COMMON CURRENCY: Fuels debate should focus on science, not politics
"Cheap oil made Sweden rich."
In testimony before the House Subcommittee on Energy and Air Quality on Dec. 7, 2005, Professor Kjell Aleklett of Uppsala University in Sweden made this startling public confession. Sweden is often upheld by my more liberal friends as a model for enlightened democratic socialism and state welfare, something like capitalism, but with all the sharp edges rounded off.
It is true that Sweden is the third wealthiest country (per capita) in the world, and its citizens enjoy a very high standard of living. But this prosperity was not achieved just through enlightened social policies, higher education, government regulation of markets or even inspired industrial policy.
Also true, these could be valid for a moral argument for social justice. But these qualities of Swedish civil society, while perhaps admirable, do not make the best economic case to explain the most fundamental reason for the attainment of Sweden's generous quality of life.
Professor Aleklett, in his testimony describing the risk of a global crisis in energy supplies based on "Peak Oil," summed up the pure economics of it pretty succinctly: "Cheap oil made Sweden rich."
Sweden emerged from World War II unscathed, having escaped combat on its own soil through a tenuous neutrality policy, but it was still poor. Post war, energy consumption in Sweden increased 7 percent per year, every year, for the next 25 years. 90 percent of the increase came from oil.
Professor Aleklett stated the most honest and straight forward assessment of the challenge ahead for us you could possibly make. Cheap oil makes people rich. Whatever else you believe about political philosophy, markets, regulation, social responsibility, personal liberty, global warming or the environment, the one inescapable fact of modern life is that 100 years of cheap oil made broad middle class prosperity possible for literally billions of people. The truth is no country in the world has dramatically increased the standard of living of its people without also dramatically and permanently increasing the consumption of oil. Fundamentally, it takes energy to create wealth.
In 1999 a barrel of oil cost about $15. In less than a decade the price of oil rose nearly 1,000 percent to almost $150 by 2008. In a matter of months that summer, the price of oil jumped to more than seven times the average world price of the last century.
Even without the housing crisis the collapse of the economy was inevitable. No one could adapt fast enough to avoid that train wreck.
The problem with oil is not that it is scarce. The problem with oil is that it is ridiculously cheap to produce in a few areas of the world, and comparatively expensive to produce everywhere else.
The lifting cost of a barrel of oil out of the sands of the Arabian Desert has historically been estimated at about $2.50 per barrel. By comparison, the lifting cost of a barrel of oil on the North Sea, or extracted from Canadian tar sands, is about six times more expensive.
This disparity in the cost of production has given enormous leverage to a few producers to dictate the pace of technological change in the world's energy complex by their ability to flood the market with cheap oil to undercut any threat to their dominance.
There is no shortage of oil. There are vast deposits of hydrocarbons all over the planet. There has just been no economic reason to exploit them as long as there was so much cheap stuff available. And still today, no one has yet figured out a viable technology to pack as much usable energy into such a convenient and portable form as a gallon of liquid hydrocarbon molecules. But at today's prices, it is getting closer; and what to do about all that CO2?
Oil is commonly viewed as an environmental boogieman, but we should remember that prior to the advent of cheap internal combustion engines the worlds' major cities were choked with feces and dead animals.
Before natural gas and electricity became common for cooking and heating, a poisonous soup of fog and coal smoke wafted through major cities at levels of toxicity we would never tolerate today.
And even in very recent history, conventional fossil fuels have been made much cleaner and more efficient. In 1980 there were 102 Stage One Smog Alerts in the Los Angeles basin. Almost every third day the air quality was so foul that children were told not to play outside.
In 1990 there were 27. The last time a smog alert was declared in Los Angeles was 14 years ago.
I recently asked my two children, born in southern California in 1987 and 1992 if they knew what a "Smog Alert" was. They both said they had never heard of it. So if today our biggest problem is a colorless, odorless, non-toxic gas, I would say we have done pretty well in very short time.
But if you really don't like CO2, then are you willing to have a nuclear power plant in your back yard? Are you willing to live within the flutter zone of a wind turbine that kills bats and song birds, and emits low frequency noise pollution?
Are you willing to trade the survival of an exotic minnow for cheap and abundant hydro electric power? Are you willing to drive a less crash worthy car? Is ethanol the answer? Current estimates are that 40 percent of this year's entire corn crop will be used in ethanol production. How much more corn can we divert from food production?
So what is the alternative? I do hope we can find it, but every discussion about "alternatives" should start with the first commandment of energy: "Thou shalt not repeal the laws of organic chemistry." For the foreseeable future we're stuck with fossil fuels and we had better come to terms with it. The debate should be about the science, not the politics, and a fair assessment of what is viable and what is not.
Here is something interesting: Park Rapids gets the same amount of sunshine as Houston, Texas, and gets more sunshine in January and February, when it is coldest, that it does in November.
This is one "alternative" that actually looks promising. The science is pretty interesting, and it might actually work: Solar furnaces for space heating. It works because the energy carried in photons of sunlight is independent from the temperature of the air.
It seems hard to believe, especially after hitting a record 41 degrees below zero last week, but maybe Park Rapids can give the term "Sunbelt" a whole new meaning!
Alan Zemek is a Park Rapids area developer and author of "Generation Busted: How America Went Broke in the Age of Prosperity." You can follow his blog, or comment on this article on his website, www.generation busted.com.