If Oil Were Like Salt, Could U.S. Kick The Habit?
SCOTT SIMON, host:
Every president - Democratic and Republican - since Richard Nixon has vowed to strive to make the United States energy independent. Forty years later, human beings have landed on the moon, human hearts are routinely transplanted, communism has collapsed, and silicon chips have made it possible to pack a library-worth of information into a device smaller than your thumb.
So why hasn't the United States or any nation become energy independent?
Jim Woolsey is the chairman of Woolsey Partners and a former director of Central Intelligence. He specializes in a range of alternative energy and security issues. He joins us in our studios. Thanks very much for being with us.
Mr. JIM WOOLSEY (Former CIA Director): Good to be with you, Scott.
SIMON: So what are some of the obstructions, technological, economic and political?
Mr. WOOLSEY: Well, in part we haven't been working frequently on the right problem. There are two energy systems essentially in the U.S. One is transportation - that's at 70 percent oil - and the other is the electricity grid - and that's over half fueled by coal and then natural gas, nuclear, hydro and others. They don't have very much to do with one another now.
Back in the '70s it was different. Oil fired power plants, provided about 20 percent of the country's electricity. So, if you were building a nuclear power plant or a wind farm in the '70s, you could well be replacing oil directly. Today, you're not.
SIMON: So when people talk about generating alternative sources of energy - and it often is things like wind or solar - that's not necessarily addressing the problem of foreign oil dependence.
Mr. WOOLSEY: It's not really addressing the problem of foreign oil dependence. No, that that doesn't have much to do with it and won't for many years.
SIMON: So where does that leave us?
Mr. WOOLSEY: In a way, there's been too much emphasis on the foreign side of this. Yes, we import well over half our oil now and that's a bad thing and we borrow a billion dollars a day essentially to import oil. But producing the oil domestically helps solve the balance of payments problem, but that's about all it does. It will not interfere with OPEC's domination of oil.
Something close to 80 percent of the world's proven reserves of oil are in OPEC states. And they are the low-cost producers and they have the big reserves. So they're going to be effectively running the international oil trade and running the cartel that runs it even if we drill more domestically. And so they're going to run the system.
We have to effectively destroy oil as a strategic commodity. Not destroy oil, but destroy its strategic role, its dominance of transportation.
SIMON: Well, that's why we've asked you here. It sound attractive. How do you do it?
Mr. WOOLSEY: Well, I think you want to focus on existing infrastructure and existing vehicles, and there are several things that could be done relatively quickly. One - and the administration is doing this, I think, and various people on the Hill, encouraging moving toward electrification. Particularly, I think, plug-in hybrids.
Another is improving the efficiency of internal combustion engines. There are a number of start-up companies that are inventing computer chips and valves and all kinds of things that you can use to modify existing engines and existing vehicles to get something like a 20, 30 percent improvement in fuel efficiency.
You can also encourage the use of biofuels generally. Require the automobile manufacturers much more rapidly than we're now requiring them to move to what's called an open-standard, flexible fuel vehicles. It just requires them to change the kind of plastic in the fuel line of the car and a bit of software -40, 50 dollars a vehicle - in the manufacturing process.
And that, I think, would an extremely positive step. One reason it would be positive is that we've got a serious health risk problem from using petroleum products. The fine particulates that are carried into the atmosphere by what's called aromatics - benzene, toluene, xylene - which is what the oil companies now use to increase octane, are highly carcinogenic.
It really looks as if tens of thousands of deaths from malignancy a year and hundreds of millions of dollars in added health care costs are caused by these fine particulates, which the oil companies have a special waiver on, essentially. If you run a chemical plant, you can't put benzene, toluene, xylene into the atmosphere, but they're permitted to do it because it's from a mobile source like gasoline in a car.
SIMON: People often point out you can burn oil, it's affordable - that's why it's good for cars. There's a reason why people use oil.
Mr. WOOLSEY: Well, it does carry a lot of energy in a relatively small space. But at least, as far as I'm concerned, that's about where its advantages stop, and there are just a number of things that are in the works that are going to give oil a real run for its money. Some of them are going to need some initial help, but I think the government role could largely be one of a Teddy Roosevelt-style trust buster - going after oil's cartel and oil's dominance of transportation, to break it.
Same thing happened to salt in the very early 20th century. Salt was a strategic commodity for thousands of years. It was the only way to preserve meat, countries went to war over salt mines. At the beginning of the 20th century, the coming of the electric grids, meant that all of a sudden refrigeration and freezing was available affordably and salt's dominance just fell apart within a relatively few years. That's what we need to do to oil. We need to make it as boring as salt is today.
SIMON: Thank you, Mr. Woolsey.
Mr. WOOLSEY: Thank you.
SIMON: Jim Woolsey, chairman of Woolsey Partners and former director of the CIA.