I used to live in New Orleans and spent time in the bayou country near where the damage from the spill is already being felt, so I don't for a minute minimize how horrific this is for people who love the land or make their living there. It’s a nightmare. But the devil’s bargain we’ve made to be able to drive our cars whenever and wherever we want means that we need oil. Desperately.
We're already dangerously reliant on the world market, which makes our economy hostage to the whims of a notoriously volatile system that also enriches nations who are in varying degrees hostile to us (Russia, Venezuela, Iran) or support groups that are. Even though we don't import oil directly from all of them, we're the world's largest consumer, and we work hard to keep the price up and help make them all richer.
U.S. oil production peaked in October 1970 and has declined steadily since then -- it's now only about half what it was 40 years ago. We've been drilling on land since the first commercial oil well in Titusville, Pa., in 1859 and we're pretty well drilled out (there's still a lot of natural gas to be found, but for now, cars, trucks and buses for the most part don't run on natural gas). Drillers didn't go into the Gulf for fun, they went because that's increasingly where the "elephants" -- huge oil fields -- are, and increasingly they're in deeper and deeper water, even deeper than the nearly 5,000 feet the Deepwater Horizon was drilling in. Right now, the Gulf accounts for almost a third of all U.S. oil production, and more and more of that comes from deep water. Bottom line: The only places left to maintain or perhaps increase U.S. production are offshore, in the Gulf and elsewhere.
Much as it would be nice to dump oil and switch to solar, wind and other alternative energy sources tomorrow -- dream on. It will happen eventually -- it has to -- but any sober analysis suggests it will take 10 years, 20 years, even 30 years to migrate significantly away from oil. Consider just this: There are more than 250 million cars, trucks, buses and motorcycles on U.S. roadways, virtually all of them dependent on fuel that comes from oil. I hope the Chevy Volt – the electric/gasoline hybrid car GM plans to begin selling late this year – is a smash success. But GM is projecting to sell only tens of thousands, not tens of millions. And each will cost the government $7,500 in tax breaks to lure buyers. Hmm. Sell a million (assuming everyone gets the tax break) and the budget is lighter by $7.5 billion in foregone revenue – that’s real money. And there are still about 249 million gasoline- or diesel-powered vehicles left to replace. Further, if the Volt and other electric cars are successful, where’s the electricity going to come from to recharge them? Again, solar and wind would be great, but the reality will be more coal and nuclear plants that haven’t been built yet.
Obama was right to devote a chunk of his Oval Office address on the Gulf oil spill to ending the nation’s addiction to oil. Understandably, he didn’t dwell on the tradeoffs necessary to make that happen, except to say this: “There are costs associated with this transition. And some believe we can’t afford those costs right now. I say we can’t afford not to change how we produce and use energy.” Right. We got a glimpse in 2008 of just how high those costs will be, but we also got a glimpse of just how quickly market forces began to enable people to cope. The alternative is to render ourselves hostage more and more to foreign oil suppliers and hope we’ll always be able to buy what we need at an affordable price. That’s a terrible bet.