Transcript Slide 1

The Global Oil Addiction
Some Facts
Israel’s security =
Eliminate oil addiction
• The first strategic priority of Israel’s
defense policy is to minimize US
dependency on oil
• The second priority of Israel’s defense
policy is to minimize the world’s
dependency on oil
IEA forecast of global all-oil
production, mbd
Source : IEA, The Guardian Newspaper
US: Oil share of goods & services
trade deficit
60%
50%
40%
30%
20%
10%
0%
2009 *
2008
2007
2006
2005
2004
2003
* Jan-Nov 2009
2002
2001
2000
1999
Source: US Bureau of Economic Analysis
Oil and the US Defense Budget
More than 50% of the US defense issues
are oil related:
•
Protecting the “Oil States”
•
Protecting the “Oil Routes”
•
War on Terror
(e.g., the Gulf War, Iraq)
(Navy)
(Radical Islam)
Oil Prices and Recession
Every major recession in the last 40
years was preceded by a rise in oil
prices.
Can the US/world come out of the
recession when oil is 80$?
Israel: Oil share of GDP
8,000
9.00%
7,000
8.00%
7.00%
6,000
6.00%
5,000
5.00%
4,000
4.00%
3,000
3.00%
2,000
2.00%
1,000
1.00%
0
0.00%
2008
Oil imports as a % of total imports
2007
Expenditure on oil as % of GDP
2006
Source:
Modelim
estimates
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
Net oil imports of oil in millions, present value $
Africa: Oil share of trade deficit
Country
Fuel Imports as %
of current account
balance
Kenya
Senegal
Tanzania
Uganda
-174%
-90%
-85%
-124%
Mali
-83%
Source: Development Indicators, World Bank, 2007
What is the best way to reduce US
oil dependency?
• Nuclear
• Wind
• Solar
• None of the above
Oil is hardly used (1%) to generate
electricity
If the US replaced
all of its coal
based electricity
with nuclear, wind
or solar… it would
not reduce its oil
dependency by a
single gallon.
2008 United States Electric
Power
HYDRO
WIND
MISC
6%
2%
1%
COAL
48%
NUCLE
AR
20%
GAS
22%
OIL
1%
Source: US Energy Information
Administration
What is the largest source of CO2
in the US?
2008 United States
Coal
or
Oil?
It is oil
Total CO2 emissions (Mt)
GAS,
1242,
COAL,
21%
2125,
37%
OIL,
2436,
42%
Source: US Energy Information
Administration
Distorted Priorities
• The US Stimulus Bill allocated $64
billion to electricity/coal related
energy (like CCS, wind and solar) and
only $3 billion to oil replacement
issues.
• If our goal is to reduce CO2
emissions, why aren't we attacking
the larger source?
Death Tolls - A Comparison
• Deaths as result of oil related wars (last 35
years)-
6- 6.7 million
• Possible deaths as result of oil related wars
(next 20 years)-
100 million
• Possible deaths as result of global warming
(next 20-50-80 years)-
Hard to determine, but according to
IPCC the severe impact
will happen in 50-80 years
A Question of Priorities
Putting Climate Change ahead of eliminating the
strategic value of oil
… it is like a physician telling a 25 year old…
“You have brain tumor and without treatment you
will die in three years. However, we will not do
anything about it. Instead you should take
medicine to reduce your cholesterol.”
We have a brain tumor
It is called global oil dependency:
•
It ruins our economy
•
It funds radical Islam
•
It kills millions today and most likely will be
the cause of a new world war
It is time to get our priorities right
Drill, baby, drill ?
The United States:
• Uses 23% of world oil supply
• Has 3% of the world's oil reserves
• Most likely production costs of new
US oil findings at $50-100 /barrel
OPEC:
• 79% of the world’s oil reserves
• Production costs under $10 /barrel
Save – efficiency – CAFE
• If the US will implement the current
CAFE standards, its oil consumption in
2030 will be a few percent lower than
today
• Yes – we should improve efficiency
(and faster), but we cannot save our
way off oil
• Smoking 18 cigarettes a day instead
of 20 is marginal – we need to quit
smoking altogether
What is the increase of OPEC
production since 1973?
• 100%
• 50%
• 20%
• -2%
OPEC since 1973- Controlling Oil
Supply (and prices)
OPEC Crude Oil Production
120%
31
100%
29
mbd
27
80%
25
60%
23
21
40%
19
20%
17
15
0%
2009 annualized
2007
2005
2003
2001
1999
1997
1995
1993
Source: Energy Information Administration
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
Year
Indexed against 1973 production
levels
33
What happened in 2008?
Demand falls… OPEC cuts production
88
32
31.5
31
30.5
30
29.5
29
28.5
28
27.5
27
87
86
85
84
83
82
1Q08
Source: Oil
Market
Report, IEA
and EIA
2Q08
3Q08
4Q08
Global Oil Demand, mbd
1Q09
2Q09
3Q09
4Q09
OPEC Avg Production, mbd
Summary
21
Food vs. Fuel
One of the best false PR campaigns in
history
Guess who said this?
“Ethanol and other biofuels do not meet
environmental and energy security goals…
their cultivation eats into the human food
supply, reduces the absorption of carbon
dioxide as forests are cut down, has not
improved the security of energy supply and
has not reduced petrol prices… we have to
look beyond biofuels… and concentrate
instead on truly renewable sources of
energy,” he said, flagging solar energy as
“perhaps the best source”
Ali Al-Naimi
Saudi Minister of Petroleum and Mineral Resources at
the International Oil Summit `
Biofuels- Good for oil or Bad for oil?
The US no longer produces electricity
from oil. Whereas biofuels:
•
Directly displace oil
•
Snatch petrodollars from the Saudi
coffers
Merrill Lynch Commodity Strategist Francisco Blanch:
Without biofuels, the price of oil would
be about 15% higher than
it now is.
It’s the OIL - not the Ethanol.
Higher commodity
prices (like corn)
are driven by OIL
prices, not Ethanol
production
volumes!
Sources: NYMEX, USDA, RFA
The campaign against biofuels
The Lie:
“Growing biofuels destroys the
rainforests”
The Truth- Growing biofuels does
not destroy the rainforests
•
Brazil has substituted over
50% of what would be its
gasoline consumption with
ethanol sugarcane
•
Should Brazil double its
ethanol production, this
would take up 3.3% of its
total agricultural land
•
This land is not the
Amazon
•
In fact, you cannot grow
sugarcane in the Amazon
A Billion Acres Of Abandoned
Agricultural Land
Source: Campbell et al., Env. Sci. Technol. (2008) ASAP Article, 10.1021/es800052w
Not Enough Land For Biomass?
Total Global Acreage
Forest
8B acres
26B acres
Crops
Pasture
Other
3.2B
acres
6.8B
acres
4B acres
10% = .68
0.675 B acres x 20 t/ac x 2.38 B / t
= 88M barrels per day
Source: Ceres, FAO Statistical Database
Varying regional yields are barriers
to meeting food demand
Corn Yield
USA
160
China
140
World Average
Brazil
100
India
Bushels per Acre
120
Sub-Saharan
Africa
Argentina
80
60
40
20
0
1990
Source: IMF
1995
2000
Year
2005
Historically, food is not expensive
30
Food expenditures by families and individuals as
percentage of disposable personal income
25
Percentage
20
15
10
5
0
2007
2004
2001
Total
1998
Away from Home
1995
Home
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
1959
1956
1953
1950
1947
1944
1941
1938
1935
1932
1929
Year
Source: USDA