Why We Need to Look at Oil as a Commodity Like Salt

To kick off the Asia Pacific Clean Energy Summit and Expo, R. James Woolsey, former Director of the CIA, talked briefly about politics. In the 1970s, during the OPEC oil embargo and the resulting energy crisis, the Carter Administration pushed policies away from oil as a source of energy. 97% of transportation worldwide is still run by oil, but thanks to Carter’s energy policies, only 1% of our power is generated this way. The continental US is blessed with ample resources for power, whether it is coal, oil, natural gas, hydroelectric, wind, or solar.

Hawaii, however, had fewer of these resources, and therefore became dependent on imported energy, in the form of diesel fuel. Thus, in the United States, according to Woolsey, using oil as a source of fuel is pretty much a uniquely Hawaiian phenomenon. Woolsey thinks the problem needs a mind-shift, and thinks we should see oil as just another form of salt. Woolsey cited the problems with oil:

  1. Octane is enhanced today by benzene, which is incredibly toxic.
  2. Certain regions have too much power. In Northeastern Saudi Arabia in 2009, Al Qaeda attacked an oil refinery there and narrowly missed knocking a lot of production offline. If they hadn’t, oil would likely have soared to over $200 a barrel. If oil is cut off for any substantial period of time, in the mainland, we’d be unable to go places. Lose oil in Hawaii, you lose all the critical infrastructures (water pumping, sewage treatment, etc.).  So there are societal vulnerabilities, given the world’s infrastructure.
  3. The United States borrows about $1 Billion per day to finance our oil habit. Most of our imports are from Canada, but it doesn’t matter–it’s one worldwide oil market. If we take less from Canada and more from Saudi Arabia, someone else will take more from Canada. OPEC controls 78% of the world’s conventional oil. They pump only 40%. Why the differential? In essence, according to Woolsey, they are a conspiracy in restraint of trade (in other words, a cartel). When they see biofuels start to come on board, they open the pumps and run their competitors out of business. Lenin said, “Capitalists would sell us the rope with which they hang us.” According to Woolsey, we outdo this by a mile nowadays. We borrow from people who hate us, then turn around and spend this money to buy their oil, at prices they dictate.
  4. 8 of 9 of the top oil producers are autocratic kings or dictatorships. (Norway is the exception.)

Woolsey suggests a shift in strategic thinking. For so many years, salt was a strategic commodity much like oil. Salt had a lock on a huge part of human life–it was the only way to effectively preserve food, and countries fought wars over salt mines. Roman soldiers were paid in salt. The word salary is, in fact, derived from salt. For thousands of years this went on. In the 1880’s, within a very few years, people could buy refrigerators and freezers and no longer was salt the only way to preserve food.

The result is, this morning, we didn’t look at the salt shaker at the breakfast table and wonder, “Are we salt independent? Where does that salt come from?”

Woolsey suggested we need to do something similar to counter oil. Electricity is going to be a big part of it. Geothermal and solar and wind. But also biofuels such as algae-derived fuels.

“There can be no more positive or creative destruction for these [Hawaiian] islands than turning oil into salt,” closed Woolsey.

Scott Cooney is the developer of a new Triple Bottom Line, Monopoly-esque board game, and the author of Build a Green Small Business (McGraw-Hill).

Follow Scott’s company, GreenBusinessOwner.com, on Twitter: Twitter.com/GreenBizOwner

Scott Cooney, Principal of GreenBusinessOwner.com and author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill, November 2008), is also a serial ecopreneur who has started and grown several green businesses and consulted several other green startups. He co-founded the ReDirect Guide, a green business directory, in Salt Lake City, UT. He greened his home in Salt Lake City, including xeriscaping, an organic orchard, extra natural fiber insulation, a 1.8kW solar PV array, on-demand hot water, energy star appliances, and natural paints. He is a vegetarian, an avid cyclist, ultimate frisbee player, and surfer, and currently lives in the sunny Mission district of San Francisco. Scott is working on his second book, a look at microeconomics in the green sector.In June 2010, Scott launched GreenBusinessOwner.com, a sustainability consulting firm dedicated to providing solutions to common business problems by leveraging the power of the triple bottom line. Focused exclusively on small business, GBO's mission is to facilitate the creation and success of small, green businesses.