its climb, pushing the U.S. share of global energy consumption up again and driving U.S. oil imports toward 15 million barrels a day, the equivalent of the total output of the world’s two largest producers, Russia and Saudi Arabia. The annual U.S. trade deficit, currently $500 billion and rising, grows increasingly unsustainable. But few seem concerned. The leaders of both political parties are focused on doing whatever is necessary to keep things going as they are for as long as possible.

Thus, in the wake of the attacks of September 11, the president announced a new national energy plan that was all supply side. It called for oil drilling in the Arctic National Wildlife Refuge, relaxation of restrictions on exploration in other national parks, construction of one thousand power plants over the next twenty years to be fired largely by coal, and incentives for natural gas development.
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At the same time, funding of research on new energy technology was slashed, and the vice president rejected any notion that Americans could do more with less, and suggested that while conservation may be a private virtue, it cannot solve the nation’s energy problems.
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The plan contained no gas taxes, no mileage requirements, or any other conservation measures of any kind. While this program was being presented, the administration was also beefing up U.S. military forces worldwide, but particularly in the Persian Gulf in view of the need to assure the unhindered flow of oil.

In its debates, the Congress followed along. Objecting to any increase in fuel economy standards, Senator Barbara Mikulski, Democrat of Maryland, said soccer moms need big vans to be safe from road rage.
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Senator Zell Miller, Democrat of Georgia, said that the ‘back of a pickup truck is the think tank of rural America’
 77 
where more problems are solved at the end of a day’s work than in all the halls of Washington, D.C. As if trying to uphold its side of Miller’s formula, Congress chose to do nothing about gas mileage but voted overwhelmingly to authorize the president to go to war with Iraq.