Friday, March 27, 2009

Liveblogging J-Week
Alaskan Issues:
Mapping the Maze of Oil and Gas

Lisa Margonelli was, unfortunately, a travel victim of the Redoubt eruption, but organizers are working on getting her on the phone. Margonelli is the author of Oil on the Brain, and if we can reach her, she’ll be helping us understand how the industry affects our daily lives.


Rhonda McBride has managed to connect us to Margonelli, who says she’s sorry she’ll be missing former House Majority leader Ralph Samuels’ talk, Gasline 101, which follows this session.

Margonelli is giving some background on her oil expertise. In 2001 she got an assignment from now-defunct Jane magazine to go to Saddam Hussein’s birthday party. It was her first immersion in “a very weird oil culture.” Everyone in Iraq, down to the coffee shop waitress in her hotel, defined their lives in terms of oil.

The same month, Margonelli was sent to Arctic Village, north of Fairbanks, to follow a Native filmmaker, but by the time she got there, the story was the fight to keep ANWR closed to development. Gail Norton flew in while she was there, and the people of Arctic Village were fighting to keep the Refuge closed. As Margonelli flew out of Arctic Village, she could see the Trans-Alaska Pipeline, and it occurred to her that it was strange for her to use so much oil without understanding the issues around it. She drove to Barrow, following the pipeline, and decided she wanted to learn more. That’s how Oil on the Brain was born.

One thing she learned in Iraq is that there are a lot of unlikely alliances around oil that aren’t really reported on — for example, people from countries that are supposedly at war are colluding on oil smuggling operations.

To write the book, Margonelli spent time along the supply chain at all levels, getting to know the people who make the industry run, and looking at how their lives were affected by greater forces in the oil economy.

Gas Stations
Consumers see two things at a gas station: Convenience, then price. A three-cent price difference will get people to make a four-point turn to the other side of the road. A six-cent price difference will get them to drive across town. Gas stations make only a few cents per gallon in profit. Gas stations face a variety of other bizarre challenges, including customers driving off with hoses still in their cars, robbery, and accidents.

Part of what drives retail prices is boutique air quality requirements; different places require different fuels. Even truck drivers face customer hostility about prices; one truck driver she spoke to said his own wife had called him to complain about the amount she was paying for gas. One of the things consumers don’t think about is who takes the risks. They’re focused on price and convenience. Transporting petroleum is a risky business, as anyone who lived through the Exxon Valdez oil spill knows.

Margonelli visited an oil barge in New York Harbor. The barge was attended by three different tugboats. The tug pilots would call ahead to bridges and tell workers to stop welding when the barges passed through. A single spark on the deck of a ship carrying four million gallons of gasoline could be a disaster. A lot of petroleum infrastructure is very old — built as long ago as the 1920s.

Politics of energy consumers
  • Mainly care about convenience.
  • Price is more than just dollars; it’s well-being.
  • Feel we have no control, are “addicts.”
  • Believe in conspiracies... of all sorts.
  • High oil prices make us want to punish oil companies AND “drill baby drill.”
  • Fantasies of “energy independence.”
Some of the conspiracies we believe in: Producer price fixing; environmentalists blocking development; OPEC manipulation; a variety of Middle East conspiracies. Consumers and voters want to see oil companies punished and publicly reprimanded (congressional hearings, windfall taxes), but they also want to drill in protected areas. Fantasies include running cars on water or solar power, but “energy independence” isn’t realistic.

Who has the oil now?
North America doesn’t have much; 67% of reserves are in the Middle East. We are, however, historically the largest consumers of oil.

Venezuela is the U.S.’s oldest oil exporter. Setting them up to export oil was conceived as a way to provide Venezuela with some independence and self-sufficiency. Now Venezuela is associated with Hugo Chavez. Venezuela’s politics are determined by oil, and there is notaxation. One Venezuelan politician told Margonelli that, while we see corruption in moral terms, he sees it as a method of distribution. Chavez will give oil money away as schools, medical care, food. It costs Venezuela a lot of money to keep oil flowing; they’re constantly re-drilling wells, and there’s a constant struggle between those who want to distribute oil money to the poor and those who want to use it to continue drilling oil.

When you live in an oil-producing country, expect the following from your government:
  • Cheap gas.
  • God gave us wealth, so we should be powerful.
  • Our destiny is controlled by someone else.
  • The U.S. is trying to control us.
  • Government as “cow” leading to corruption, poverty, lack of democracy, and violence.
  • No taxes.
Where does Alaska fit?
  • Extreme consumers and extreme producers.
  • State bears large risks.
  • Multiple political/environmental realities in state, PLUS outside advocacy groups. Squabbles and blame.
  • Extraordinarily complex economic, political, and technical issues vetted at local levels.
As she was touring and looking at oil producers, she started to question things. The Republic of Chad is the world’s newest oil producer. The World Bank helped Exxon make it happen. Chad has become “a nightmare.” The country is so poor that there are no gas stations; you buy smuggled Nigerian gas out of whiskey bottles on the side of the road. Exxon followed its regulations, but it didn’t have the same level of accountability it would in the U.S. Ultimately, everywhere oil comes from is someone’s backyard. In Chad, there was no accountability. In the U.S., there is at least some accountability, even in moderately stable countries like Kazakhstan.

How do we change?
  • 73% of Americans want change.
  • But we don’t agree on why, or on what to do.
  • Nuclear, solar, wind, tar sands, more drilling, efficiency...
  • The “media” is seen as eroding morally and physically.
Examples of reporting that does a disservice: People replicate stories they’ve seen before; they say they blame the oil companies. But it’s a lot more complicated than that. Nixon, Ford, and Carter’s energy conservation policies have paid off, but all three lost their careers (in Nixon’s case, obviously, not for those reasons). If you go against the dominant narrative, you take a risk as a politician. Know what the myths are and report on them as myths, then move into the deeper causes. We have to get out of the “the oil companies are ripping us off” narrative; it goes nowhere and it doesn’t allow for change.

— Maia Nolan

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