“To the extent that the Gulf’s recapture of the dominant share of the global oil market will make price increases more likely, the U.S. economy is at risk…. Since 1970 sharp increases in the price of oil have always been followed by economic recessions in the United States.”
– Charles Curtis and Joseph Romm, “Mideast Oil Forever?” The Atlantic Monthly, April 1996.
“This notion that the environmental movement — or any other major play in the media landscape — is pushing non-stop apocalyptic messages like a broken record is one I debunked ….”
– Joe Romm, “A Critique of the Broken-Record Counterfactual Message of the New York Times on Environmentalists and Scientists,” ThinkProgress, April 29, 2012.
Joe Romm, the climate-alarmist doyen of ThinkProgress (Center for American Progress), has long been subject to rebuttal at MasterResource. Except for a few areas where a free-market hat is suddenly donned (nuclear power, carbon capture & storage), he has cried wolf so much that some of us just go meow.
Part I today examines quotations from his co-authored piece with Charles Curtis, published in April 1996 in The Atlantic Monthly, “Mideast Oil Forever?” (vol. 277, no. 4, pp. 57–74).
Major premise: Another energy crisis was “likely” within a decade. The US Department of Energy (where Romm worked at the time) was developing a number of cures for oil dependence in a Peak Oil world. Planned budget cuts for energy efficiency and renewable energies, the result of “a misbegotten ideology,” would be “a blunder of … potentially historic proportions.”
Some salient quotations follow:
“Imagine a world in which the Persian Gulf controlled two thirds of the world’s oil for export … and America was importing nearly 60 percent of its oil. That’s a scenario out of the 1970s which can never happen again, right? No, that’s the ‘reference case’ projection for ten years from now from the federal Energy Information Administration.”
“Congress’s actions all but guarantee that if an oil crisis comes, our national response will be reactive, uninformed, and unduly burdensome. Having abandoned the technological means to minimize the crisis, the nation will be left in the next century with little more than its usual responses to energy crises: price controls or other rigid regulations, or unplanned, ineffective attempts to deal with the effects of sharp price or supply fluctuations.”
“A relatively small amount of money spent today to develop, test, and deploy highly reflective roofing and road material and plant shade trees could help cool the Los Angeles area by five degrees….”
“Yet if we don’t focus on energy today, our quality of life tomorrow will be permanently diminished.”
“Given that the most recent war America fought was in the Persian Gulf, let’s start by examining the likelihood that an oil crisis will occur in the coming decade. Forecasting is always risky, especially where oil is concerned, but consider what a variety of experienced energy hands from every point on the political spectrum have said in the past year alone [adding bullets and bold for readability].
“The Persian Gulf, with two thirds of the world’s oil reserves, is expected to supply the vast majority of that increased demand–as much as 80 percent, according to the EIA. Within ten to fifteen years the Persian Gulf’s share of the world export market may surpass its highest level to date, 67 percent, which was attained in 1974. The EIA predicts that in the face of increased demand, oil prices will rise slowly to $24 a barrel (1994 dollars) in 2010. If, instead, they remain low, the Gulf’s share of the world export market may rise as high as 75 percent in 2010.”
“Although non-OPEC nations did increase production by almost 15 percent from 1980 to 1990, they increased proven reserves of oil by only 10 percent. The net result is that the remaining years of production for non-OPEC reserves has actually fallen from eighteen years to seventeen years. On the other hand, while OPEC increased production by 20 percent in the 1980s, it increased its proven reserves by 75 percent. As a result, OPEC’s reserves-to-production ratio doubled to ninety years.”
“The growing dependence on imported oil in general and Persian Gulf oil in particular has several potentially serious implications for the nation’s economic and national security. First, the United States is expected to be importing nearly 60 percent of its oil by ten years from now, with roughly a third of that oil coming from the Persian Gulf. Our trade deficit in oil is expected to double, to $100 billion a year, by that time–a large and continual drag on our economic health.”
“To the extent that the Gulf’s recapture of the dominant share of the global oil market will make price increases more likely, the U.S. economy is at risk. Although oil imports as a percent of gross domestic product have decreased significantly in the past decade, our economic vulnerability to rapid increases in the price of oil persists. Since 1970 sharp increases in the price of oil have always been followed by economic recessions in the United States.”
“Increasing domestic supply, although it may help to slow the rising tide of imports, cannot itself reverse the major trend. And reversing the nation’s ever-increasing demand for oil would be difficult.”
“Some argue that energy forecasts are notoriously inaccurate and that for the Department of Energy to base decisions on them is risky. We cannot, of course, say with certainty that an oil crisis will occur in the next decade, that a transition to renewable energy will occur as Shell envisions, or that industry worldwide will shift to pollution prevention. But each of these things seems very plausible, if not likely.”
The takeaway? Don’t trust the alarmists when it comes to “market failure.” Trust incentives in a free-market. And don’t trust Joe Romm any more on climate today as on Peak Oil and “Mideast Oil Forever” yesterday.