In 1963, a relative of mine who worked for the Defense Intelligence Agency was with some fellow agents on their way deep into the Sahara for reasons he’s not allowed to tell me for two more years. South of the Libyan city of Benghazi, his crew settled in to spend the evening at a popular oasis, where they collected water and conversed with Bedouin tribesmen. It was a good excuse to practice Arabic; the night was clear, and stories flowed as though Scheherazade had inspired the gathering.
One man at the oasis was curiously silent at first. He belonged to a contingent of cadets about to graduate from the Libyan Military Academy in Benghazi. But when the topic turned to politics, he began talking excitedly in perfect English. Though the man had yet to receive a commission as an officer, he expressed very clear ideas about the way the country should be run. The man’s name was Muammar Gaddafi.
What seemed to be a cadet’s harmless ramblings about a nation of neighborhood watches and a leadership both elected and appointed by one supreme leader has turned out to haunt his country for the last 40 years.
Yet the chaos in Libya might actually be good for Texas. Gaddafi and the revolution he’s trying to crush have inspired oil markets to go crazy with volatility. International jitters have sent oil over $105 per barrel and sent gas prices in San Antonio from $2.72 to $3.40 per gallon in two weeks. Nothing about exploding demand and shrinking resources did this; Wall Street and Chicago options traders did not do this. The instability in the Middle East and North Africa did.
And with Saudi Arabia looking like the next domino, we may only be at the beginning of higher prices. While the feds discuss opening up national reserves to help bring prices back down, Texas will inevitably benefit from increased demand for domestic production. But the bigger story is that the premium that we’re paying for in political instability in the Middle East might actually inspire more research and exploration into alternative fuels. And just as the people in the Middle East are rising up against their dictators, we may finally start to shake off the dictatorship of petroleum-based energy here in the U.S.
Here’s the problem with overthrowing dictators: Who fills the power gap? It would be hilarious to watch the pundits debating which nations are “ready” for democracy if the stakes weren’t so high. The same could be said for our choices about liquid fuels, fuel cells, and plug-in vehicles.
But even as we condescendingly ask if Saudis can handle democracy, perhaps the more relevant question is: Are we ready to start substituting for oil imports? Many energy companies are developing biodiesel and other fuels that may free us from the tyranny of oil, but at what cost? Biodiesel — whether crop- or algal-based — requires huge amounts of water. Hydraulic “fracking” of oil shales — now a major play across South Texas (See “The next petro boom,” June 23, 2010, or “Sinking feelings,” January 5, 2011) — also uses huge amounts of water and has contaminated air and water across the country.
Jim Marston, director of the Environmental Defense Fund’s Texas office, says the fracking at work across South Texas will play a key part in the solution, insisting “the best companies do it right a lot better than the companies who do it wrong.” With better oversight, natural gas from shale could still prove to be a key transition fuel as we march toward renewables. “Most of the problems have come with lazy or shoddy operational practices, which is a problem with any drilling,” Marston said. “There’s no reason why companies need to use toxic chemicals to frack a well. We need to know what they’re using and regulate it better.”
Done wrong, fracking’s current resuscitation of economies across South Texas could elicit political blowback that “might stop natural gas exploration entirely and make the problem even worse.”
First it’s important to stop the grumbles about oil profiteering, OPEC hostage-taking, or Wall Street manipulations. That’s not quite what’s happening. This oil spike isn’t just about how the great “elephant fields” of oil are gone, or how demand is outstripping supply. In fact, this type of spike was predicted by the International Energy Agency back in November.
By now almost everyone has heard of the relatively peaceful revolutions in Tunisia and Egypt. Libya has been anything but peaceful. Since Gaddafi took power, displaying a willingness to shelter terrorists in addition to possibly personally ordering the 1988 bombing of a passenger flight over Lockerbie, Scotland, many nations have already abandoned Libya as a source of oil. Today, Libya kicks in only 3 percent of world demand. Why should a 3-percent instability result in OPEC crude oil going from around $94 per barrel to $105 a barrel since the revolutions began? Because Saudi Arabia — which produces six times Libya’s output — is on deck. And they export more oil than any other nation.
Professor Norman Guinasso at Texas A&M anticipates that the current crisis may spur a renewed interest in local and offshore Gulf drilling, despite the BP spill. He points out that the technology has long existed to prevent such mistakes that caused the spill and its aftermath. The drill operators at that platform simply didn’t follow safety protocols. In preparation for the return of deep Gulf drilling, several oil companies with interests in the region, such as ConocoPhillips, Shell, Chevron, and Exxon, have developed a nonprofit called the Marine Well Containment Company, which would have equipment and engineers at the ready in case of blowouts, instead of having to find technology, skimmer ships, and containment equipment on the fly the way BP did. The government has already resumed, quite cautiously, the permitting process for deepwater drilling.
According to Trinity University professor John Huston, all of this is a double-edged sword for Texans. “On the one hand `because of the price increases`, consumers will obviously have less money to spend in other sectors of the economy, especially SUV drivers. On the other, the smaller producers in South Texas will make greater profits, and more drilling and refining will require more equipment.”
Because locally headquartered Valero (a refining rather than exploration company) relies heavily on local oil, such as that produced the Eagle Ford shale area wells, the company is able to purchase oil at a discount, and they’re not alone. That’s one of the reasons why San Antonio oil prices, as high as they’re getting, are still cheaper than in many other states.
The prices aren’t the real drama, however. Right now, all eyes are on Saudi Arabia. Calls for international protests on March 11, a “Day of Rage,” have some speculating that oil may lurch to $200 a barrel this summer. To head off a popular uprising at home, the Saudi government arrested 50 protestors in Jeddah last month. More importantly, they also pledged $36 billion in aid to government programs and gave civil servants massive raises all over the nation. Only “money may not be enough this time,” according to Trinity University history professor David Lesch. Arresting 50 people is akin to shutting down a frat party; arresting protestors nationwide is another thing altogether. While it’s likely the Saudi royals will ride out the Middle East turmoil, there is a caveat. “One educated man immolating himself brought down Tunisia,” said Lesch. “You can’t rule out everything.” Huston makes the point clear: We’re never so motivated to pursue alternative energy than when gas prices shoot higher. It reminds us we are at the mercy of dictators far away from us, and we’re paying for that relationship.
So let’s hear it for higher gas prices; maybe they will free us from the dictatorship of oil, and give alternative-power advocates a louder voice at the energy table. That part isn’t up to a dictator far away, or advanced by a midnight rant at a desert oasis. But as in North Africa and the Middle East, the question remains: Will the next guys do any better? Which means that even as we grumble at the gas pump, we need to look long and hard at the environmental risks we’re willing to take for alternative liquid fuels.
As we enter another period of inflating oil prices and increased investment in oil shale formations across South Texas, an Environmentally Friendly Drilling Systems Program by the Houston Advanced Research Center has been organized to help share critical, cost-effective technologies that can help policy makers and industry reps plan the development of natural gas reserves “in a safe and environmentally friendly manner.” Tuesday’s meeting is intended to bring area residents, elected leaders, environmental groups, and oil and gas companies together to identify and discuss the social, environmental, and technical issues related to natural gas drilling, completion, and production. It will also share information about research programs underway that address these issues. 8am-4pm Tue, Mar 15, Mission Verde Center/Cooper Middle School, 1700 Tampico St., efdsystems.org. To register and for further info, contact Rebecca Wicketts, email@example.com.
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