Oil & National Security Roundtable
Two signatories of the letter to President Bush talk about the Middle East threat to U.S. energy, and about the here and now of alternative energy like plug-in hybrids and bio-diesel. Host Steve Curwood speaks with former CIA director James Woolsey and former national security advisor Robert McFarlane.
CURWOOD: Joining me now are two signatories of the letter to President Bush. They're from both sides of the political aisle who have come together on this issue of oil security. James Woolsey is former director of the CIA under the Clinton administration and vice president now of Booz, Allen and Hamilton; and Robert MacFarlane was national security advisor to President Reagan and is now CEO of energy and communications solutions. Gentlemen, hello.
WOOLSEY: Hello Steve, good to be with you.
MACFARLANE: Good morning.
CURWOOD: Now, Jim Woolsey, as former director of the CIA, how real is this possibility that terrorists could send the entire world's economy into a tale spin by disrupting oil supplies?
WOOLSEY: I think it's definitely real. Two thirds of the world's proven reserves of oil are in the Middle East, at least the greater Middle East, most of it in the Persian Gulf. That's going to be a highly difficult area to predict the future of for a long time. We can all hope that helping it move toward democracy and the rule of law and is going to work and Iraq will be peaceful and Saudi Arabia will transition gradually and sensibly to a far more modern and less ideological and fanatic Wahabi-oriented state, but none of that is sure.
And, I think that Bin Laden's frequent public statements about attacking the oil infrastructure, the fact that they've done it in Iraq, tried to do it on the high seas, tried to do it in Saudi Arabia and the fact that important parts of the infrastructure, particularly in the Gulf, are quite vulnerable to terrorist attack, is an important part of the puzzle.
Another important part of the puzzle is that in 1979 there was a serious coup attempt in Saudi Arabia. The Islamists took over the Great Mosque in Mecca and they tried to do a lot more. We've got a very serious security problem now because of the situation in the Gulf and that part of the world.
CURWOOD: Just to be clear, how vulnerable is vulnerable when you say that there are parts in the Persian Gulf that could be easily disrupted by a terrorist? How easy?
WOOLSEY: Well, let me use only an illustration from Bob Baer, a former CIA officer that's written a book called, "Sleeping with the Devil," in which the opening scenario is a terrorist crashing a 747 into the sulfur cleaning towers up near Ras Tanura in northeastern Saudi Arabia. Since you have to get sulfur out of the Saudi oil that would take several million barrels, probably around five or six million barrels a day, off line for a year or more. And Bud here is an old artilleryman. He and I were talking the other day; I think he'll tell you you probably don't need a big 747 to do that. A pretty skilled guy with some orders could probably do it.
CURWOOD: So, Bud MacFarlane, now the national security aspect of this?
MACFARLANE: Well, as Jim said, I was an artilleryman for 20 years and I can tell you with high confidence that I would have no problem at all in shutting down Ras Tanura on any given afternoon. Four-point-two inch mortar can go 4,000 yards very accurately and the ability of an Al-Qaeda terrorist to come within that distance is easy. There are other threats through shipping, through pipelines that are terribly vulnerable, easy targets and virtually impossible to defend. So, in short, back in the ‘70s we didn't have a declared enemy with that kind of capability, but today we do.
CURWOOD: And, what would it do to our economy, Bud MacFarlane, if six million barrels, five or six million barrels of oil a day were suddenly not available?
MACFARLANE: Oh, it's not only our economy. The economies of China, Japan, Western Europe and the United States would be facing, not just one hundred dollar per barrel oil, but probably double that at least. You take six million barrels off, you have a spike but also a prolonged shortage and the impact of that on not only the gasoline pump, but downstream industries, federal chemicals and so forth and that would lead in turn to massive unemployment. And, in short, it doesn't take long before you've got a global depression or worse. This is not theoretical or to be alarmist, this is just reacting to what is plausible, possible, I think, almost certain to happen in the next year's time.
CURWOOD: Now, gentlemen, what makes you think that this effort, your effort now is going to succeed where those others have not for what, 30 some-odd years?
WOOLSEY: Three new technologies: hybrids, which are here on the road, plug-in hybrids which are here probably within a year or so and two kinds of bio-fuels—cellulosic ethanol, genetically modified bio-catalysts make it possible to breakdown grass or corn husks or whatever in order to make ethanol now instead of having to make it just from starch, like corn. And, bio-diesel technologies to turn waste into diesel. Those technologies are all relatively new. They're beginning to come into production. They're finishing up R and D. We don't need a Manhattan Project to invent all sorts of new stuff.
CURWOOD: Deputy Secretary of the Department of Energy Clay Sell says that the administration appreciates, what they consider to be, a broad endorsement of White House policy in the form of your letter, and they just need Congress to pass an energy bill and things would be good. What's your response?
MACFARLANE: First of all, I think the administration does acknowledge that the threat of disruption of oil supplies from the Persian Gulf is very real. Al-Qaeda has made public its intention to begin attacking oil facilities in the Persian Gulf and if we were to lose as much as some say as much as five or six million barrels a day for an extended period, this would literally cause a meltdown of the global economy. And so, against that day coming we had to begin now doing things that can reduce our reliance on foreign oil. I think what brings us together on this letter is that there are things that you can do today that don't involve pie-in-the-sky technologies that can begin to get us off reliance on Saudi Arabian oil primarily.
CURWOOD: Bud MacFarlane likes what the White House is saying, what about you, Jim Woolsey?
WOOLSEY: Well, some of what the White House is saying I think is fine, but there are a couple of things that are centerpieces in the administration's energy policy as I see them that are certainly not centerpieces of ours. Their view of changing the vehicles is focused on hydrogen fuel cells. They just announced some 80 plus million dollars going to various automobile companies to work on hydrogen fuel cells. Well, that is a 15, 20-year or more in the future technology. This is an awful lot of inventing to do. Whereas what you have already available is hybrids, particularly coming along right now within the next year or two, plug-in hybrids. And what that means is in addition to the hybrid gasoline, electric feature that a lot of people are familiar with where you're charging your battery as you slow down and so you get very, very good gasoline mileage, when you can also plug the hybrid in at night and top up the battery and use battery power exclusively for short trips, you are able to operate your car a substantial amount of time, on at least eight and a half cents a kilowatt hour electricity, which is the average for residences in a lot of parts of the country at night, two to four cents per kilowatt hour. Two cent to four cent electricity per two kilowatt hour is the equivalent to 12 to 25 cent a gallon gasoline.
So, you have an opportunity for American consumers to substitute very cheap electricity for extremely now expensive gasoline, well over two dollars a gallon in most parts of the country, and that technology is here. It's not something you have to do a lot of inventing for. Our energy commission suggested that the U.S. government with tax credits, give tax credits so Detroit can catch up with the Japanese and start making hybrid gasoline electrics, including plug-in hybrids, itself. But that doesn't seem to have any resonance with the administration. They seem to be entirely focused on this 20-year in the future fuel cell business.
MACFARLANE: Just to underscore, Steve, the state-of-the-art reality of this, when I entered the Marine Corps, 40 years ago, we had flexible fuel vehicles then, and we have them now. And, we ought to be able to stress that in our legislation.
CURWOOD: So, let me ask you, Bud MacFarlane. We've got the technology today, but what about Detroit? Both auto-makers and unions have resisted changes, especially increases in fuel efficiency requirements. How and why will they go along with your proposal?
MACFARLANE: Well, I think it's a matter of self-interest. That is, unless they move in this direction, they're going to begin losing market share. I mean, right now, I expect Toyota has the dominant position in hybrid vehicles. That can only increase unless Detroit gets off the dime and begins to adopt what is, as Jim said, currently available, state of the art technology. So, it's a matter of survival. Detroit could actually steal a march on Japan, if they were also to adopt carbon composite metals, lighter metals that are stronger that we've been using for 25 years and aircraft, can give you an SUV that could be getting four or five hundred miles a gallon and safer.
WOOLSEY: Just to augment something, Steve, that Bud said. Our approach toward encouraging hybrid construction in the U.S. tax credits was endorsed by the automobile workers. I'm an old Scoop Jackson Democrat, so I'm going to say that I think the workers are ahead of management on understanding the importance of cutting back on oil consumption.
CURWOOD: Let me ask you this, beyond the Middle East, what other potential conflicts over oil do you see? In particular, what about China's energy? Jim Woolsey?
WOOLSEY: China and India are both growing rapidly, among one of the reasons why oil demand is going to go up so sharply, I think, and potentially cost in price over the course of the next several years. But China is still a Communist dictatorship and it has a long-term strategic view of how to approach this. It's got long-term contracts; it's working on with Venezuela, with Russia to try to end, I think, Saudi Arabia, to try to get long-term commitments for as much oil as it believes it's going to need. So, we have potential difficulty in terms of price and also even sometimes a potential conflict with China.
CURWOOD: And Bud MacFarlane?
MACFARLANE: Well, I think short of aggression, there's a potential problem of severe competition between Japan, China, and other Asian nations for fuel and they're all heavily reliant upon the Persian Gulf. And, when you think about the ramp up last year of almost 40 percent and China's demand and how that can worsen that competition for scarce resources. And, then look at choke points and the potential for Al-Qaeda intervening, Straits of Timor, Straits of Malaka, you have the makings of a real crisis purely on economic grounds. The competition for oils between these East Asian economic giants.
CURWOOD: Now, we've known for quite a while that it's not so good to be dependent on such a volatile region of the world for our oil, so what's new here, gentlemen? I mean, what's changed to bring the two of you and your 20-some other colleagues to this point of signing on to a letter to the president?
WOOLSEY: Well, I would sign up to being a tree-hugger for a long time, as well as to, in some people's eyes, I guess, a sort of foreign policy hawk. I think all hawks ought to be tree-huggers. Where else you going to nest? And, I think it's important for people to realize that in this early 21st century world of the vulnerabilities to terrorism and the chaos in the Middle East we are in a different strategic situation than we were back in the 1970s. And, we're in a different strategic situation than if we were only concerned about global warming and emissions. Those are both important concerns, but the real urgency, I think, that drives, I think increasingly is driving a lot of people to pay attention to this issue, is the prospect of terrorist attacks in the Middle East on the oil infrastructure or in this country, for that matter, and or the possibility of governmental changes that could substantially reduce our access to oil.
CURWOOD: Robert MacFarlane is former national security advisor to President Reagan and now CEO of Energy and Communications Solutions. James Woolsey is former director of the Central Intelligence Agency and now vice president of Booz, Allen and Hamilton. Gentlemen, thank you both for taking this time with me today.
WOOLSEY: Thank you, Steve.
MACFARLANE: Enjoyed it, Steve.
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CURWOOD: Just ahead: Tips on how to be a smart and environmentally-friendly consumer. Stay tuned to Living on Earth.
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