Are we addicted or spoiled when it comes to oil?

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First in a three-Part series on energy

 

Oil and politics mix like, well, oil and water.

In his 2006 State of the Union address, for example, George W. Bush declared, “America is addicted to oil.” It was a striking and bewildering comment from a Republican president, not to mention a former oilman.

As for Bush’s successor, throughout his nearly three-and-a-half years in office, President Barack Obama has been unrelenting in his attacks on oil companies, and in his calls to jack up taxes on so-called “Big Oil.” Given that the hardcore environmental movement ranks as a key Democratic Party constituency, Obama’s comments and actions have been anything but bewildering.

With some notable exceptions, the political class either exhibits breathtaking ignorance when it comes to the realities and economics of energy, or chooses to deliberately mislead the American public. I can’t decide which is worse.

A new documentary titled “spOILed,” produced and directed by Mark Mathis, a former television newsman, counters much of this political nonsense by laying out assorted realities about oil in the economy and in our daily lives, while raising various questions about the future of energy.

In terms of daily life, it’s noted in the film that the power of oil, for example, brings “the world to our dinner tables,” allows for affordable flights around the globe, and keeps us clean and sanitary, with oil in our trash bags and cans, and in the garbage trucks picking up our waste.

Oil drives manufacturing, and fuels 98 percent of the movement of people and products via cars, trucks, trains, ships and planes.

Indeed, as “spOILed” points out, we are “born into energy abundance,” and have no clue as to what life was like before oil.

Some interesting historical points are mentioned. For example, carbon-based energy, initially coal, freed individuals from backbreaking work, including making slavery economically obsolescent. Low-cost kerosene from oil saved the whales by putting most whalers, who had hunted certain species of whale to near extinction for oil used in lighting, out of business.

Eventually, oil took us to a “super-charged economy.” But given the tremendous benefits that come with oil, there naturally will be some costs, including increasingly rare oil spills. In fact, “spOILed” does not shy away from showing the powerful and tragic images of the fallout of such spills, such as the BP spill in the Gulf of Mexico.

The key point, however, is that the nearly incalculable benefits derived from oil for mankind’s prosperity, health, general wellbeing, and yes, environment (with no oil, environmental devastation is wrought, for example, through massive deforestation, as history and some current nations show) are taken for granted, while people focus on the costs. It then becomes easy for politicians, backed up by a green movement ginning up guilt by equating energy use with hurting the environment, to talk about doing away with fossil fuels.

However, given that the U.S (along with much of the world) gets 37 percent of its energy from oil, 24 percent from natural gas, and 23 percent coal, while only 0.5 percent come from wind and solar, anti-fossil-fuel declarations amount to misleading political rhetoric, and/or wishful thinking.

The documentary actually deals with reality, noting, for example, that the costs of the alternatives to oil are far too high, from hybrid cars that take 5 to 10 years to recoup their higher costs to commuter trains that suck taxpayers dry while pushing more transportation of goods off rails and onto highways. And then there’s the ridiculousness of ethanol, as it takes 1.6 gallons of gasoline to make one gallon of ethanol, while the shift in corn production to ethanol drives up food costs.

Emphasizing and exaggerating costs while ignoring the overwhelming benefits of oil also means that politicians erect obstacles to oil and gas production. As noted in “spOILed,” 90 percent of public lands are excluded from oil and gas production, while the Atlantic and Pacific coasts, along with the eastern Gulf of Mexico, are off base in terms of offshore exploration and development. Consider the drilling ban in ANWR in Alaska. That area could produce as much oil on a daily basis as is imported from Saudi Arabia.

The film asks: Is that smart policy, especially given the incredible need for oil and that the real “Big Oil” is government oil, i.e., that 93 percent of all oil in the world is under government control, with 75 percent in areas of considerable political risk, including the Middle East, Venezuela, Nigeria and Russia? The obvious answer is: No.

Finally, the rhetoric about “Big Oil” should end if we’re serious about the facts. Mathis notes, “In America, most oil and gas production is actually done by ‘Little Oil’ — thousands of privately owned companies, most of which have ten employees or less.” It turns out that independents produce 82 percent of U.S. gas, and 68 percent of the oil.

In conclusion, Mathis observes: “We’re not addicted. We’re just spoiled. We believe that we can continue down the road to wealth, freedom and prosperity while cutting ourselves off from the fuel sources that make it all possible.” That sums up dreamy, misguided and costly U.S. policymaking on energy — policies that desperately need to be changed.

Raymond J. Keating is the chief economist for the Small Business & Entrepreneurship Council. His new book is “Chuck” vs. the Business World: Business Tips on TV.