Fueling the Future
With the world oil market as volatile as the fuel it deals in, Middle East Institute Scholar Molly Williamson advocates using all possible sources of energy to minimize the impact that conflict and stress over oil have on the U.S. economy.
The former U.S. Foreign Service officer, who served six presidents and achieved the rank of career minister, told the audience for ASU’s E. James Holland-Roy A. Harrell Jr. Foreign Affairs Speakers Program that a scenario of perpetual military conflict and roiling oil prices is not inevitable.
“The solution is diversification,” Williamson said. “Neither consumer nor producer wants to be held hostage by the other. Volatility is not in the producers’ interest any more than price volatility is for the consumer. The diversification that is required calls for developing a variety of sources, transport groups and other resources from which to choose. As far as the eye can see, the world will be dependent on petroleum, which means growing as many sources as possible.”
Williamson touted wind, solar, ethanol, geothermal, nuclear, coal and biomass power sources as avenues to reduce the stress on oil supplies, but cautioned that they are not “silver bullets.”
“How we expand the universe of available fuels is critical,” she said. “It is going to cost money, and the fuel standard to beat is oil.”
“For economic growth to occur, there is a linear relationship between development of fuel sources and energy usage. If you have more development, you are going to have more energy.”
One process Williamson advocates, but is vehemently opposed by environmental activists, is “fracking,” which was invented in Texas decades ago and has recently experienced an uptick in interest thanks to technological advances. Slang for the hydraulic fracturing of an oil-bearing rock stratum called shale, fracking is a process that injects highly pressurized chemicals or fresh water into the shale, releasing trapped oil or natural gas to allow increased extraction.
“About a decade ago,” Williamson said, “fracking became really precise, within a margin of 12 inches. Shale exists all over the world and is considered the game-changer in the energy scene. We may have the world’s largest deposits of natural gas in shale in the U.S.”
Williamson said that while America has a 300-year supply of coal lying beneath the surface, it conservatively has twice that much energy locked in shale, much of it natural gas. Since natural gas is so plentiful, though, the price is depressed, which reduces companies’ interest in exploiting it until it becomes more profitable.
Another energy source Williamson supports is ethanol, though she recommends changes in how it is processed.
“In Brazil, they use sugar cane,” she said. “Here, we use corn. We will have ethanol in our future, but we have to get out of the food chain. There are already corn riots and tortilla riots, and we hear of possible global summits on food security. We can extract ethanol out of citrus waste, organic sludge, cellulosic base, such as shrub grass, and other things.”
On the flip side, Williamson does not favor powering vehicles with hydrogen or electricity.
“It now takes four gallons of gasoline to make one gallon of hydrogen to go the same distance,” she said. “The prospect of having hydrogen cars is possible, but you have the real fixings for disaster with these little hydrogen bombs on the road.”
“It would take 27 years to make a transition to electric transportation when we already are advanced with an extensive petroleum infrastructure,” she added. “You are also talking about displacing jobs.”
The keys to capitalizing on alternative energy sources are investment in innovation and cultivating smart people in the industry, areas the U.S. has been neglecting for decades.
“We need to reevaluate our technological needs and priorities,” Williamson said. “In the 1970s, the U.S. produced the majority of the world’s engineers. Last year, China graduated 700,000 engineers, India graduated 300,000 and the U.S. graduated 70,000.”
But, the biggest area of concern in the energy industry remains the unrest in the Middle East and its accompanying impact on the world economies through the oil market. How it will play out is a mystery.
“That we are in a time of great turmoil is clear,” said Williamson, who is a member of Georgetown University’s Master of Science in Foreign Service oral boards, and a board member of the American Foreign Service Association, International Executive Service Corps and American Academy of Diplomacy.
“What we understand or expect from it, not so much,” she said. “We are moving into a situation where the only certainty is change, the sense of vulnerability is increasing and the range of maneuverability is decreasing.”
The current Middle East strife appears to be focused on long-standing regimes as evidenced by the ouster of Hosni Mubarak in Egypt, the killing of Libyan leader Muammar Gaddafi and the military reaction of Syrian President Bashar al-Assad. Those and other Middle East countries will continue to cause turmoil in the region and instability in energy prices.
“The fear is that tomorrow’s Middle East is completely unknowable,” Williamson said. “What we know is it won’t be the same, and there is little maneuvering room to buy time.”
With 40 percent of all globally traded oil going through the Strait of Hormuz, the Bab el-Mandeb and the Suez Canal, volatility in the region and in energy prices is likely to continue for the foreseeable future. If any of those choke points flare up into military conflict, 2.3 million barrels of oil could go off the global energy market.
“We are looking at a situation where for every 1 percent of increased demand that is not met with a 1 percent increase in supply, the impact is a 20-point range in the market price,” Williamson said.
Also looming is a possible clash between Iran and Israel that could go nuclear.
“I think that is a scenario that is worth worrying about,” Williamson said. “I don’t care where it comes from. If it starts, it will be ours to finish. The biggest risk is going to war by accident, not by design.”
Williamson dismisses calls some have made for the U.S. to go isolationist, but she does advocate for energy independence in the U.S. by using all available sources to insulate the country from whatever pitfalls loom in other parts of the world.
“For economic growth to occur,” she said, “there is a linear relationship between development of fuel sources and energy usage. If you have more development, you are going to have more energy.”