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Rethinking the Axis of Oil

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    http://www.economist.com/world/na/displayStory.cfm?story_id=3914915 Rethinking the Axis of Oil Apr 28th 2005 | WASHINGTON, DC From The Economist print edition
    Message 1 of 1 , May 2 3:19 PM
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      http://www.economist.com/world/na/displayStory.cfm?story_id=3914915

      Rethinking the Axis of Oil

      Apr 28th 2005 | WASHINGTON, DC
      From The Economist print edition

      Can America ever kick the oil habit? Not if Congress
      and George Bush have their way, but the ground is
      shifting

      FOR six decades, one of the few fixed stars in
      American foreign policy has been the special
      relationship with Saudi Arabia. Bluntly put, America
      has offered military protection to the Saudi royal
      family in return for the free flow of relatively cheap
      oil from the desert kingdom. Every president since
      Franklin Roosevelt has stuck by this deal, and the
      Saudis have mostly done so as well. Within the OPEC
      oil cartel, the Saudis are usually the voice of
      moderation.

      Alas, things seem to have gone wrong on George Bush's
      watch. Despite his family's famous closeness to the
      Saudi rulers, oil prices have shot past $50 a barrel,
      up from barely $10 in 1998. The price of gasoline,
      which Americans still expect to cost just a buck a
      gallon, now touches $3 in some places.

      That explains why the mood was not so cheerful when Mr
      Bush met Crown Prince Abdullah, who in effect rules
      Saudi Arabia, in Texas this week. As petrol prices
      have gone up, Mr Bush's popularity ratings have
      declined. Uncharacteristically, before he met the
      prince, Mr Bush publicly pointed a finger of blame at
      the Saudis for the high prices. Much less publicly,
      the Saudis are still smarting from the �demonisation�
      of their country since the attacks of September 11th.

      The two leaders tried to patch things up in Crawford.
      The Saudis promised to raise oil output sharply,
      pledging to spend $50 billion over the next five years
      to that end. Mr Bush cooed about the special
      relationship, and the two issued a communiqu� pledging
      �to continue their co-operation, so that the oil
      supply from Saudi Arabia will be available and
      secure.�

      So all's well with the Axis of Oil? Not quite. This is
      because the symbiotic relationship between the world's
      largest oil consumer and its largest producer is under
      attack from a surprising corner. Complaints from
      greens about cheap oil, Bushphobic wailings from the
      Michael Moore brigade and neo-conservative worries
      about Saudi terrorism are all well established. But
      the axis is now being challenged by an increasing
      number of pragmatists from the centre-right of
      American politics.

      Several independent groups have strongly urged America
      to move away from oil. The Rocky Mountain Institute, a
      think-tank concerned with energy efficiency, argues in
      a newish study partly funded by the Pentagon that
      America can end its oil imports with aggressive
      adoption of biofuels, radically more efficient cars
      and other related policies. The National Commission on
      Energy Policy (NCEP), a bipartisan panel of energy
      heavyweights, recently made the case for boosting
      domestic energy sources, and also advocates a clever
      �cap and trade� approach to tackling greenhouse gases.

      The most stinging attack came in a recent letter to Mr
      Bush signed by two dozen politically influential
      figures organised by the Energy Future Coalition, a
      lobbying group. These folk, an odd mix of
      national-security hawks and die-hard greens, argue
      that �dependence on imported petroleum poses a risk to
      our homeland security and economic well-being.� These
      worthies want to see �clean, domestic petroleum
      substitutes and increased efficiency in our transport
      system.�

      One of the �geo-greens� (to use the moniker given them
      by Thomas Friedman of the New York Times) is Boyden
      Gray, an influential conservative who served as the
      White House counsel for Mr Bush's father. �I don't
      even like the word green!� he bristles. It is not
      greenery but post-September 11th fears that led men
      like him to join hands with the tree-huggers. In a
      thinly veiled reference to Saudi Arabia, he explains
      that he worries about �the corrupting influence of oil
      receipts that end up in terrorist hands�.

      Robert McFarlane, who was Ronald Reagan's national
      security adviser, also signed the letter. He worries
      about the possibly devastating impact of terrorist
      attacks on oil infrastructure inside Saudi Arabia. He
      joined the greens because �we share a common interest
      in weaning ourselves off foreign oil.�

      So is Congress rushing to embrace innovative ideas to
      kick the oil habit? Certainly not. In fact, the House
      of Representatives has just done the opposite by
      passing an energy bill stuffed full of subsidies for
      the oil-and-gas business. It includes giveaways for
      ethanol (a pretty ungreen petrol additive popular with
      corn farmers) and cheap catastrophic insurance for the
      nuclear industry. Meanwhile, it does nothing to close
      a loophole that allows sports-utility vehicles and
      Hummers to escape fuel-economy standards.

      This bill is similar to last year's failed energy
      bill, which itself was based on the recommendations of
      the Cheney energy task force of 2001. But the House
      managed to add so much more pork�including a $2
      billion giveaway to oil companies for deep-water
      research�to the bill that even the White House now
      criticises it as excessively costly. Taxpayers for
      Common Sense, a watchdog group, estimates that the
      full cost could be more than $90 billion (see chart).
      The bill now goes to the Senate.

      Mr Bush's idea of reform may be a little more
      sophisticated than Congress's, but not much. His main
      priority is simply to get a bill through. He has asked
      Republican leaders for a final bill by August. On
      April 27th, he even offered the Senate some new sops
      to the oil-and-gas lobby in the name of �energy
      independence�. He wants to help buyers of cars with
      cleaner-burning diesel engines, utilities building
      nuclear plants and energy companies building
      refineries or �liquefied natural gas� facilities (all
      half-measures or worse).

      Some geo-greens think the energy bill will fall apart.
      That would, in theory, allow the politicians to
      redraft a better bill�perhaps even one that included
      sensible provisions on auto-fuel efficiency, mandatory
      carbon curbs and so on. A few years ago, such reforms
      would have found scant support. Now they may find
      unexpected allies. For instance, the farm lobby is
      getting gradually more eager to plant windmills
      instead of profitless crops. The energy behemoth may
      still largely be committed to cheap oil; but there are
      a growing number of small technology companies looking
      for alternatives who resent the giveaways to Old Oil.

      James Woolsey, a former director of the CIA, envisions
      a geo-green coalition of �tree-huggers, do-gooders,
      sod busters and cheap hawks� pushing for energy
      independence. The oddest couple of all�Jerry Taylor of
      the libertarian Cato Institute and Dan Becker of the
      deeply verdant Sierra Club�have just issued a joint
      call for a radically different energy policy: a
      market-based, �zero subsidy� energy bill. If such
      coalitions really spring forth, then American energy
      policy, and the Axis of Oil, would be turned on its
      ear.



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