U.S. Imperative: Securing our Nation through Efficiency

Remarks by R. James Woolsey, Jr., Vice President of Booz Allen Hamilton and former CIA Director

Energy security has many facets – including particularly the need for  improvements to the electrical grid to correct vulnerabilities in transformers and in the Supervisory Control and Data (SCADA) systems.  But energy independence for the US is in my view preponderantly a problem related to oil and its dominant role in fueling vehicles for transportation.  For other countries, e.g. in Europe, energy independence may be closely related to preventing Russia from using against them the leverage that proceeds from its control of the natural gas they need for heating and electricity.  In the US, however, we generally have alternative methods of producing electricity and heat, albeit shifting fuels can take time.  Some of these methods are superior to others with respect to costs, pollutants, global warning gas emissions, and other factors.  Technological progress continues to lead to reassessments of the proper mix – for example, there appears to be progress in affordably and reliably sequestering the carbon captured during the operation of integrated gasification combined cycle coal (IGCC) plants.  And progress in battery technology to improve the storage of electricity may help us expand the use of renewables such as solar and wind, which are clean but intermittent.  Change is not easy in generating electricity, but we are not locked in to a single source for it, for heating, or for most other uses of energy.

Powering vehicles is different.

Just over four years ago, on the eve of 9/11, the need to reduce radically our reliance on oil was not clear to many and in any case the path of doing so seemed a long and difficult one.  Today both assumptions are being undermined by the risks of the post-9/11 world, by oil prices, by increased awareness of the vulnerability of the oil infrastructure (as illustrated in the al Qaeda attacks ten days ago on the large Saudi oil facility at Abquaiq) and by technological progress in fuel efficiency and alternative fuels. 

There are at least seven major reasons why dependence on petroleum and its products for the lion’s share of the world’s transportation fuel creates special dangers in our time.  These dangers are all driven by rigidities and potential vulnerabilities that have become serious problems because of the geopolitical realities of the early 21st century.  Those who reason about these issues solely on the basis of abstract economic models that are designed to ignore such geopolitical realities will find much to disagree with in what follows.  Although such models have utility in assessing the importance of more or less purely economic factors in the long run, as Lord Keynes famously remarked:  “In the long run, we are all dead.”

These dangers in turn give rise to two proposed directions for government policy in order to reduce our vulnerability rapidly.  In both cases it is important that existing technology should be used, i.e. technology that is already in the market or can be so in the very near future and that is compatible with the existing transportation infrastructure.  To this end government policies in the United States and other oil-importing countries should:  (1) encourage a shift to substantially more fuel-efficient vehicles within the existing transportation infrastructure, including promoting both battery development and a market for existing battery types for plug-in hybrid vehicles; and (2) encourage biofuels and other alternative and renewable fuels that can be produced from inexpensive and widely-available feedstocks -- wherever possible from waste products.

DANGERS OF PETROLEUM DEPENDENCE:

1.  The current transportation infrastructure is committed to oil and oil-compatible products.
2.  The Greater Middle East will continue to be the low-cost and dominant petroleum producer for the foreseeable future.
3.   The petroleum infrastructure is highly vulnerable to terrorist and other attacks.
4.   The possibility exists, both under some current regimes and among those
that could come to power in the Greater Middle East, of embargoes or other disruptions of supply.
5.   Wealth transfers from oil have been used, and continue to be used, to fund terrorism and it's ideological support.
6.   The current account deficits for the US and a number of other countries create risks ranging from major world economic disruption to deepening poverty, and could be substantially reduced by reducing oil imports.
7.   Global-warming gas emissions from man-made sources create at least the risk of climate change.

THREE PROPOSED DIRECTIONS FOR POLICY:

The above considerations suggest that government policies with respect to the vehicular transportation market should point in the following directions:

1.  Encourage improved vehicle mileage, using technology now in production.
2. Encourage the commercialization of alternative transportation fuels that can be available soon, are compatible with existing infrastructure, and can be derived from waste or otherwise produced cheaply.
3. Encourage the commercialization of plug-in hybrids and improved batteries.
The dangers of dependence on conventional oil in today’s world require us both to look to ways to reduce demand for it and to increase the supply of alternatives. 

The realistic opportunities for reducing demand soon suggest that government policies should encourage hybrid gasoline-electric vehicles,  particularly whatever battery work is needed to bring plug-in versions thereof to the market, and modern diesel technology.  Light-weight carbon composite construction should also be pursued. The realistic opportunities for increasing supply of transportation fuel soon suggest that government policies should encourage the commercialization of alternative fuels that can be used in the existing infrastructure:  cellulosic ethanol, biodiesel/renewable diesel, and (via plug-in hyrids) off-peak electricity.  Both of the liquid fuels could be introduced more quickly and efficiently if they achieve cost advantages from the utilization of waste products as feedstocks.

 The effects of these policies are multiplicative.  All should be pursued since it is impossible to predict which will be fully successful or at what pace, even though all are today either beginning commercial production or are nearly to that point.  Incentives for all should replace the current emphasis on automotive hydrogen fuel cells. 

 If even one of these technologies is moved promptly into the market, the reduction in oil dependence could be substantial.  If several begin to be successfully introduced into large-scale use, the reduction could be stunning.  For example, a 50-mpg hybrid gasoline/electric vehicle, on the road today, if constructed from carbon composites would achieve at least 100 mpg. If it were also a Flexible Fuel Vehicle able to operate on 85 percent cellulosic ethanol, it would be achieving hundreds of miles per gallon (of petroleum-derived fuel).  If it were also a plug-in, operating on either upgraded nickel-metal-hydride or newer lithium-ion batteries, so that 30-mile trips could be undertaken on its overnight charge before it began utilizing liquid fuel at all, it could be obtaining in the range of 1000 mpg (of petroleum). If it were a diesel utilizing  biodiesel or renewable diesel fuel its petroleum mileage could be infinite.  
 
A range of important objectives – economic, geopolitical, environmental – would be served by our embarking on such a path.  Of greatest importance, we would be substantially more secure.