Why you need an EV: Radicalism in Iraq Menaces the World’s most Important Oil Fields

By Juan Cole

The virtual collapse of the Iraqi army and its inability to take back any territory from Sunni forces coordinated by the Islamic State of Iraq and Syria brings into question our earlier insouciance about the oil impact of ISIS advances. The Kirkuk fields in the north produce only about 670,000 barrels a day. Up to 300,000 of that production can be exported through the pipeline to Ceyhan in Turkey. These days, the pipeline is only handling about 120,000 barrels a day from Iraqi Kurdistan.

The Kirkuk fields contribute only a fraction of Iraq’s 3.3 million barrel a day production. Most of it is in the south around Basra.

Until the Ceyhan pipeline was reopened in May after sabotage closed it, all Iraq’s oil exports of 2.5 million barrels a day were going out through Basra in the south.

But if city after city is falling to ISIS, and they have even captured the Jordanian border towns, you have to ask yourself if they can really be kept out of Basra in the south. Seven years ago, it was common for militias to smuggle as much as $5 billion a year of Basra refined petroleum products. ISIS may want in on that bonanza, and it has the bomb-making expertise to blackmail the industry into giving them a share.

An even more frightening possibility. What if ISIS becomes popular in Saudi Arabia itself? If Saudi production were disrupted, gasoline prices would head toward the moon.

As it is, Brent Crude on the London exchange reached over $115 a barrel last week, and had fallen to $114 or yesterday. A decade ago it wasn’t unheard of for a barrel to be sold at $15 a barrel, about a tenth of what it is now, though the price was more usually around $30.

During the past ten years, American drivers have seen their gasoline bill go up tremendously– though not as much as it by all rights should have– and stay there. Because of Iraq unrest, it will likely average as much as $3.70 later this summer nationwide (because of state taxes and varying profit taking by stations, the price is different from state to state).

The hype around hydraulic fracturing of petroleum in North Dakota cannot obscure that newly found US fields are small by world standards, and are shallow and doomed to run dry by the early 2020s. US fracked oil is almost irrelevant when the world is producing 91 million barrels a day and appears to want 100 barrels a day.

The US is not energy independent and is unlikely to become so. It uses 18.7 million barrels a day of petroleum, with a shortfall of around 5.7 mn b/d. That shortfall will shrink slightly through 2022 when it will likely start growing again because the fracked oil fields are shallow and will quickly get used up.

Moreover, the new US production is small enough in world terms that it doesn’t bring the prices down, given growing Asian demand. Despite small differences between the West Texas Crude and Brent exchanges (with a typical spread of $10 or 10% of the price), the petroleum market is pretty much a single market worldwide. Thus, US prices move up when there are shortages in countries from which it does not import. It is like everyone sitting in a backyard pool full of oil. If the level of liquid falls, it falls for everyone, and supply and demand determine the price.

People with long commutes are going to feel the extra cost this summer.

Americans need, where they can, to move closer to their work. A lot of young people have moved downtown and use public transport because of the high gasoline prices. That is why we didn’t go back up to using 21 mn barrels a day of petroleum when the economy began recovering. All cities need to look at Portland’s transportation program.

For those who drive, Americans who own their own home are crazy not to buy an electric vehicle or a plug-in hybrid.

I put solar panels on my house last December. In May they provided virtually all of the 600 kilowatt hours of electricity my home uses every month. I had no electricity bill. This month my utility is sending me $26 because I generated more than I used. Given the $7500 Federal tax break and the bonus I got from my utility, probably 40% of the cost of the panels was defrayed.

And a got a Chevy Volt, which is a plug-in hybrid (it goes to gasoline when the battery runs dry). Here’s what that looks like:

Juan’s Chevy Volt statistics in May:

Fuel Economy: 170 mpg
Electric Consumption: 30 kW-hr/100 miles

Electric Miles: 273
Gas Miles: 80
Total Miles: 354
Percentage on Electric: 77 %

My car used about 82.5 kilowatt hours of electricity in May, accounting for 13% of my house’s consumption. (Actually Ann Arbor lets you charge for free in city parking lots, so probably 30 or so KwH was just given to me by the city).

Since sunshine is free, I drove 273 miles for nothing, which would have cost me, at $3.70 a gallon and an ordinary gas mileage of say 30 miles per gallon, about $40. (I don’t work 9-5, so most often I charge the car in the daytime from sunlight, avoiding Michigan’s dirty coal dependence).

Between having little or no electric bill and a very small gasoline bill, I’ll pay off the panels in 6 years or so. Assuming that I would have bought a car like a Volt (it is a *nice* car and they’ve dropped it to $32,000) anyway, I’m way ahead economically and not dependent on foreign oil or its instabilities at all.

A bonus, which is the really important thing. Between the car and the panels I have avoided about 2 tons of carbon dioxide pollution so far this year. Each American on average produces 16 tons of CO2 each year, though just driving and powering one’s home is much less than that (the extra comes from the factories that make the things we buy). I have taken a big step toward a net zero carbon style of life. (It does of course cost carbon to produce the panels and the car, but that will be paid off fairly quickly). The US produces 5 bn metric tons of CO2 every year. We need that to be zero ASAP.

I know not everyone can afford the panels or the car. But actually if those who can afford them buy them, it reduces the cost for everyone else down the road. By Swanson’s law, “the price of solar photovoltaic modules tends to drop 20% for every doubling of cumulative shipped volume”. Also, in states like California or Colorado, companies will rent you the panels for an up front cost of only $1000.

After 6 years or so, the savings will be cream. So even if you didn’t believe in global warming, if you plan to be in your house for a decade or more you’re crazy not to do what I did. The cost of solar panels has come way down quickly. Plus, it saves you having to worry about the Middle East oil fields.

——-

Related video:

From last week: WSJDigitalNetwork
“Iraq Oil Refinery Targeted in Latest ISIS Attack”

25 Responses

  1. “US fracked oil is almost irrelevant when the world is producing 91 million barrels a day and appears to want 100 barrels a day.”

    I think you meant that sentence to end “100 million barrels a day.”

  2. An EV and PV house power are moves in the right direction, it would seem. One hopes maybe not too little, too late, but they and other increments will prolong the comfort, or the agony — at least, for those who can afford them. Many cities in Michigan still have unprivatized water supplies. What’s worse — something like ISIS(L) taking by force and arms, or the sneaky s__ts that are using the ordinariness and respect for ruleoflaw of the rest of us to take by force and proconsular edict, with a long tail of debt attached to the ordinary losers?

    The video clip paints an interesting picture: Look closely at the gunmen — they are men living in their moment, intense, alive. Until a bullet or shrapnel shatters their fragile skulls or viscera. link to youtube.com

    Those same extremities could hold a child, or a lover, build a garden, a roof, but they’re instead lined up to send “rolling fire” down-range at other men with maybe less resolve in the moment, less inspiration or reason to do “war,” more fear, more interest in the other things humans can do, ordinary things like trade and water pipes and tiny cups of coffee and putting arms around their precious families. So little study of what impels us creatures to engage in mastery of urban warfare instead of urban planning. So little attention to what “the enemy” is, that dark and deep archetype in our collective and individual psyches. Such yearning for a “common enemy,” link to socioecohistory.wordpress.com, as the only apparent lodestone to draw all of us to pulling on the same end of the rope. (We sure seem to have largely become the Enemy We Feared in that silly movie, “Independence Day…” Add “who gets to use the last drop of God’s petroleum?” to “Who gets to be the last Troop to die in Iraq, Yemen, Nicaragua, Notagainistan?”)

    And the grand prize is what? Temporary control of a fragile, vulnerable refinery? To what end? But to too many of us, the answer to that one seems so idiotically obvious…

  3. It’s easy enough for those of you in urban areas to find ways to reduce the use of petroleum fuel, but it is much harder for those of us who live in rural areas to do so. And, I think, you do want people to live in rural areas as that is still where most of your food is grown. There are not yet hybrid tractors (though John Deere, among others, does seem to working on it). So you can expect the increase in petroleum price to affect you – on the table – even if you reduce your personal transportation bill.

    • One way or another, it’s starting to look like we humans, with our arrogant ignorant well-compensated economists saying to ignore them, are painfully and fairly swiftly going to be forced to internalize all those costs that have been the basis of really cush lives for people like Tony Heyward, highlighted in this fun article:

      Could this possibly be that Tony Hayward — the pinched, sweaty chieftain of British Big Oil? The Englishman whom Americans derided as an insensitive buffoon — and whom President Obama said he would have fired? The man who sailed his yacht off the Isle of Wight as the tar balls washed up on the Gulf Coast? Who, in the middle of it all, delivered that crisis-P.R. sound bite from hell: “I’d like my life back.”

      Yes, this is that Tony Hayward, looking his elfin, curly haired self and sounding more upbeat than he has in a long time.

      Mr. Hayward, it turns out, has his life back.

      Two years after being shown the door at BP, in one of the most ignominious corporate exits in recent memory, Mr. Hayward is back in the oil game. Not at an oil major like BP nor, for that matter, in the gulf, where oil rigs and refineries were being tested anew last week, this time by Hurricane Isaac. No, Tony Hayward is hoping to strike it rich in, of all places, the oil fields of northern Iraq.

      He has some deep pockets behind him. They include a scion of the Rothschild banking dynasty, a former dealmaker at Goldman Sachs and two Turkish tycoons with a foothold in the wild and wildly contentious world of Iraqi oil. It’s a dangerous game, financially and otherwise. But despite sectarian bombings and political deadlock, Iraq’s crude oil production is soaring. In July, the nation produced more than three million barrels of oil a day, the most in a decade, eclipsing Iran and shaking up the old order in OPEC…. There’s even more fun in the balance of the article, at link to nytimes.com.

      There’s no choice but to eat our externalities. It’s just simple chemistry and physics at this point. The question is whether we have to eat the externalities of all the Tony Haywards and Lloyd Blankfeins and David Petraeuses and even Barack Obamas, too.

    • Stan, change begins with first steps. As a nation we do not have the option of not changing. Degrade the economics of transportation and you instantly alter a consumerist economy. Six months ago I leased an EV. The monthly cost of the lease is nearly identical to the cost of gasoline alone burned in my 10 year old car, not counting the cost and hassle of filters, oil changes, antifreeze, exhaust, miles of wiring, plumbing, and troubleshooting complexity to make the engine burn a little cleaner, not to mention pollution and military and war costs spent trying to keep hold of someone else’s oil. Electrical fuel for an EV costs roughly 10% of a gas car. EV’s don’t work for everyone in every situation, but they work for 90% of the people 90% of the time. We kept the old gas car for trips. Now it just sits there. The value to America’s future of EV’s is a no brainer.

    • Stan, actually rural applications of renewable solutions are getting easier than those in the city. Typical rural houses have more land and more open space to utilize than city dwellers. You may not have a hybrid tractor yet, but you can put rented solar panels out in a fallow field and grow watts while letting the soil rest (they do this in Germany). You can build passive solar features on your house and use the ground for heating and cooling. There are wonderful earthship house designs for using cheap recycled materials (like old tires) to build energy neutral structures. It’s just important to focus on what you can do and not worry about what you can’t.

  4. “I put solar panels on my house last December. In May they provided virtually all of the 600 kilowatt hours of electricity my home uses every month.”
    A few questions if I may. How many square ft in panels is that? What is the installed capacity (wondering what capacity factor you are getting)? What about snow in the winter? Thanks!

    • They don’t work when covered in snow, obviously. You can get a kind of broom with a long attachment if it bothers you, but they are warm and the snow usually melts fairly quickly. This last winter was snowy but in the past couple decades they typically haven’t been. Anyway, you have to think about the energy and carbon savings averaged through they year and they are certainly both well worthwhile. Michigan is sunnier than most of Germany, which gets 7% of its electricity from solar.

  5. What each of us do to make our daily life less malignant to the environment does of course not by itself matter significantly as far as material, numerical impact.

    But if each of us does not focus as well on our own personal impact humanity shall not survive.

    Thank you, Juan, for sharing what you are actually doing. As far as your suggestion that one would be “crazy” not to drive an EV or hybrid what does it make us in the Seattle area where our utility provides 94% renewable energy at about 7 cent/kWh if we don’t do so?!

    Our 13 years old Prius hybrid is still humming away — with the original batteries! — and we recently acquired an utterly amazing Ford Focus pure electric …

  6. You say: I have avoided about 2 tons of carbon dioxide pollution so far this year. Each American on average produces 16 tons of CO2 each year, though just driving and powering one’s home is much less than that (the extra comes from the factories that make the things we buy) […]

    So to really make an impact, we need to encourage companies that go solar. They need to get their mad men on this, and we need to create a reverse boycott movement: buy from solar powered companies.

  7. Have for years been a regular reader of Juan’s outstanding articles (as I find them on other discerning websites).

    Now obviously finding myself on juancole.com (yes, yes belatedly) I am equally fortunate to have come across a Comment section that is well worth reading and responding on. Thank you!

    Actually getting so carried away that I am venturing to post a comment in verse. With apologies as, while us poets strive for immortality, most folks just seem to want us dead:

    “our outlook fossiliferous
    toward restraint belligerent
    in our daily lives carboniferous
    toward the future indifferent

    hubristic vanity
    in despairing dissonance
    turned full blown insanity
    beyond deliverance:

    while icarus merely didn’t watch the wax
    we’re giving our whole species the axe”

  8. I had to mention the irony of having the 5 second add before the video sponsored by the Keystone XL project. :)

  9. For those rural folks, truckers, and equipment operators out there, even if you yourself cannot justify driving electric or hybrid, or options are not available, you should still consider supporting proliferation of this technology where it works. It will reduce usage of the carbon fuels you still need, reducing demand and costs. And for rural folks, typically you’ve got a lot of land, which always provides options. a few hundred square feet of solar or a wind turbine in a well located corner of your land (or solar on the roof of your home, barn, shop, whatever) can produce a lot of energy. Rural folks often have more than one vehicle. Surely at least one could be a hybrid or econobox, or simply more efficient than what it replaced. The same solution won’t work for everybody, but just about everybody CAN do something.

    • Actually rural people can easily benefit from solar energy, even for vehicles. My late wife’s family owned a cattle ranch, so I have some familiarity with day to day life on a ranch.

      While a “trip to town” could mean a 100 mile or more drive, all EVs on the market could make that trip with a “fill-up” in town because the ranch families typically spend a whole day “in town.”

      As for ranch vehicles, even a large ranch is well within the ranges for EVs.

      While most ranches and farms now have rural power, a good solar energy plant would quickly compensate for the often unreliable grid power (when a power line goes down in a storm, it can take multiple days before it is found and repaired).

      In reality, there is no rational reason ranches and farms can’t be totally electric, especially if the government subsidized the conversion.

  10. Oil production infrastructure is insanely EASY to blow up.

    Most oil infrastructure is readily accessible on the surface of the earth. Sure, the pipelines are often buried, BUT the pumping stations are usually not and refineries are all above ground. Anything that sits on the surface of the earth can be destroyed by the tens of thousands of inexpensive and relatively accurate missiles that are being produced each and every day of the week. During WW2, the Nazis discovered that no matter how brutal they were, their oil infrastructure was always vulnerable and weapons systems and tactics have only gotten much better since then.

    In addition to being accessible, oil infrastructure contains EXPLOSIVE material. That is, missiles only have to get close enough to let the explosive oil products escape and to ignite them. Once the reaction starts, in many cases the explosions continue until all the oil products are burnt up and all the production or delivery infrastructure is destroyed.

    But the real problem comes AFTER oil infrastructure is destroyed. What few people realize is that all oil infrastructure is hand built, in place. That is, there are NO SPARE PARTS just laying around some where. Sure some individual components like some valves are somewhat available, but reconstructing those components plus all the custom parts has to be done in place by extremely skilled engineers and technicians. The bottom line is once oil infrastructure is destroyed, it can often take YEARS for it to be repaired.

    If ISIL decides to just cripple Iraq and Iran if they can’t control the oil fields, they can EASILY destroy them.

    Note that the balance between current demand and current possible supply is on a knife edge and any decrease in supply could drive the whole world to economic ruin (which just might be what ISIL wants rather than making money).

    Fun times ahead.

    • Who needs a missile? A block of C-4 or two, or a couple of grenades, and the steel of a storage tank or pipeline or cracking tower is ruptured. RPG and mortar rounds, 12.7 or .50cal or 20 or 30mm cannon shells work too. Not all the gunmen care if the refinery assets remain intact, some in the joy of combat tend to LIKE big violent explosions they can “claim responsibility” for.

      See Dr. Cole’s latest post for a reminder of how quickly big things can change and even huge arrogant empires can suddenly lose their mojo…. And territorial reach.

      • JT you are correct that C4 and many short distance stuff can do equal damage to oil infrastructure. I referenced missiles because they allow someone to be several miles away and still make things go boom. basically anything that can crack some metal and ignite the gases and fluids that leak will do a fine job. Note that Egypt was never able to stop people from blowing up the gas pipeline from Egypt to Israel and Jordan and has now given up (now they can get a better profits by sending he gas to Europe via their existing LNG terminal).

  11. A ‘quick rule of thumb” for PV is about 8 watts per one square foot of PV cells. Obviously this number fluctuates a lot depending on the time of day, day of the year and the weather, but there are multiple techniques to compensate for this variability. The simplest is to use the existing grid as both a place to send excessive energy during the brightest days and to draw energy from when the PV needs to be supplemented.

    If every building in the US had PV on the roof, and “Smart Grid” was fully implemented, the only time grid based resources (hydro electric, nuclear and hydrocarbon based generators) would be needed would be during the night.

    Maybe the US should skip any more wars and just take the money we would waste and follow China’s example of heavily subsidizing solar energy. The Chinese people KNOW that solar is the future. Why are Americans so much dumber than Chinese?

  12. Oil has us in a cleft stick. It doesn’t matter if oil goes up or down in price, either way it snookers us. Too dear people stop using it, which is what is happening now with one in 3 planes idle and one in five cars staying home. Too cheap [below $80bbl] and producers will go belly up as the easy oil is only available in a few places. That’s already happening as we see oil companies having to sell off inventory and take out loans to pay dividends.

  13. My experience is very similar to Professor Cole’s. I had solar panels installed 18 months ago. Last month they generated more power than we consumed and our utility bill was $10 which consisted of various fees, etc. I am now looking at and waiting for the next generation Volt (lighter, less expensive, etc.). A small but increasing number of households in our neighborhood here in DC are installing solar and going EV.

  14. Divest, divest from oil. I love what the Harvard students are doing.
    Have a look. What’s in your mutual fund, ira’s.
    Divest, divest. It’s the most effective way to steer energy.

  15. I’m dying to put solar panels on our house but there isn’t even one contractor in the entire city where I live that does that. To bring somebody in from far away would probably be too costly.

  16. We have 2 Nissan LEAFs at our house in Northern California . My wife and I have about 10 mile commutes each way to work. We have a 2000 Toyota van that we keep around for heavy loads or longer trips. We last filled the Toyota tank in February. If we have a trip of hundreds of miles to make we will rent a car.
    Our solar panels go up in a couple weeks. Our utility gives credit for power supplied to the grid but does not give cash. Still, we will be driving two cars for free. The cars have excellent acceleration, relatively simple drive mechanisms that require little or no maintenance and are very smooth and quiet. One is leased and the other was bought used. The gas savings pay for just about all the lease and loan payments and we have two nice new cars. And we get to drive in the HOV lanes with a solo driver. Yeah, it’s a no-brainer.

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