Oil, Profits, and the Question of Alternative Energy.
The application of solar power is not a new idea. The ancient Greeks and Romans developed mirrors that would direct the sun's rays and cause a target to burst into flames within seconds. Nearly two centuries ago in 1839, Edmund Becqurel, a French experimental physicist, discovered that sunlight could produce electricity--almost fifty years before the first successful internal combustion engine was built.
During the late 1800s, harnessing the sun's rays to produce hot water was a booming business in the United States. Although the Industrial Revolution was in high gear and remarkable discoveries and inventions abounded, it took over 100 years for the first photovoltaic cell (a cell capable of producing wattage when exposed to radiant energy) to be developed by Bell Laboratories in 1954. Considering that photovoltaic cells have been the exclusive power source for satellites since the 1960s, and how rapidly television evolved during an era known as the Atomic Age, it is a wonder that solar technology hasn't advanced further.
The utilization of solar energy was briefly resurrected during the 1970s when the United States appeared to be committed to pursuing a technology that had the potential to reduce our dependency on fossil fuels. In April 1977, in the midst of an "energy crisis," President Jimmy Carter began a bold initiative to develop solar energy and other alternative fuels when he unveiled his National Energy Plan, which included setting an example by placing solar panels on the White House. Carter announced a "national goal of achieving 20 percent of the nation's energy from the sun and other renewable resources by the year 2000," and he introduced legislation that would provide homeowners with tax breaks for investing in this promising technology. In 1979, Congress followed Carter's lead and approved a $20 billion development fund for synthetic and alternative fuels. It appeared that the alternative energy industry was finally getting the financial backing it needed to have a profound impact on the nation's energy needs.
During the period in which financial support for solar energy was growing and a "windfall tax" on the profits of the oil industry was imposed, the proponents of big oil were gathering their own resources on Capitol Hill. Political action committees (PACs) that were affiliated with oil and gas interests began to sprout and, from 1977 to 1979, they contributed over $2.6 million to House and Senate candidates. A report by Alan Berlow and Laura Weiss in Congressional Quarterly concluded that most of the money went to candidates "with strong pro-industry voting." Support for alternative energy took a downward spiral when Ronald Reagan (a former spokesperson for General Electric) was elected U.S. president and became a staunch ally of corporate America.
By the late 1970s, oil companies had bought out many of the patents for photovoltaic cells, and corporate giants like Atlantic Richfield, Amoco, Exxon, and Mobil took control of solar power companies. This trend would lead Alfred Dougherty, former director of the Federal Trade Commission's bureau of competition to warn, "If the oil companies control substantial amounts of substitute fuels ... they may slow the pace of production of alternative fuels in order to protect the value of their oil and gas reserves." Edwin Rothschild, a spokesperson for the Citizen Energy Labor Coalition, was concerned that the big oil companies "see solar power as a competing source of energy, and they want to control it and slow it down." However, ownership of solar technology by big oil was only the first step in the methodical dismantling of the alternative energy renaissance.
The Reagan administration would continue the squeeze on alternative energy as tax credits for residential investment in solar and wind power became "obsolete," as it was deemed to be "the responsibility of the private sector to develop and introduce new solar technologies." The $684 million requested by Carter for alternative energy in fiscal 1982 was slashed to $83 million in Reagan's 1983 proposal. What was transpiring in the realm of solar technology development didn't go unnoticed by the science community. In the November 1981 New Scientist article "Big Oil Reaches for the Sun," Ralph Flood reports that the "energy policy under the Reagan administration seems designed to accelerate the oil companies' control." The solar panels on the White House were discarded.
The lack of support for the development of alternative energy continued despite the findings of a study released in 1980 by the National Academy of Sciences at the request of the Energy Research and Development Administration. The study concluded that "a costly push by the government would lead to rapid growth in solar-related energy sources" and, if this occurred, "renewable energy sources could account for a quarter or more of the nation's energy needs within thirty years." Instead, the Reagan administration preferred to rapidly expand military aid and sent billions of dollars to foreign countries. It also greatly increased the federal budget for the research and production of atomic weapons.
Despite its promise, solar power faced several hardships and questions. Many fly-by-night companies popped up hoping to jump on the bandwagon and make a quick profit, which led to shoddy construction and customer dissatisfaction. The solar industry during this early stage lacked structure, and there was enormous confusion as industry representatives scrambled to establish guidelines for advertising claims, technical specifications, and warranty standards, which contributed to a higher cost.
Regardless of the problems the solar industry faced, greater financial support and stricter guidelines by the government could have offset many of the obstacles. There were some who argued that solar energy could only be harnessed during bright sunshine, which added to the skepticism surrounding it. However, in 1982 Charles Wurmfeld, former president of the New York State Professional Engineers Society, invented and patented an engine that drew energy from the ordinary atmosphere, not requiring bright sunshine. He believed his invention would save one-third of the oil burned in this country.
Two decades later, we are once again in the midst of an energy-related controversy. The dramatic rise in oil prices has been blamed on the Organization of Petroleum Exporting Countries (OPEC), pipeline problems, tougher standards imposed by the Environmental Protection Agency (EPA), and even consumer choice in vehicles. However, just as they did in 1979, oil companies are reporting large profit increases during this recent "energy crisis." Chevron Corporation announced that it earned a record $1.1 billion as surging oil and gas prices boosted first-quarter profits in 2000 nearly fourfold. BP Amoco said its profits more than doubled because of rising oil prices and cost-cutting measures. Exxon Mobil, Texaco, and Conoco also reported between two and four times more profits than in 1999.
During a House hearing in June, oil company profits were updated: Texaco profits were up 473 percent; Conoco, 371 percent; BP Amoco, 290 percent; and Chevron, 271 percent. The list goes on, and it is predicted that the oil business will continue to be lucrative. According to Sam Fletcher in the February 21 Oil and Gas Journal, the rise in oil prices is "fueling a recovery among producers ... that is expected to propel the oil and gas industry through 2000 and beyond."
Analysts across the country agree with this prediction. According to Deutsche Banc Alex Brown, a major investment banking firm in Baltimore, Maryland, there is a "bullish outlook for the commodity." David Garcia, a financial analyst, says, "These are the best industry conditions for at least fifteen years." And Fadel Gheit of Fahnestock and Company says, "The industry has never looked better."
Motorists paying high prices at the pump would beg to differ. According to Steve Leisman in his April 26 Wall Street Journal article, "High Prices Give Oil Companies a First-Quarter Boost," analysts describe the stocks of several big oil companies as "increasingly attractive." This attractiveness relies on profitability, which relies on finding more oil reserves. According to a June 1 article in the Houston Chronicle, shareholders of Exxon Mobil recently rejected overwhelmingly proposals to invest in renewable energy and study potential harm from oil drilling in Alaska.
While the development of alternative energy sources continues to lag, supporters of the oil industry continue to promote the use of fossil fuels. During a recent House hearing on high gas prices, representatives from the oil industry argued that a possible solution would be to begin drilling in environmentally sensitive regions, such as the Arctic and Rocky Mountains. According to Red Cavaney, president and chief executive officer of the American Petroleum Institute (API), the nation's energy woes could be resolved if the oil companies were allowed to drill in areas that have been safe-guarded by environmental protection legislation.
Already there is congressional support to begin such action. Senate Energy and Natural Resources Chair Frank Murkowski (Republican--Alaska) proposed legislation that would allow oil companies to drill in the Arctic National Wildlife Preserve. A Senate budget measure has already projected $1.2 billion in royalties from the Alaska refuge in 2005, and it recently voted in favor of opening the region to commercial drilling.
Currently, American oil corporations are sinking millions of dollars into exploration and gaining access to large oil deposits in the Caspian Sea region. According to Jeanne Whalen in the March 4, 2000, Wall Street Journal, the Caspian holds as much as 2.2 billion barrels, and Michael Davis reports in the April 22 Houston Chronicle that Conoco and Exxon Mobil have received the green light to proceed with an estimated $5 billion oil development project in that region and will pay $75 million for the right to develop in the Azerbaijan fields of the Caspian. Secretary of Energy Bill Richardson, who recently addressed the House of Representatives, summed up the rationale for the movement toward searching for oil when he said that the "world's thirst for oil is steadily rising" and "demand will continue to grow."
Imagine if the money spent by the U.S. government on foreign aid and by oil corporations on fossil fuel exploration were invested on the development of alternative fuels. Apparently loyalty to fossil fuels is too deep. According to a recent analysis by the Congressional Research Service, reported in the March/April issue of Mother Jones, seventy-seven cents of every energy research dollar from 1973 to 1997 went to nuclear and fossil fuels; just fourteen cents went to alternative energy.
The adverse effects that burning fossil fuels have had on our environment and their contribution to global warming are well documented. Yet, according to Exxon Mobil's 1999 annual report, the company acknowledged the public's concern over "climate changes" due to the use of fossil fuels but said that the projected serious effects "rely on speculative assumptions and results from unproven models." Exxon Mobil doesn't believe that "the current scientific understanding justifies mandatory restrictions on the use of fossil fuels" as it is certain "that significant economic harm would result from restricting fuel availability to consumers." The fact is that the company would lose profits--just as any other oil company would if alternative energy sources were developed. Oil companies are searching for more oil reserves, not alternative sources for fossil fuels. More oil means more profit.
While there is no concrete evidence that proves oil companies purposely sabotaged the progress of alternative energy, there are clues that point to political favoritism on their behalf. The U.S. Senate recently passed an amendment by Senator Kay Bailey Hutchinson (Republican--Texas) that saves oil companies from paying $66 million a year in royalties to the government. Opposing the amendment was Senator Russ Feingold (Democrat--Wisconsin), who said, "I am very concerned that Congress is abdicating its responsibility." Feingold cited soft money political contributions from oil giants--including Exxon, Chevron, BP Oil, and Amoco--that totaled over $2 million during a two-year span. In all likelihood, the oil industry will use the latest "oil crisis" as leverage to promote continued legislation in its favor.
As for future legislation, the current poll leader for the presidency, Republican George W. Bush--a former oil company executive who has amassed "substantial financial contributions" from the industry --has also been criticized for being a "tool of oil interests." It is highly unlikely that alternative fuels have a chance for further development if Bush--who, according to Joby Warrick in the April 4 Washington Post, "supports oil exploration in the Arctic National Wildlife Preserve while opposing the United Nation's 1997 Kyoto protocol that requires industrialized countries to cut emissions of greenhouse gases blamed for global warming"--lands in the White House in 2001.
Nearly two decades ago, a group of students from Crowder College in Neosho, Montana, built a car at the cost of about $5,000 that traveled across the continental United States powered only by the sun. Just last year, students from the University of Oklahoma built a solar-powered vehicle that won a biennial intercollegiate competition which provides them an opportunity to "design, build, and race solar-powered cars." Modern science technology has given humanity the ability to access hundreds of channels on cable television, develop computers to communicate on a global scale, clone animals, and produce state-of-the-art weapons of mass destruction. Imagine if the inventors and scientists of the world focused their minds and energy on developing alternative energy sources for the public good.
Time magazine recently published a special issue entitled "The Future of Technology." In a section depicting the future of the automobile, surprisingly, there was no mention of cars powered by solar technology or any other alternative fuels. Could it be that the fate of alternative energy has been sealed by an industry that would crumble if it were to face competition from other sources?
At the end of the movie Back to the Future, a brilliant scientist called "Doc" refueled a DeLorean with a handful of household trash. It is a fantastic concept that falls into the same category as solar energy because it is nonprofitable. According to the July 7 Fortune 500, Exxon Mobil, Ford Motors, and General Motors are some of the top profit-making corporations in the United States, and they wield a great amount of economic and political clout. Although there are alternative energy sources and related technologies available for development to meet our growing energy needs, there is currently not enough profit in them to be an attractive alternative for corporations. Perhaps renewable energy, too, is destined to become fossilized.
RELATED ARTICLE: Running on Empty
With the flap this summer over gas prices in the United States, I feel impelled to ask why anyone is actually surprised. Petroleum is a finite resource and hence, before it runs out, it's only natural that the price should go up. Current estimates, based upon today's rate of consumption, indicate that cheap oil will be gone within fifty years. Therefore, as that time approaches, local conditions and price gouging can be expected to cause painful spikes in what U.S. consumers pay at the pump.
We must adjust to reality by reducing demand and converting to alternative sources. Higher oil prices today are a wakeup call to the fact that infinite growth is impossible and population growth is approaching the limits of what the environment can acceptably support.
The standard of living of individual societies results from conversion of available natural resources into useful products through technology. These natural resources have limits that can be temporarily exceeded by importing them from regions with a surplus. But when such reserves have also been consumed, only the development of new technology to utilize renewable resources will preserve or improve a traditional standard of living.
Unfortunately for the people with underdeveloped economies, resources that are necessary to raise their living standard are being consumed by the developed economies. For the people living in the underdeveloped economies to raise their standard of living now, new technological advances are required on a magnitude comparable to those that made fools of earlier predictors.
World population was about one billion in 1800 when Thomas Malthus predicted that starvation would halt population growth. He was wrong because he didn't anticipate the technological advancements of the Industrial Revolution, which raised Western living standards and increased life expectancy. World population was about four billion in 1960 when Paul Ehrlich wrote his book The Population Bomb, in which he also predicted that starvation would stop population growth. He, too, was wrong because he didn't anticipate the technology that became known as the green revolution.
But both Malthus and Ehrlich were right in terms of the underdeveloped economies, which are still very nearly in the state they envisioned. Technology gave Western societies the two revolutions that developed their economies, raised their middle-class standards of living, and reduced their death rates, resulting in rapid population growth. World population has now passed six billion and is expected to peak at ten billion within the next 100 years. But there is a tradeoff between population size and the living standard. The higher the standard of living, the less people the environment can sustain with its finite resources. Some estimate that two billion is the maximum world population sustainable with an acceptable standard of living. At two billion, poverty and starvation might be ended throughout the world. But at over ten billion, virtually all will be at a starvation level of existence.
In the United States, we behave as though there are no limits. An automobile driver who runs out of gas in the middle of nowhere is thought to be irresponsible, but such common sense isn't applied to our civilization. Politicians like to give the impression that they can influence the price of fuel by government action. But in the long run it is a supply-and-demand problem, and when the demand exceeds supply the price defies controls. Rationing will occur either through higher prices or long lines at gas stations.
At present, alternatives to oil aren't cost-effective, but rising oil prices will eventually resolve that problem. We are entering a time of transition to the post-oil era. There is a whole new growth industry waiting in the wings based upon energy alternatives stimulated by higher oil prices. For example, hydrogen fuel cells and photovoltaic cells have yet to be applied to their full potential. These alternative energy sources and more must be applied now by new technology to transportation, heating, food production, plastic products, and related industries before the price of petroleum becomes prohibitive.
Change is coming whether we like it or not, forced on us by the natural increase in the price of petroleum. But if the producing countries are persuaded to temporarily increase their production to keep prices low, they will run out sooner rather than later. If the price increase is gradual, the transition could be smooth; but if it is manipulated, when change does come it could be catastrophic for Western societies. And while it might have less effect on the underdeveloped economies, it will make it harder for them to catch up with the developed world.
Such fundamental changes should take many years, but we have less than fifty to complete the transition. The price of petroleum will probably go ballistic over the next ten years--and this seems to have already begun. We must learn how to function on the energy we receive daily from the sun. We must allow and encourage our population to shrink back to a sustainable size while we preserve a tolerable standard of living and the freedom of individual choice.
As nations become increasingly dependent upon oil controlled by unsympathetic suppliers, national security crises are imminent--perhaps even wars will be fought to control the remaining supply. The Gulf War may be a preview of things to come. Saddam Hussein's goal was to control the world's largest supply of oil. He was stopped in time. But the next Gulf War may not be resolved easily.
At some point an epiphany will occur, and the sooner it does the better. But as Mark Twain said, "People refuse to see the handwriting on the wall until their backs are against it."
Philip M. Morse can be reached by e-mail at pmmorse@ worldpath.net.
Richard Rosentreter holds an associate's degree in journalism from Suffolk County Community College in New York, where he has been cited for his investigative journalism, and a bachelor's degree in English from Southampton College at Long Island University, New York, where he regularly writes a column on social and political issues. He can be reached by e-mail at firstname.lastname@example.org.
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|Date:||Sep 1, 2000|
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