Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

20 July 2014

Some Good News amongst the Bad: the Iran Talks and Atlantic Oil and Gas

[For comment on atrocity-by-negligence in downing MH17, click here.]

The Iran talks will continue
Careful offshore exploration for fossil fuels will proceed Implications for Keystone
Coda: the view from Manhattan

As bodies of innocent fliers fell from the sky over Eastern Ukraine and Israeli tanks rolled into Gaza, it was easy to despair the relentless drumbeat of bad news. But submerged in that drumbeat were small sounds of hope: two bits of good news.

The Iran talks will continue

The first was extension of the talks in Vienna with Iran. The talks were not on track to meet their self-imposed July 20 deadline (today) for a permanent resolution of open issues. So the parties to them, including our own government, extended the talks for four months. They did so professionally, with little comment, and apparently as amicably as possible under the circumstances.

Nowhere in the world today are the prospects for diplomacy more promising and more important than in the multilateral talks with Iran. (See 1 and 2) Our Little Cold War with Iran is and has been utterly senseless. A rapprochement with that important and increasingly democratic regional power could change a lot of things for the better.

Not only could a rapprochement reduce the level of Israel’s paranoia. It might also lead—eventually and with the circuitousness of any positive developments in that region—to a resolution of the Israeli-Palestine conflict.

Is it just me, or do others also see something strange in the barrage of some 1,600 rockets that Hamas has been sending into Israel in the current war? There are many of them, to be sure, but they have been singularly inaccurate and ineffective.

Israel’s “Iron Dome” has worked well, but it covers mostly the big cities and is not 100% effective even there. So it looks as if the rocket technology available to Hamas has not kept pace with Iran’s, which Western intelligence agencies now fear is capable of international flight with nuclear warheads.

Does this mean that Iran, quietly and without fuss, has stopped supplying advanced technology to Hamas, a Sunni terrorist organization that might, sooner than later, become Iran’s direct enemy? That question is one that every interested intelligence organization worldwide should now be trying to answer, especially those sitting behind the diplomats at the just-extended talks.

Careful offshore exploration for fossil fuels will proceed

The second bit of good news is contingent. Our President has opened large parts of our own Atlantic seaboard to seismic exploration for fossil fuels. Drilling there will be contingent on the results of that exploration and on efforts to minimize the environmental impact of exploration and drilling on innocent sea creatures, which seismic exploration alone could harm.

Let me say first off that I am enthusiastically adamant about protecting our fellow species on this planet from unnecessary harm. My views on that point are just an extension of my revulsion at Vladimir Putin’s treating his neighbors as subhuman, with policies that he would not for a moment foist on his own countrymen. For me, it’s all the same principle—merely extended beyond our own species to others who share our planet.

But the consequences of not exploring and drilling, as carefully as we can, may be much worse than the consequences of moving forward, both for sea creatures and for our own species. Read on.

For gas

If we find gas, we can use it, kilowatt-hour for kilowatt-hour, to replace coal. With that simple expedient, already underway almost everywhere, we can slow the acceleration of global warming. If heating our planet continues on its present course, let alone accelerates, it is highly likely to do far more harm to sea creatures than a few weeks or months of intermittent undersea noise. (And even gas drilling, let alone exploration, has nothing analogous to the risks of oil spills because gas is a gas and dissipates naturally, even if accidentally released.)

Already there are credible scientific estimates that global warming and other human activities, on their present courses and without appreciable acceleration, will eventually extinguish up to one-half of species now sharing our planet. In the long run, global warming is the most dangerous of these activities. So it is by far a greater evil than temporary, localized undersea noise, even if the noise may have unfortunate effects on sea creatures nearby.

For oil

If we Yanks find oil, we may at last be able to make our nation 100% energy independent. (Right now, we supply only 60% of our oil needs.) We might even sell some to Europe and thereby give our disputatious allies a bit of backbone in dealing with states like Russia, Saudi Arabia, and Iran. (Venezuela appears to be on the brink of rediscovering the value of foreign technology and expertise in preserving and enhancing the sole asset that saves it from choas and revolution.)

A war, even a short one, will be far more devastating to other species that share our planet, including sea creatures, than any seismic exploration or foreseeable oil spills.

And, in case you haven’t noticed, fossil fuels are the number-one probable cause of war today. China is at loggerheads with its old enemy Japan, its older enemy Vietnam, and its neighbors the Philippines and Indonesia over oil and gas in the South China sea. Russia’s oil and gas give it leverage over Europe, which makes Europe meek in protesting Russia’s abysmal politics in Syria and Ukraine, raising the risk of wider wars. By becoming energy independent, we Yanks can increase the strength and bargaining power of ourselves and our allies and better reduce the risk of war.

Any war today would wreak havoc with the environment, on land and sea, especially if it were nuclear (as it might be in the Middle East or South Asia). So again, exploration and drilling are the lesser of evils, as compared to increasing the risk of a war over energy resources that could devastate large parts of our biosphere, to the detriment of all species, including our own.

Implications for Keystone

Does the same reasoning apply to the proposed Keystone oil pipeline, which would send crude Canadian tar-sands oil through our heartland to refineries in Texas, probably mostly for export? Although the question is a good one, I think the answer is no.

Keystone is different because rejecting it would not cause the Canadian fossil fuels to stay in the ground. Refusing to approve exploration and drilling along our Atlantic seaboard would, as we Yanks are the only ones who can exploit the resources there.

Already Canadians are making plans for a pipeline to take their northern-Albertan tar-sands oil to the west coast of British Columbia (BC) for export, most likely to China. There are several practical and geopolitical reasons why this is, in sum, a much better plan than sending it over a longer pipeline to our Yankee refineries in Texas.

First, there is geography. The west-coast BC port offers a direct sea route to China. Selling the Canadian oil to China would: (1) take some pressure off the South China Sea and its potential for catastrophic conflict: (2) site the risk of overland pollution in Canada, which owns and will profit from the oil and ought to accept the risks with the benefits; (3) give China a reliable source of supply; and (4) bring China closer to our friendly northern neighbor, which shares our Western history and our Enlightenment values.

As for Europe and its dependence on Russia and the House of Saud, among others, Alberta’s tar sands are far away. If we Yanks ever have excess oil, it makes far more sense to send our own crude directly from oil wells off our Atlantic Coast than to pump Canada’s overland to Texas, at the risk of spills and evironmental catastrophes, refine it there, and ship it a longer distance to Europe.

The main reason for taking the geographically less sensible approach would be to increase the downstream profits (principally from refining) of our own Yankee Big-Oil firms. But that would just reduce the profits of their European counterparts, in which there is much cross-ownership. At the same time, it would leave us Yanks holding the bag of pollution, far from where the energy is used. That’s a generally bad idea, if only because it reduces the incentive to clean up.

Second, based on a recent Canadian Supreme-Court decision, Canada, BC and the part of Big Oil that builds and maintains the pipeline will have to negotiate with Canada’s “First Nations” (natives that we Yanks might call “Indians”), whose land will suffer it. The results of those negotiations will be examples for the world, in fair treatment of native peoples, environmental protection and sensible sharing of the benefits of natural resources. Some day even Nigeria and Saudi Arabia might take note.

Third, it seems likely, although far from certain, that the dirty process of further refining the partially refined tar-sands oil into gasoline, heating oil and jet fuel will take place in China. If so, much of the pollution from using this resource will occur where it is used—a just, fair and sensible outcome, and one that will give China a constant incentive to clean up its act.

Finally, and perhaps most important geopolitically, a BC oil port would make Canada more independent of us Yanks.

If we Yanks did not have such a helpful and friendly neighbor to our north, we would have to invent one. For over a century, Canada has fought alongside us in every major war of ours abroad, including our stupid and sinful ones.

At the same time, Canada has often served as an adjunct to our national conscience. It did so before and during our Civil War, when our “Underground Railroad” led slaves to freedom as soon as they crossed the Canadian border. It did so again during our War in Vietnam, when many of our best youth crossed that same border to continue their political struggle against the war, or just to live their lives in peace and freedom.

Unlike Putin, we Yanks don’t like having poor, weak, downtrodden neighbors who resemble vassal states and not-so-secretly hate and fear us. We like having strong, healthy, capable and independent neighbors.

Canada is one of the world’s finest neighbors, not the least for its independent voice, independent conscience and independent approach to the same Magna Carta and Enlightenment values that suffuse all English-speaking societies. We Yanks need it to stay independent, not to become a vassal of our Yankee Big Oil. So do Canada’s First Nations.

So for a whole bunch of very good reasons—only a few of which are environmental—Keystone should fail. Canada and/or its own firms should manage, transport and sell its own tar-sands oil. Canada should receive the benefits of doing so, and it should incur the environmental and other costs, with as much help from us Yanks as it and its own fossil-fuel companies care to accept.

For all these reasons, the President’s announcement of seismic exploration for fossil fuels off our Atlantic seaboard is good news. It will make us Yanks more energy independent. And it may encourage Canada to become not only energy independent, but an energy exporter infused with a good environmental conscience and healthy Enlightenment values. The world needs more of those.

Coda: The View from Manhattan

There is yet another reason—a smaller but nevertheless important one—why I favor the BC oil port and oppose Keystone. It has to do with the increasing concentration and centralization of power in our increasingly capitalist and business-minded world.

We think we live in a democracy. We credit our myth that the popular will controls. But in fact the vast majority of decisions that affect our individual lives are made by people and in places utterly free from any public scrutiny or sway.

They are made by well-meaning but self-interested businessmen working with spreadsheets and other abstractions in offices far above both Main Street and the common streets of their own cities. (I say “men” because that is present fact; the proportion of women in positions that can affect, let alone make, the big decisions is rising but still, regrettably, tiny.)

I know because I once worked in such a place. During the summer of 1977, working as a so-called “summer associate,” I temporarily occupied the corner office of a senior partner in a major Wall-Street law firm.

Some thirty or forty floors above the hubbub of real life, I had a commanding and stunning view of the State of Liberty, the ferries running to and from her, and ship traffic into Manhattan and America.

I don’t think I was (or am) a bad person. But as a young man, I sometimes found it hard to keep my mind on my work. If I were in that office as a much older man today, I would find it easy to forget the 307 million Americans behind my back and out of sight, whose lives the decisions I might make might change in profound and sometimes terrible ways.

From Emperors Nero and Caligula to Vladimir Putin today, concentration and centralization of power can have many evil consequences. Good ideas and good people from the hinterlands or the outback get ignored or crushed. Justice gets neglected or trampled. Cronyism comes to matter more than brains, character and wisdom. And as cynicism and apathy replace public trust and energy, a society declines. So it happened with ancient Rome, and so it may happen with us Yanks today.

That’s why, uncharacteristically for a progressive, I sing the praises of corporations. Their original purpose was a good one: to deconcentrate economic power and remove economic activity from politics and monarchy. That purpose still applies.

But like governments and leaders, corporations can get too big and too powerful. Then they morph from part of the solution into part of the problem. Their CEOs can have—and today often do have—more power over more people, more energy and more economic activity than ever did an emperor or caliph of the ancient world. And they also can abuse it.

The problem is not just stupidity or ill will, although those, too, exist. The kindest and smartest man or woman can ignore harm to others simply because he or she doesn’t see or feel it.

New York today is hardly the world’s most polluted city. It has its bad days, but it’s nothing like Beijing, Shanghai or the refinery farms of South Texas or Louisiana.

Most bosses in their fortieth-floor corner offices on Wall Street aren’t bad people. They try to do what’s right. But they don’t smell or have to breath the toxic and carcinogenic fumes. And so they don’t include them in their decisionmaking.

They and their fellow bosses deal with abstractions. Lawyers deal with words. Business people deal with spreadsheets and other attempts to crush-pack real life into numbers.

But not everything can be quantified, let alone easily. And even if it could, not every hurtful or dangerous quantity gets properly negotiated in a regime of private property rights. Ronald Coase, a path-breaking economist, in 1991 won the Nobel Prize for a 1937 paper proving that point.

More important, he proved that “externalities” like pollution and environmental damage don’t get properly negotiated unless there is good information about them and the “transaction costs” of negotiating a resolution are low. In other words, if the man on that fortieth-plus floor making the decision keeps his back to the nation and the people and doesn’t see or talk to them, the rest of us end up picking up the tab or suffering the consequences. Isn’t that just what happened in the aftermath of the Crash of 2008?

It’s not that he’s evil or even more neglectful than most. It’s just the way the world works.

So I’m much happier if the pipeline from Alberta’s tar sands takes the shortest route, and if the people whose lives it will affect directly have a big role in negotiating where it goes, how safe it is, the precautions its operators take against leaks and spills, and some stake in its financial success. Those people include the First Nations whose traditional lands will be used and the good, ordinary people of British Columbia, one of the most beautiful and still-pristine places on our planet.

As Tip O’Neill once said, all politics is local. Wouldn’t it be wonderful if all decisions were local, too, in the sense that the people whose lives, health, prosperity and happiness they directly affected had a commensurate role in making them?

Our Yankee right wing wants to drown our Yankee government in a bathtub to make sure that happens. But it forgets the people who make the really important day-to-day decisions in our capitalistic lives—the ones in those corner offices with the commanding views.

As for our Atlantic oil and gas, I’ll be much happier when the big ocean rigs go up not far from Manhattan, where the movers and shakers can see them, if only through binoculars, from their forty-plus floor corner offices. It’s a small thing, but maybe then they’ll understand, from personal experience, that energy has unquantifiable costs, especially when it comes from fossil fuels.

I drive a car, too. And for the moment, it uses gasoline, not electricity. But as an ex-scientist and a writer with some imagination, I’m fully aware of all the not-so-wonderful things that have to happen to get my car to move when I step on the gas.

Many of those things—including some of the most important—cannot be quantified and don’t appear in the CEO’s spreadsheet. But I think it will help our society—its justice, fairness, common sense, and cohesion—if once in a while he or she can see those consequences personally, if only through binoculars.

Endnote: I don’t mean to imply that only a Canadian province is capable of effective local politics. Our Yankee federalism can be a marvel of effectiveness. Often it works for the public good, even at a local level.

But Canada is a much smaller country, with a much stronger environmental tradition and (generally speaking) greater provincial influence over both the federal government and large corporations. And Canada has not yet chosen to follow our Supreme Court’s lead of equating money with speech. So I have no doubt whatsoever that the unquantifiable harms of the pipeline—and practical means for mitigating them—will get a fairer and better hearing in Ottawa and British Columbia than in Washington, D.C., and our American Midwest.



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