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EV World Open Access Article |
Nigeria's Oil Women, 600 of whom occupied ChevronTexaco's Escravos terminal for six days in 2002, trapping some 700 workers. The women had a list of nearly two dozen social and environmental demands including correction of river erosion, clean water, electricity, schools and clinics for their villages. Chevron agreed to the terms.
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Unprepared for the Oil Shockwave
If too many unforeseen events converge to drive oil up over $100 a barrel, America will be in a world of hurt, says James Woolsey.
By Bill Moore
Open Access Article Originally Published: August 27, 2005
It all begins with a revolution in Nigeria. Six-hundred to seven-hundred thousand barrels of sweet, light crude are taken off the market virtually overnight. The price of oil traded on the NYMEX suddenly shoots up to over $70 a barrel. This was quickly followed by fighting in Northeastern Saudi Arabia, near its oil refinery complexes, driving crude up into the $90 range.
With a jittery world already struggling hard to stay afloat economically, al-Qaeda terrorists hijack an oil tanker and slam it into the oil facility in Valdez, Alaska, setting it ablaze and closing down the Alaska pipeline, depriving the West Coast of much of its oil.
Thankfully, none of these events have actually occurred. Instead, they were "war game" scenarios thrust on members of America's political elite, including two former CIA directors, who late last June gathered at a hotel in Washington, D.C. to highlight the nation's vulnerabilities as a direct consequence of its over-dependence on oil.
One of the participants, who played the role of Secretary for Homeland Security, was R. James Woolsey, now a vice president with Booz Allen Hamilton, as well as being a member of the National Commission on Energy Policy. Between 1993 and 1995 he was Director of Central Intelligence under the Clinton Administration.
With oil prices now in the high-$60s, as opposed to the mid-$50s in late June, Mr. Woolsey generously took half an hour out of his busy schedule -- between his many travels, he's overseeing the remodeling of his home -- to talk to me about the Oil Shockwave Simulation, and what the participants learned. He sounded tired, but his personal assistant assures me, he was about to take a much need vacation on his boat.
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Although the scenario of the simulation took place over the course of a year, the actual game itself lasted about five hours. The participants formed what would have been called a "Principals" group in the Clinton years, led by the National Security Advisor. They played the roles of various members of the National Security Council, including Secretaries of Defense, Energy, State, and the Joint Chiefs.
When the game was over and only 3.8 million barrels of oil a day (4.5%) had been removed from the market out of 83 million bpd, the world was headed into a major recession with 2 million jobs lost in the U.S. alone. Gasoline was $5.17 a gallon, while heating oil cost a numbing $5.14 a gallon. The S&P 500 dropped 28 percent and consumer confident sank by 30 percent. A barrel of oil traded for $161.
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"Game" Players
Robert M. Gates, former Director of Central Intelligence
Richard N. Haass, former Director of Policy Planning at the Department of State
General P.X. Kelley, USMC (Ret.), former Commandant of the Marine Corps, member of the Joint Chiefs of Staff
Don Nickles, former U.S. Senator
Carol Browner, former Administrator of the Environmental Protection Agency
Gene B. Sperling, former National Economic Advisor
Linda Stuntz, former Deputy Secretary of Energy
Frank Kramer, former Assistant Secretary of Defense for International Security Affairs
R. James Woolsey, former Director of Central Intelligence.
Senators Richard Lugar (R-IN)
Joe Lieberman (D-CT)
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To make matters worse, China, who was demanding the US stop selling arms to Taiwan, had just invaded disputed islands in the South China Sea claimed by both Taiwan and Japan and rumored to be rich in offshore oil and gas deposits. Meanwhile, Saudi Arabia was demanding changes in Washington's policy towards Israel and the Middle East in order to open its oil taps further.
For Woolsey, this wasn't the first "war" game he's played during his long career in government and business, but it was the first one focused strictly on an energy scenario.
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Reader Comments
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13 comments so far...
06-Sep-2005
9334
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Great news! Ford Excursion production is ending. I hate Ford Excursions. They are unjustifyably huge and heavy fuel gusslers (single digit fuel mileage with the V10 is not unusual).
A quote from the Toronto Star:
"While earlier reports of the Ford Excursion's imminent demise proved premature, this time it is for real. Ford will cease production of its gargantuan SUV in September, possibly replacing it with an extended-length Expedition for the 2007 model year."
Here's the link.
This marks the beginning of the end of an era of fat profits from oversized SUVs.
I think I'll open a bottle of wine tonight as this is worth celebrating.
With some luck, high fuel prices will continue and totally kill the market for 'brute-force' vehicles like this.
Posted by: Peter Stern
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29-Nov-2005
11228
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I have a Diesel powered Excursion and it gets better MPG than most of the SUV's in my workplace parking lot. It is big, so it is an easy target. It gets better mileage than any mid to large SUV. PERIOD. If the Excursion is a target, than all SUV's, mini-vans and light trucks should share the same criticism. On another note, I would run bio-diesel, but over 5% (B20) would void my factory warranty. IMO, hybrids and all trucks/SUV's should diesel powered. It's a step in the right direction.
Posted by: Rodney Cole
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14-Sep-2005
9510
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Then again, a Ford Excursion with a Power Stroke diesel running with biodiesel fuel is going to burn cleaner and greener than a gasoline Toyota Prius. Emissions are EXTREMELY low with biodiesel compared to any kind of fossil fuel, has greater efficiency than petro-diesel, and the carbon dioxide released from combustion of biodiesel is easily and readily absorbed by vegetation. And, because it burns cleaner, it's easier on the diesel engine, so it does improve reliability.
Plus, parts and service for a diesel Excursion are going to be cheaper and easier to deal with than on a gasoline hybrid.
The problem with hybrids is that the batteries in these vehicles may require replacement after about 3 to 5 years of service. This particular form of maintenance can really only be performed by a certified repair shop and can cost a significant percentage of the vehicle's worth. A huge chunk of the money you will save from the excellent fuel efficiency will no doubt be spent when the car requires a new set of cells every few years. In the short term, the benefits are obvious, but it's a gimmick in the long term because of the highly expensive battery replacement interval that will be inevitable with any hybrid vehicle.
If you REALLY want long term economy with a gasoline vehicle, just buy a conventional 4 cylinder engine car, like a Honda Civic (non hybrid model).
Either way, these vehicles run on petroleum gasoline, which is non-renewable and still contributes to the pollution problem. Hybrids are a quick fix to the supply problem with a finite resource. The only way a hybrid may become something that's truly a solution to the fuel problem, at least to me, is if someone builds a hybrid that runs on diesel, not gasoline. This way, you can adapt to biodiesel if you choose and not have to directly rely on petroleum fuels to run your hybrid.
The upside for biodiesel, you can make it yourself if you have the equipment along with 70 cents worth of caustic soda and methanol per gallon of fuel produced. All you need is the vegetable oil, new or used. Of course, the used oil will need some additional cleaning, but it's still worth it.
You would also have to figure out what to do with the waste glycerin, but fortunately, that waste should be biodegradable. - Reinhart
Posted by: Reinhart Anonymous
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14-Sep-2005
9512
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To Mr. John Boyd,
The increased hurricane activity does not really have anything to do with the greenhouse effect.
If greenhouse were a factor, there would be an increase in cyclone activity throughout the world in the basins that form hurricanes and hurricane-like storms. This has not occured and, actually, worldwide cyclone activity is actually less than normal.
What is happening is a cycle in the Atlantic Basin, known as the Atlantic Multidecadal Oscillation. Right now, the cycle is at a point which is favoring more storms to develop in the Atlantic and Gulf of Mexico, and this cycle may remain for the next couple of decades. The early 20th century also saw highly active seasons, with 1933 having about 21 tropical cyclones forming in that season alone. During the mid-later part of the 20th century, North Atlantic tropical activity was actually below normal up until about 1995, when storm formation episodes began to increase again.
Anyways, the greater problem with global warming is the melting of the polar caps which may raise the sea level, potentially causing a flood threat to coastal areas, not really in the changes in climate.
A climate change in a scale to truly worry about can really only happen in the event of an astronomical catastrophe, such as a collision with a celestial object or a massive volcanic eruption, both potentially bringing about an ice age.
Other catastrophes: A supernova of our sun won't occur until about 5 billion years from now. The loss of the earth's magnetic field won't occur until about a few millions of years from now. - Reinhart
Posted by: Reinhart Anonymous
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16-Sep-2005
9534
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Reinhart,
I enjoyed your posting, but I do have to take issue with one of the things you said. I think it is unrealistic to think that batteries will remain a limiting factor in the practicallity of electric vehicles. Already Toshiba has announced lithium-ion batteries with very fast re-charge times and very long life. Whether they live up to their promise is a question, but in the long run aren't we only seeing the normal evolution, development, and refinement of a needed new technology? Electric is far better than bio-diesel. Vehicle design is much simpler and efficiency of energy use is 2-3 times higher. With electric you have the choice of any kind of generating technology including any kind of renewable, such as biodiesel, wind, solar, etc.
Posted by: Kevin Hill
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17-Sep-2005
9579
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I'm glad you enjoyed my post, but batteries are a limiting factor in hybrids in their practicality, whether you realize it or not.
Drain and recharge cycles will wear out batteries of any kind. The wearout is marked by a gradual decrease in endurance after every complete recharge. Eventually, this can get to the point where the battery can no longer hold a large enough charge to be practical. This is unavoidable.
The advantage of lithium ion and nickel metal hydride cells are that they will not develop a memory like nickel cadmium cells would. Nickel cadmium develops a chemical memory which limits their capacity if, for example, the recharge cycle is started before the battery is completely drained. Of course, lead acid batteries are a poor choice because of the electrolyte, which is typically sulfuric acid, and if a lead acid battery is allowed to run down and is not immediately recharged, cell damage could result. But all batteries will eventually wear out and require replacement after years worth of use and exposure (namely, temperature extremes and temperature fluctuations).
The problem here is how much it will cost to service the vehicle when this occurs, both in parts and labor. One way to reduce the cost of such a factor is to try and standardize the cells used in hybrids to a handful of industry standard and universally accepted sizes and shapes, but this will likely never happen due to competitive differences between the automakers. Then, you also have to figure out what to do with cells that have exceeded their useful life. You would have to recycle what you can and discard what you can't. Plus, hybrids are still reliant on fuels in order to run. Hybrids are typically gasoline powered, so it only reduces the consumption factor of petroleum but doesn't totally address it. Plus, not everyone will instantly buy a hybrid because, quite frankly, they are still rather expensive.
These points, at least to me, offsets the efficiency of electric hybrids. In this case, it's more practical to change the fuel source to one that has minimum impact to existing transportation infrastructures and can be implemented relatively quickly in an overly gradual change.
Alcohol based fuels, such as biodiesel and ethanol, are the answer as they burn very cleanly, are carbon neutral, and can be implemented with less impact to existing infrastructures.
Modifications to existing vehicles may be required (especially with ethanol on gasoline powered vehicles, namely any fuel management parts with rubber), but the cost would be nothing like having to replace a perfectly functioning car that may be paid for with another vehicle and having to incur more payments (particularly if you can't really afford it).
Anywans, alcohol fuels can be blended with petroleum fuels, but I hope that these alternate fuels can be implemented by themselves instead of being blended. These fuels can make existing gas and diesel powered cars much cleaner for the environment, while hybrids will take the cleanliness a step further along with even lower fuel costs.
Internal combustion is less efficient, but that's the infrastructure that's in use already. The only way to do the change without causing chaos is to make it gradual.
But, do we really have the time necessary to change the standard over to hybrids or should we act now and do with what can work with the existing system, which can allow more time for the change to realistically take place? - Reinhart
Posted by: Reinhart Anonymous
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27-Aug-2005
9106
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We've talked about this so many times on EVWORLD and it just doesn't become less important: fuel diversification of our Transportation Fleet. Woolsey is refreshing. Thanks for the article!
Posted by: Jim O
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27-Aug-2005
9107
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The sky is falling!!!!
Posted by: John Adams
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27-Aug-2005
9108
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How about a major, category 5 hurricane heading
straight for New Orleans, a major oil processing
city.
Posted by: John Boyd
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28-Aug-2005
9115
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Talk about prophetic irony.... The docudrama, Oil Storm, begins with a category 5 hurricane named "Julia" that destroys the oil and gas terminal at Port Fourchon, Louisana, south and west of New Orleans on Labor Day, 2005!
Posted by: Bill Moore
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28-Aug-2005
9117
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Bill: They just missed the name by one letter!
Posted by: John Boyd
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28-Aug-2005
9118
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Two Cat. 5 hurricanes within 13 years. Tell me
something is not affecting the ocean temperatures.
Interestingly, Nature's fury is headed directly to the
cause of manmade global warming.
Posted by: John Boyd
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18-Sep-2005
9618
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Can't say you are wrong about any of this, but here are some thoughts. It seems the amount of bio-diesel needed to offset oil would be very large, probably more than could be produced. I agree that hybrids aren't all that attractive an idea in the long run. But electric vehicles are a great idea because of the potentially very large and clean energy sources available. The arguements about batteries eventually wearing out is just about the economics of it, not the technical viability. So there is a cost to recycle battery materials, just a different set of costs from what some other alternative has (assuming these are manageable costs of course). Your point about making good use of existing infrastructure is a good one. It's also one very significant positive about hybrids.
Posted by: Kevin Hill
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