the global oil addiction some facts. israel’s security = eliminate oil addiction the first...
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The Global Oil AddictionThe Global Oil Addiction
Some FactsSome Facts
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Israel’s security = Eliminate oil addiction
• The first strategic priority of Israel’s defense policy is to minimize US dependency on oil
• The second priority of Israel’s defense policy is to minimize the world’s dependency on oil
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IEA forecast of global all-oil production, mbd
Source : IEA, The Guardian Newspaper
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US: Oil share of goods & services trade deficit
0%
10%
20%
30%
40%
50%
60%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009 *
Source: US Bureau of Economic Analysis * Jan-Nov 2009
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Oil and the US Defense Budget
More than 50% of the US defense issues are oil related:
•Protecting the “Oil States”(e.g., the Gulf War, Iraq)
•Protecting the “Oil Routes”(Navy)
•War on Terror (Radical Islam)
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Oil Prices and Recession
Every major recession in the last 40 years was preceded by a rise in oil prices.
Can the US/world come out of the recession when oil is 80$?
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Israel: Oil share of GDP
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Net oil imports of oil in millions, present value $
Expenditure on oil as % of GDP
Oil imports as a % of total imports
Source: Modelim estimates
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Africa: Oil share of trade deficit
Country Fuel Imports as % of current account balance
Kenya -174%
Senegal -90%
Tanzania -85%
Uganda -124%
Mali -83%
Source: Development Indicators, World Bank, 2007
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What is the best way to reduce US oil dependency?
•Nuclear
•Wind
•Solar
•None of the above
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Oil is hardly used (1%) to generate electricity
2008 United States Electric
Power
OIL
1%
GAS
22%
COAL
48%
MISC
2%
HYDRO
6%WIND
1%
NUCLE
AR
20%
If the US replaced all of its coal based electricity with nuclear, wind or solar… it would not reduce its oil dependency by a single gallon.
Source: US Energy Information Administration
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What is the largest source of CO2 in the US?
CoalorOil?
2008 United States
Total CO2 emissions (Mt)
COAL,
2125,
37%
OIL,
2436,
42%
GAS,
1242,
21%
Source: US Energy Information Administration
It is oil
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Distorted Priorities
• The US Stimulus Bill allocated $64 billion to electricity/coal related energy (like CCS, wind and solar) and only $3 billion to oil replacement issues.
• If our goal is to reduce CO2 emissions, why aren't we attacking the larger source?
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Death Tolls - A Comparison
• Deaths as result of oil related wars (last 35 years)-
6- 6.7 million
• Possible deaths as result of oil related wars (next 20 years)-
100 million
• Possible deaths as result of global warming (next 20-50-80 years)-
Hard to determine, but according to IPCC the severe impact
will happen in 50-80 years
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A Question of Priorities
Putting Climate Change ahead of eliminating the strategic value of oil … it is like a physician telling a 25 year old… “You have brain tumor and without treatment you will die in three years. However, we will not do anything about it. Instead you should take medicine to reduce your cholesterol.”
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We have a brain tumor
It is called global oil dependency:
• It ruins our economy
• It funds radical Islam
• It kills millions today and most likely will be the cause of a new world war
It is time to get our priorities right
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Drill, baby, drill ?
The United States:• Uses 23% of world oil supply• Has 3% of the world's oil reserves• Most likely production costs of new US
oil findings at $50-100 /barrel
OPEC:• 79% of the world’s oil reserves • Production costs under $10 /barrel
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Save – efficiency – CAFE
• If the US will implement the current CAFE standards, its oil consumption in 2030 will be a few percent lower than today
• Yes – we should improve efficiency (and faster), but we cannot save our way off oil
• Smoking 18 cigarettes a day instead of 20 is marginal – we need to quit smoking altogether
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What is the increase of OPEC production since 1973?
•100%
•50%
•20%
•-2%
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OPEC since 1973- Controlling Oil Supply (and prices)
15
17
19
21
23
25
27
29
31
33
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009 a
nnualize
d
Year
mbd
0%
20%
40%
60%
80%
100%
120%
Indexed a
gain
st
1973 p
roducti
on
levels
Source: Energy Information Administration
OPEC Crude Oil Production
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82
83
84
85
86
87
88
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09
2727.52828.52929.53030.53131.532
Global Oil Demand, mbd OPEC Avg Production, mbd
What happened in 2008?
Demand falls… OPEC cuts production
Source: Oil Market Report, IEA and EIA
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21
SummarySummary
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Food vs. Fuel
One of the best false PR campaigns in history
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Guess who said this?
“Ethanol and other biofuels do not meet environmental and energy security goals… their cultivation eats into the human food supply, reduces the absorption of carbon dioxide as forests are cut down, has not improved the security of energy supply and has not reduced petrol prices… we have to look beyond biofuels… and concentrate instead on truly renewable sources of energy,” he said, flagging solar energy as “perhaps the best source”
Ali Al-Naimi Ali Al-Naimi Saudi Minister of Petroleum and Mineral Resources at Saudi Minister of Petroleum and Mineral Resources at
the International Oil Summitthe International Oil Summit ` `
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Biofuels- Good for oil or Bad for oil?
The US no longer produces electricity from oil. Whereas biofuels:
• Directly displace oil
• Snatch petrodollars from the Saudi coffers
Merrill Lynch Commodity Strategist Francisco Blanch:
Without biofuels, the price of oil would be about 15% higher than it now is.
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It’s the OIL - not the Ethanol.
Higher commodity prices (like corn) are driven by OIL prices, not Ethanol production volumes!
Sources: NYMEX, USDA, RFA
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The campaign against biofuels
The Lie:
“Growing biofuels destroys the rainforests”
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The Truth- Growing biofuels does not destroy the rainforests
• Brazil has substituted over 50% of what would be its gasoline consumption with ethanol sugarcane
• Should Brazil double its ethanol production, this would take up 3.3% of its total agricultural land
• This land is not the Amazon
• In fact, you cannot grow sugarcane in the Amazon
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A Billion Acres Of Abandoned Agricultural Land
Source: Campbell et al., Env. Sci. Technol. (2008) ASAP Article, 10.1021/es800052w
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Not Enough Land For Biomass?
Total Global Acreage 26B acres
ForestForest CropsCrops PasturePasture OtherOther
8B acres 3.2B acres
6.8B acres
4B acres
10% = .6810% = .68
0.675 B acres x 20 t/ac x 2.38 B / t
= 88M barrels per day
Source: Ceres, FAO Statistical Database
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Varying regional yields are barriers to meeting food demand
Corn Yield
1990 1995 2000 2005
Year
Bushels
per
Acre
0
20
40
60
80
100
120
140
160USA
China
World Average
Brazil
India
Sub-SaharanAfricaArgentina
Source: IMF
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Historically, food is not expensive
Food expenditures by families and individuals as
percentage of disposable personal income
0
5
10
15
20
25
30
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
Year
Perc
enta
ge
Home Away from Home TotalSource: USDA