Tuesday, May 4, 2010

Revisiting oil's real cost

   Ultimately, it's all about dollars, don't you know.

   The financial press reports that BP has lost $32 billion in stock market value, oozing away in liquid blackness. Previously identified with green-ness as oil companies go, BP now models a shroud of tar.

    Efforts to contain the mother of all oil spills in the Gulf of Mexico are costing the company $6 million a day. It stands to lose up to $15 billion in said fashion, and many billions in liability claims.

    And it will still make money. Lots, in fact.

    Exxon-Mobil couldn't be doing better. Now 21 years after one of its tankers wrought devastation to the Prince William Sound and the Gulf of Alaska, Exxon-Mobil is the world's largest publicly traded oil company.

     And that should satisfy all. All's well that ends with profits.

      Actually, that is one of the precepts that many Americans came to reconsider in the last two general elections when they turned away from the chorus that put dollar signs above all.

     That's why, for instance, Congress has refused to open the Alaskan National Wildlife Refuge to oil production. Drilling there is cynically advertised as securing "energy independence." But oil is fungible, meaning that whatever is harvested, wherever it is harvested, goes into one big global vat. Or what are international markets for?

    Get real. Drilling in delicate places is about dollars.

    So, is the imperative to "drill here, drill now," (as of this writing, "spill here, spill now") with the understanding that some things we value but that don't have a price tag will suffer? Or should a national imperative be to conserve, here, now and into the future? We should all know the answer.

    During a debate in the '90s over a production-heavy energy initiative of the Bush administration, Sen. John Kerry said something very smart. He said that Congress could grant every drop and every kilowatt of energy production the administration sought, and in 20 years "we would find ourselves more dependent on foreign oil than we are today."

      Why? Simple: Under the policies so embodied by BushCheney Corp., we would be consuming at the same rate as before while global supplies dissipated.

       This brings us to the subject of what oil costs. Because dollars matter over all else, we are accustomed to living on the cheap — yes, even at $3 a gallon. But that's only at the pump.

         During the height of America's incursion and occupation of Iraq, the National Defense Council Foundation factored in all the costs associated with oil, including the military costs of securing its supplies overseas, and found that with "hidden costs," the price of gasoline to be $5.28 a gallon.

        If we paid oil's real costs up front, we would use less of it, and ultimately need less of it.

        An intriguing proposal is gaining support in Washington: "cap and dividend." An alternative to increasingly feeble "cap and trade" legislation to curb greenhouse gases, it involves the sale of carbon permits to major emitters of carbon dioxide — as well as those that produce high-carbon fuels like oil and coal — under a gradually tightening umbrella. The "dividend" part would be checks sent to U.S. taxpayers, a la the Alaska Permanent Fund from proceeds for energy leases in that state.

      The sale would cause the cost of energy to go up. Yep. Gas prices would rise. At the same time, consumption would go down. Can't afford this? The truth is we have no idea what we are paying for in our heavy dependence on oil. "Cap and dividend" would provide a far more accurate picture of its real cost.

      We're all paying for it now in the Gulf of Mexico, and only a fraction of the cost is in dollars.

      John Young writes for Cox Newspapers. E-mail: jyoungcolumn@gmail.com.  

No comments: