Home inFocus ‘Oil Itself Is a Problem’

‘Oil Itself Is a Problem’

An Interview with James Woolsey

James Woolsey Fall 2009

On June 18, 2009, inFOCUS editor Jonathan Schanzer interviewed R. James Woolsey. Mr. Woolsey was Director of Central Intelligence from 1993 to 1995. Mr. Woolsey is Chairman of the Advisory Boards of the Clean Fuels Foundation and the New Uses Council. He is a founding member of the Set America Free Coalition, dedicated to American oil independence. He also serves on the board of directors for the electric vehicle advocacy group Plug In America and is an adviser to the Institute for the Analysis of Global Security, which promotes a flex fuel mandate. Mr. Woolsey was an adviser on energy and climate change for Senator John McCain's 2008 presidential campaign. He served as Ambassador to the Negotiation on Conventional Armed Forces in Europe from 1989 to 1991. Mr. Woolsey was Under Secretary of the Navy from 1977 to 1979, and General Counsel to the Senate Armed Services Committee from 1970 to 1973.

iF: You’ve been working to get America off oil. What’s driving your effort?20151104_Woolseyhires(1)

JW: Well, about 40 percent of the global warming gas emissions that come from energy use come from oil. Another 40 percent or so comes from coal, much of that from the electricity grid, of course. So, oil, particularly since it has a 96 percent monopoly on transportation, is a substantial problem, from the point of view of emissions of carbon dioxide.

Oil is also an extraordinary problem with respect to national security. It’s not just that we might face a cutoff, as we did during the Yom Kippur War of 1973, which gave rise to a lot of concerns about oil independence. Oil itself is a problem. There are some people who think we can solve our security problems with oil by drilling more in the U.S., or by shifting our consumption patterns. Let’s say we buy more from Norway and less from Saudi Arabia. That’s not going to work. Drilling here helps a bit with respect to jobs in the U.S. And it helps a bit with respect to balance of payments. But it doesn’t get at the basic problem, which is that OPEC dominates oil and sets oil’s prices. And oil dominates transportation. Practically everything that we do requires transporting something. So, oil dominance and OPEC’s dominance of oil presents an extraordinary national security problem for us, in a number of ways.

iF: The problem, of course, is that OPEC is dominated by dictators and rogue regimes.

JW: Thomas Friedman wrote a chapter in Hot, Flat, and Crowded about this issue—of the nature of governments that control oil. It’s called “Fill ‘Er Up with Dictators.” This notion is supported by Paul Collier at Oxford, and others. It sets out very clearly how oil, when it is a dominant commodity for an autocratic or dictatorial state, helps that state to be more autocratic and more dictatorial. A huge amount of economic rent—essentially unearned income, when it comes into an autocratic or dictatorial state—enhances the central power of the state. It doesn’t do what broad-based economic development does, which is to encourage the development of other sources of economic power, as happened in Taiwan, South Korea, and elsewhere. And, in those places, in time, a diversification of political power occurs. Oil doesn’t disrupt democracy if it is discovered by a mature democracy, such as Norway. But of the top nine oil exporters in the world, only Norway is a democracy. The others are all autocracies or dictatorships. So, that’s the first point.

Secondly, Lawrence Wright in The Looming Tower says that, with a little over one percent of the world’s Muslims, the Saudis control about 90 percent of the world’s Islamic institutions. The Islamic institutions they control tend to preach Wahhabi Islam, which is somewhere between murderous and worse with respect to Shi’ite Muslims, Jews, homosexuals, and apostates. The Saudis are also massively repressive of everyone else, particularly women, and they seek a worldwide theocratic dictatorship called the caliphate.

That is what is taught in the Saudi-funded madrassas of the West Bank, or of Pakistan. And that is all fueled by oil. So, if you wonder who is responsible for those little Palestinian and Pakistani boys being taught to be suicide bombers—or at least to have the ideology that comports with their being suicide bombers—next time you pull into a filling station, before you get out to charge your gasoline, turn your rear view mirror a couple of inches, so you’re looking into your own eyes. Now you know who’s paying for those little Pakistani and Palestinian boys to be taught to hate.

iF: You’re saying that a very good argument can be made that one can be a security hawk and an environmentalist.

JW: Absolutely. I wrote a chapter for a Brookings book—it came out about a year ago—that’s called “A Partnership Deal.” And it closes with a dialogue between a tree-hugger and a hawk. The tree-hugger is the ghost of John Muir, the father of the environmental movement in the United States, and he is only worried about carbon. And the hawk is the ghost of General George S. Patton, and he’s only worried about terrorism and attacks on national security. It all ended up as the same problem. They keep realizing that they are willing to take the same actions, such as getting off oil, even though it’s for somewhat different reasons.

iF: What are your thoughts on the benefits of nuclear power?

JW: Nuclear power has the advantage of not emitting carbon. It produces electricity while being relatively inexpensive to operate. However, it’s also extremely expensive to construct, and getting more and more expensive, because we’ve gotten out of the business. The nuclear industry has to get huge subsidies from the federal government. This comes in the forms of insurance, 100 percent loan guarantees, and all the rest.

I think it is much more expensive now to build toward nuclear than toward natural gas, together with renewables. A nuclear plant today costs much more to build than a comparable natural gas facility. Even though gas puts out some carbon dioxide, it puts out much less than coal. And when you combine natural gas with renewables, I think you have a better package and a more affordable package.

The biggest problem with nuclear is that it turns the United States into the Johnny Appleseed of nuclear weapons proliferation. The industry, to get back into the nuclear power business, is going to look for other customers. And they’re going to be eager to build nuclear power plants in places like Saudi Arabia, Egypt, and elsewhere. Those countries will say they’re interested in nuclear power for electricity, but many of them have a lot of oil and gas. That’s not the real reason any more than it is Iran’s real reason for establishing a nuclear facility. What they want is to be able to get into the fuel cycle, and to be able to enrich uranium or re-process plutonium. Once they can do either of those, they get very close to having what they need for a nuclear weapon.

So, the biggest problem with getting back into nuclear is that we could start a movement to spread reactors around the world under a treaty regime that does not stop states from being able to produce the fissile material for nuclear weapons. Actually, to some extent, it even encourages it.

iF: So, how should we produce electricity in a smarter way?

JW: With electricity generation, the other renewables may have some role, but I think electricity generation will rely very heavily on solar, wind, and geothermal, and the like. We don’t use oil to produce electricity to any substantial degree any more. We did in the 1970s, when about 20 percent of our electricity came from oil. We got away from that in the 70s. Only about 2 percent of our electricity comes from oil today. So if one is talking about moving toward renewables for transportation today, that would be moving it toward biofuels of one kind or another.

But, it’s also possible now to do what I do, and drive a plug-in hybrid. That will be increasingly possible in the years to come. This will electrify at least a portion of our vehicle transportation. We will produce the electricity from renewables such as solar, wind, geothermal, and the like. I think that in the long-run, solar will be the dominant renewable technology for electricity generation.

iF: What’s your position on the science of global warming?

JW: I think “climate change” is a better term, because some of the disruption from added carbon dioxide may help cause cooling in some areas. For example, if the gulf-stream is disrupted over the coming century by a lot of ice melting in the Artic, that could make northern Europe cooler, not warmer.

I really like Hunter Lovins’ term “global weirding.” But for normal discourse I suppose that “climate change” does the job better.

There have been some non-anthropogenic climate changes throughout the history of the Earth, and we may be seeing some non-anthropogenic now, with the tilting of the Earth’s axis, which happens every several thousands years, adding to a warming trend in the northern hemisphere. But I think it’s ridiculous to assert that because there is some non-anthropogenic change, there can be no anthropogenic change. I have no idea why people think that, just because the Earth may be getting somewhat warmer, or the climate changing from natural causes, it’s irrelevant that we have put double the amount of carbon into the atmosphere that was there at the beginning of the industrial age. Carbon helps contribute to trapping emissions and warming the Earth.

Whenever anybody makes that argument to me, that there can be some natural changes, so nothing that the humans do can be adding any effect, I ask them this: If they were unlucky enough to be genetically pre-disposed to having lung cancer, would they say, “Great, I get to smoke six packs a day?”

I don’t understand why people can’t accept the proposition that there may be some climate change going on naturally, but that we may be making the problem worse by putting so much carbon into the atmosphere.

Virtually all of the leading climatologists in the world believe that this is a serious problem. There are one or two who do not. There are a number of economists and people who are in other disciplines, who don’t really know anything about climatology, who assert that there is no climate change going on as a result of carbon emissions. But, if you talk to virtually all of the world’s leading climatologists, they are much more worried about climate change than the climate change models suggest. They’re more worried because the climate change models don’t deal adequately with relatively rare events in the Earth’s history, such as the tundra melting in the Arctic, or any of the other so-called positive feedback loops that can produce exponential change, as distinct from linear change.

So, yes, I think climate change is an issue, and it will be a serious one in the time, at least, of our grandchildren. We need to take steps to reduce carbon emissions, and to scientifically investigate other things that we might need to do in order to deal with this problem as the years go on.

iF: How do you feel about cap-and-trade?

JW: Cap-and-trade can be a useful tool for turning us away from carbon-emitting electricity and large power sources in the future. The Obama Administration has decided to give away 85 percent of the permits under cap-and-trade, whereas they had campaigned on the basis of giving away none of them, and auctioning all of them. If they give away 85 percent, they are 85 percent along the way toward a fiasco similar to the one experienced in Europe. The Europeans stumbled around for several years because they gave away all of their carbon credits under their cap-and-trade system, and they had carbon sink to a price of under one Euro per ton, for long periods of time, which is ridiculous and does no good at all in terms of limiting emissions. So, the Administration may well have, for a long time, substantially undermined the effectiveness of what could have been a useful cap-and-trade regime by giving away 85 percent of the permits.

Cap-and-trade on a global basis for carbon would be a substantially more complex system than the cap-and-trade that we did with sulfur and nitrogen oxide emissions in our own national efforts to limit the acids that produced acid rain. We did that reasonably well, and I think we proved that a cap-and-trade system can work. But it’s going to be difficult to make it work very effectively, with some very low carbon prices suggested by giving away 85 percent of the permits.

There’s one other point. Cap-and-trade, even with substantial carbon prices—say $30 a ton—does very little to move us away from oil because $1 a ton of a carbon price, in a cap-and-trade system, is about one penny or less per gallon of gasoline at the pumps. So, even with a $30 per ton price for carbon, there’s only 30 cents per gallon added to the cost of gasoline with your cap-and-trade system. And that won’t have any substantial effect in moving us away from oil and gasoline. We have to use other tools to move us away from oil and from gasoline use for cars.

iF: What are those tools?

JW: One is electrification. On average, you reduce global warming gas emission in a vehicle by about 20 percent or so when you go from an internal combustion engine to a plug-in hybrid. The incentive is that electricity is so much cheaper, even under a cap-and-trade system, than any imaginable price for gasoline or diesel fuel. We can have a move toward cleaner transportation, and away from oil, by moving to electricity and biofuels.

I also like a combination of modern biofuels, such as butanol, from cellulosic feedstocks, or ethanol, from cellulosic feedstocks, or diesel from algae. There are a number of very promising technologies that are beginning to move from the prototype stage into early production. Those are some of the things we can do.

iF: How would you advise the Obama Administration on its environmental policies?

JW: We can move off of oil faster. Charles Krauthammer suggested having a $1 per gallon gasoline tax that is 100 percent remitted to the population. That way we could get some Republican and conservative support, as well as the Administration and the Democrats in the Congress.

The way Charles has suggested doing that is by adding $1 a gallon to gasoline and then immediately remitting­—through either Social Security tax reductions, Social Security payment increases, or unemployment compensation increases­—every penny of that directly back to the population. And those three categories of remittances cover almost everybody.

Of course, some people are going to get back more money than they spend on gasoline, because they don’t drive cars or they drive very little. Others will get an imbalance the other way. But that’s the whole point: to penalize gasoline use, but to give the money that implements that penalty back to the people. A step like that could garner pretty broad public support.

iF: Thank you for your time.