SOS: save oil stupid

SOS: save oil stupid
Published: December 30 2005 02:00 | Last updated: December 30 2005 02:00

There is another reason at this season to say hurrah for reindeer. Just before Christmas the US Senate rejected the Bush administration's proposal to allow oil drilling in Alaska's national wildlife refuge, a prime breeding ground for caribou. Had it been approved the physical impact might not have been that great; modern horizontal drilling techniques can leave quite a small footprint. But had it gone through it would have reinforced the tendency, particularly strong in the US, to believe that the solution to the sort of oil market crunch the world has experienced this year always lies on the supply side.

It is the geological equivalent of always hoping to find coins down the back of the sofa. Relatively small coins, too, because although there might be as much as 1m barrels a day extractable from the refuge, this would amount to less than 5 per cent of current US consumption. According to even administration estimates, the extra Alaskan oil would in 20 years' time be less than half as effective in cutting US dependence on foreign oil than if today's higher prices were sustained.

These higher prices are having an effect in the US, depressing demand for sports utility vehicles. But a surprising feature of energy policy in America, the home of capitalist economics, is that the US does not make more use of the price mechanism by raising gasoline taxes and instead prefers to set Detroit the sort of administrative norms for fuel efficiency that would have done a Soviet Gosplanner proud. One past argument in the US against higher fuel taxes was that they especially hit the poor who tended to own gas-guzzling heaps. But that is no longer so true; many older cars consume less than new ones. Lack of good public transport remains a real problem, in the UK as much as anywhere. But nowhere is car dependency so great as in America's suburbs that sprawl far enough to be called exurbs. Changing this will take long and must start soon.

Unless you believe (one or two optimists do) that oil is still being created in the bowels of the earth, its supply has to be considered finite. So it is time to stop using oil for purposes where alternatives exist, such as heating, power generation and ground transport (biofuels and eventually hydrogen), and start saving it for jet fuel, plastics and petrochemicals, for which there seems to be no alternative. This cannot be a total switch from one use to another. A barrel of crude is composed of different chemical fractions producing different products and substitution is limited. But modern life would be now unthinkable without petroleum-based clothes, furniture, fibres, rubber, paints, detergents, fertilisers and so on. For instance, Malaysia, once the source of much of the world's natural rubber, could now no longer be. And you don't have to agree with Barbie that "Life in plastic, it's fantastic" to concede life would be very awkward without it.

Copyright by the financial Times