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Iraqi Whale Oil

Something fishy is going on here

Francis Vale

January 2003

In 1860, whale oil was king. Customer demand for energy, light and heating via whale oil supported an enormous global enterprise, and also caused devastation to marine life on an unimaginable scale. In 1864, the whaling industry was finished. It was wiped out almost overnight by a new kind of oil, petroleum from the earth. In four short years, everything the world had come to depend on, and fight over, forever changed.

This is the big problem with the seismic upheavals that new technologies cause. People always believe they will be gradual. History shows they aren't. Another good example is the advent of the transistor. Once its power, reliability, and cost to build were fully understood, vacuum tubes went the way of the whaling ships, and almost just as quickly. But remarkably, in 2003 the world economy is still hooked on an almost 150 year old technology, petroleum, for getting its daily energy fix, which if the technology parallel held would be currently traversing the seas in wind-powered oil tankers.

And in 2003, the world, or at least the U.S., is going to war over oil, once again. The argument that this is all about getting rid of a nasty man who supports terrorism is nonsense. The world is filled with nasty, brutish men, many of whom value human life even less than Hussein. Worse, they are extreme ideology, almost suicidal, driven, which makes them much more dangerous than Saddam, who at least has some sense of self-preservation. So if the U.S. agenda truly is getting rid of all these bad boys, then there are horrifically murderous despots in some African countries, a few Asian countries, and in some others, who richly deserve the made in America cruise missile treatment. But that won’t happen to them because they don’t have what the U.S. prizes most—control over the second largest oil spigot on the planet.

However, if that’s the real politick of the matter, then so be it. Because the U.S. has the world’s biggest energy habit, the harsh reality is we need a stable supply of oil, and at the cheapest price. Especially when our other erstwhile friend and major supplier in the region, Saudi Arabia, seems to be doing two things at once; giving us our oil and also sending its sons to kill thousands of innocent Americans. As a nation, you have to do what you have to do, even if it’s ugly as all hell.

Of course, this all presumes that the Iraq invasion and its occupation by the U.S. goes off as planned, a big assumption as such major actions also tend to invoke the law of major unintended consequences. But assuming all goes well, the U.S. led Iraqi invasion and occupation will still cost the American economy about a trillion dollars, and likely even more than that. Some of these will be direct costs, such as the military costs for the invasion and subsequent occupying force, which will have to be stationed in Iraq for at least several years. The other costs are indirect, but are no less tangible and substantial. Some of these costs are a result of a rapidly ballooning budget deficit, which will be further deepened by the war. This deficit has to be financed, which means the U.S. government will be competing with the private sector for funds and that drives interest rates up. This is an extra cost for everyone, from financing home loans to capital equipment that quickly gets up into the many billions.

The Bush administration will also necessarily be forced by the deficit to cut back on many government services. Ironically, the conservatives view a big government scale back as a good thing and therefore huge deficits are great as they help force such cutbacks. But budget cuts cut both ways. If drug traffic escalates because the government manpower is no longer available to enforce the borders; if crime escalates because the police forces have to cut back; if educational standards drop because schools are cut off from funding; if elderly healthcare quality dramatically drops because the thoroughly broken HMOs now take care of senior citizens; then what do all those costs add up to? A trillion dollars may even be too small a number when all these other costs, both financial and human, are taken into account.

However, even after having accepted all this dismal news as the price we must pay for keeping the factories humming, the cars on the road, and the lights on, the fact still remains we will have bet the national farm on the premise that petroleum technology will remain the staple of the American energy diet for now and into the foreseeable future. But suppose energy technology suddenly shifted, just as it did between 1860 and 1864? Where would that leave the U.S., besides being mired in a huge national debt, and also having incurred the enduring enmity of a large part of the world? This is the real problem with the Iraqi invasion--The core supposition by the Bush administration that our primary energy source will remain oil for the next 50 years or more.

For as we have all seen these last twenty years, technology is now on an unstoppable, exponential march. There is no reason whatsoever to assume that energy sources are exempt from technologies’ sweeping effects. It is almost a certainty that someone, somewhere—someone you probably never heard of—is right now working hard on a replacement for petroleum, and it will be both practical and economically cheaper than the petroleum it will swiftly replace, just as whale oil was quickly booted off the economic map. This energy breakthrough may happen next year, or maybe not occur until the next decade, but it will assuredly happen given the present technology climate. And when it happens, the U.S. will be broke and busted out of the global game because of an incredibly bad bet.

Francis Vale, Copyright 2003, All Rights Reserved

21st, The VXM Network, http://www.vxm.com

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