ON A BOOKSHELF above my desk, I have a rock that’s about the size of a fist. It’s ridged and bumpy, and covered in oil. I’ve been carrying it with me for about a decade, after collecting it from a remote beach in Galicia on the northwest coast of Spain.
Photo by Stéphane M. Grueso
The beach, about fifty miles north of the border with Portugal, is barely more than a rocky outcropping in the Atlantic, an isolated place with a sharp cold wind even in the spring. Six months before I slipped the rock into my overcoat pocket, on the night of November 22, 2002, a ferocious storm off that coast had tossed the Prestige, an eight-hundred-foot-long single-hull oil tanker, like a toy boat. As she lurched in the violent waters, a wave smashed into the right forward hull and the three-foot-thick steel blew open—“like a sardine can,” a rescue worker later recalled. After the captain’s SOS, the Spanish Coast Guard sent a helicopter to pick up the nineteen crew members. Then the Prestige sank about thirty miles offshore. Out from the hull came viscous cascades of oil: Seventy-nine million gallons of crude washed onto a thousand miles of coast, all the way up to the beaches of southwest France. Satellite photos taken by the French research agency CIDRE show the oil spreading from the Prestige like spindly black veins in the circulatory system of the Atlantic.
The Prestige unleashed one of the worst environmental disasters in history — at least until the Deepwater Horizon, BP’s oil derrick, exploded in the Gulf of Mexico in April 2010. When the oil started gurgling out of BP’s underwater pipes, after the explosion killed eleven people who’d been working on the rig, a sense memory of Galicia returned.
I didn’t go to the Louisiana coast to watch, but I did, like many of us, watch in horror from afar. It rapidly became clear that oil spills are not very different. In fact, they are interchangeable. The Prestige was carrying a refined version of what the Deepwater Horizon was pumping from under the ocean: same substance, different location. By way of contrast in the fossil-fuel-catastrophe sweepstakes, the Prestige spill was far bigger than the Exxon Valdez crack-up in 1989, which spilled some fifteen to thirty million gallons of oil (the exact number is still in dispute) along the coast of southeast Alaska, less than half of the Prestige’s toxic load. The Deepwater Horizon blew them both away — unleashing over its excruciatingly public effusion some 210 million gallons of oil. I was standing on the Atlantic coast of Spain, but I might as well have been standing on the coast of the Gulf of Mexico, south of New Orleans, or, for that matter, of Prince Edward Sound in Alaska.
I went to Galicia to investigate the causes of the Prestige accident for the PBS newsmagazine show FRONTLINE/World, and spent many hours clambering over those oil-splattered beaches. Even in the wind, the air on that isolated beach had the sickening smell of a gasoline station. All I could see in either direction — to the south, toward Africa and to the north, toward Ireland — were thousands of rocks, millions of them, stretching into infinity, covered in the black gooey crud that had been carried in the cargo holds of the Prestige. An assortment of volunteers from as far away as Italy and the Czech Republic were still scraping rocks and boulders with spoons in a quixotic effort to remove the vile substance.
Photo by Scott Hess
The closest town was Corcubión, about ten miles away, which for hundreds of years has been sustained by the abundant fish of the North Atlantic. The town is renowned as the source of a marine delicacy unique to this area called percebes, a barnacle that clings to the side of the rocks and is a prized feature of Galician cuisine. The waves that crashed upon those rocks were tainted with oil: There would be no percebes that season, nor any other fish caught along the Galician coast. The marine environment was severely damaged, and tens of thousands of fishermen suddenly lost their source of livelihood all along the coast. Tourists who normally flood this area in the spring and summer stayed away.
The economy of Corcubión was devastated. I met the town’s mayor, Rafael Mouzo, who with his trim beard and bushy mustache looked like a character out of Cervantes. As we walked along the stone balustrade overlooking the town’s port, lined with idle fishing boats stranded by the blacklist on Galician fish, Mouzo could barely contain his rage at the disaster that had befallen his town. He told me that the oil spill was like an act of war. “This,” he exclaimed, “was an act of terror, a criminal act! We need an international tribunal to judge . . . all those responsible for the spill.” Currents carried the Prestige’s vile cargo northward, and in fishing communities along its path there was a similar sense of having been besieged by an evil, destructive force that seemed to come from nowhere and let loose its demons upon their shores.
The cleanup costs quickly mounted into billions of dollars as the Spanish government sent out hazmat crews in insulated white suits to power-spray the beaches with high-pressure hoses. Some of the earth’s most pristine beaches were plunged into a scene out of science fiction.
I’ve held on to that rock for all these years so I would not forget the image and feel of the grotesque environmental and economic destruction wrought by that sunken tanker, and the price that is paid for our reliance on a fuel that at every turn wreaks collateral damage while it powers our economic might. That Galician rock, perhaps the only physical legacy remaining of the sunken Prestige here in the United States, tells a story of the acute effects of oil unleashed upon the sea and upon the land. Who could have guessed we’d see the same infinity of oil-splattered rocks along a thousand miles of the Gulf Coast? Well, we all could have guessed. Oil spills have not been rare events. And it’s a good guess we’ll see more of them, somewhere, because oil is the Esperanto of the world’s fossil fuels, speaking the same language everywhere.
Half of all global oil use is for transport, and most of that for automobiles, according to the International Energy Agency. There’s only one real distinction between the oil once in the hold of the Prestige and the oil I use every day. After a successful journey across the sea, “my” oil was refined into gasoline that provides the energy for the steady beat of the pistons in my car. It pumps away through my fourteen-year-old Saab’s plumbing, and leaves its CO2 fumes behind. So that’s the other reason I held on to that rock: It reminds me that I, like all of us, am tied to the oil carried by the Prestige — except my shipment of oil and its associated greenhouse gases ended its journey in my gas tank and not on the beaches of Spain. The CO2 embedded in the Prestige’s oil from all those millions of years of decay at the center of the earth went straight into the atmosphere without detouring through my car. All that BP oil went straight from the center of the earth onto the beaches of Louisiana without detouring through a refinery and onto an oil tanker. And the unique circumstances of the BP spill, in the middle of the ocean, unleashed huge quantities of methane, a greenhouse gas twenty-five times more potent than CO2, from under the ocean floor — “the most vigorous methane eruption in modern human history,” a Texas A&M University scientist told the press.
The effects of climate change, of course, are occurring far more slowly than the overnight destruction that follows an oil spill. But where the CO2 comes from, or what it powered in the intervening sequence of connections into our gas tanks, is an incidental detail in oil’s journey. The rock above my desk is coated with the substance that we rarely actually see as it travels up wells in distant locales like Saudi Arabia or Venezuela or one hundred miles offshore from Louisiana, into pipes and tankers and finally into the refineries of America that process it into the energy that fuels our cars.
We, too, are contributing every day to what amounts to an ongoing oil spill into the atmosphere of our planet.
***
I PULL MY CAR into a Chevron station near my house in Berkeley. The prices at my local station are not much different from anywhere else in town. The people who run the station are friendly, stuck behind their Plexiglas booth, immigrants from Ethiopia. They’re charging $4.15 a gallon. Wow, that bites, as it does every time we go to the gas station.
Photo by Richard Masoner
Alas, that’s another fake price in the economic hall of mirrors — in which the price reflects not actual costs but the reflected glare of the margins necessary for oil companies to sustain hefty profits. Perhaps this is the harshest news in the struggle to shift our habits away from fossil fuels: Gasoline should be a lot more expensive than the “expensive” gasoline we’ve been paying for. Nor are the true costs invisible; they’re hiding in plain sight. You just have to do the math.
According to the EPA, transportation is the second most significant contributor, after industrial sources, to greenhouse gases in the United States. More than a quarter of the nation’s greenhouse gas load comes from moving ourselves and our goods around — all those trips down the block or across the country add up. I could have filled my gas tank about ten million times with the amount of oil spilled in the BP disaster. (I don’t drive that much, so you’d have been using some of that gas, too.)
Personal vehicle use is responsible for almost half of those transportation emissions: 787 million tons of CO2 in 2010, to be exact, according to the EPA. The average American, said the EPA, uses 557 gallons of gas a year driving around; and each of those gallons emits twenty-five pounds of CO2. Twenty-five pounds, as was pointed out by Sarah Terry-Cobo, my former researcher and a journalist affiliated with the Center for Investigative Reporting, is about the weight of a single cocker spaniel. That’s 557 cocker spaniels’ worth of CO2 a year, from each of us with a driver’s license.
Over the course of reporting this book, I traversed the state of California by car, driving several times into the Central Valley and as far south as Los Angeles — at least one thousand miles of driving on that 2000 Saab. I emitted twenty-five thousand pounds of CO2. It would take about a tenth of an acre of forest to absorb that carbon footprint over the course of a year if I were to offset it in one of those Brazilian forests. Terry-Cobo’s animated film The Price of Gas walks us through the various stages of how a single gallon of gasoline’s greenhouse gases journey into the atmosphere, using figures backed up by studies from the EPA and various academic institutions across the country. The pumping of oil from Saudi Arabia and transport by tanker to the United States, she shows us, results in two pounds of greenhouse gases per gallon. The refining, at a Chevron refinery in Richmond, about fifteen miles from where I write: another 3.5 pounds. And then there’s the pumping into my gas tank, which includes evaporation at the pump, and driving: That’s another nineteen pounds. Thus, 80 percent of the total emissions per gallon comes from us, the drivers.
My car gets about twenty miles to the gallon, so my Saab consumed fifty gallons of gas during my travels across the state. That comes to about two hundred dollars for gas. I should have paid a lot more, according to the calculations of those who are beginning to apply a price for gasoline that approximates its actual cost.
Of the top twenty-five industrialized countries, the United States has the lowest price for gasoline. In Germany, for example, in 2013 the average price of gasoline was $8.50 per gallon; in Britain, $8.04; in Norway, $10. That’s why the price of gas for all those reporting trips should have been about double what I actually paid for it—say, more like about four hundred dollars. And it’s not because the gas is cheaper to obtain in the United States. Britain and Norway, for example, have a huge supply of oil just offshore, in the North Sea. We all get oil mostly from the same constellation of suppliers — the dozen member countries of OPEC, as well as Russia, Britain, Norway, and the United States, distributed to us, for the most part, by the top ten global oil companies.
The difference is that a tax has been slapped onto gasoline in those countries to help compensate for its immense ecological and economic costs. The same goes for airplane fuel: The quantity of greenhouse gases emitted by US airlines is not even counted by the Federal Aviation Administration, and, as we explored in chapter 1, the United States is resisting European efforts to bring prices more in line with true costs. Meanwhile, many EU countries—notably Germany, Britain, France, and the Netherlands—have been channeling the extra funds generated through gasoline taxes to begin the process of lowering the greenhouse gas emissions of European cars, devising less greenhouse-gas-intensive fuels, and mitigating the effects of climate change.
The Organisation for Economic Co-operation and Development (OECD) has concluded that environmental taxes account for approximately 2.4 percent of GDP in Europe, compared with 0.8 percent in the United States. Jason Scorse, an associate professor of environmental economics at the Monterey Institute of International Studies, has calculated that the 1.6 percent difference between the two figures—given the roughly comparable sizes of the European and American economies (Europe’s is actually slightly larger) — would provide the US government with $240 billion annually in extra revenue. Even a portion of those funds, he said, “could be applied to the monumental costs of climate change and associated environmental problems associated with gasoline.” Consider that figure in the context of the two devastating and costly events of 2012 alone whose intensity has been linked to climate change: the fifty billion dollars in public money apportioned by Congress to the East Coast for recovery from Hurricane Sandy; and the eleven billion dollars in damages, apportioned through the federal crop insurance system, from the midwestern drought. Even a minimal addition to the already minimal tax on US gasoline would have gone some way toward covering those costs.
The federal gasoline tax in the United States now stands at 18.4 cents per gallon—a figure that has not changed since 1993, when President Clinton, egged on by his vice president, Al Gore, jammed it through a reluctant Congress. The price of gas was roughly $1.75 to $2.00 in the mid-1990s—so what was a roughly 9 percent tax then is now half that as the price of gas doubled.
A team of engineers at Carnegie Mellon University and Arizona State University concluded that conventional cars over their life span come with an average of two thousand dollars in greenhouse-gas-related costs that are “paid by the overall population rather than only by those releasing the emissions and consuming the oil.” And those costs don’t come just from climate-induced weather events. They affect our health care system, too. The American Public Health Association, for example, estimates that the health costs from respiratory diseases and premature death due to automobile-induced air pollution amount to eighty billion dollars a year. Even these numbers don’t tell the whole story. Beyond storms and health are the more slow-moving, but potentially far more expensive, long-term impacts from greenhouse-gas-induced climate change. A gas tax, say costing (at the top end) roughly two hundred dollars a year over the decade-long life span of your average car—and assuming the EPA’s average American gas consumption of 557 gallons per year — would begin to compensate for those costs. Instead of each of us paying those costs up front, depending on how much we use our cars, we all now pay collectively, irregardless of whether we even drive a car.
Indeed, gasoline prices have risen significantly over the past ten years, but all those extra billions did not go into the development of less greenhouse-gas-intensive fuel technologies. Rather, the price increases were channeled into the profit margins of the major oil companies. The years of 2011 and 2012 taught us a critical economic fact: When the price of gas goes up, consumption may decline incrementally, but oil company profits do not drop. In fact they did the opposite: Over the course of 2011, as gasoline prices started their most recent rise, the country’s top five oil companies (Chevron, ExxonMobil, Shell, BP, and ConocoPhillips) earned a combined profit of $137 billion, despite reducing their levels of production. In 2012, as gas prices continued to rise and stayed above four dollars, the top five oil companies hit another one-hundred-billion-plus year — while the actual quantity of oil they delivered to the market declined by at least 5 percent. Nor, concluded a report by the minority Democratic Party staff of the House Committee on Natural Resources, did the companies use those funds to hire more Americans; in fact, the top five oil companies shed at least four thousand employees while reaping those record profits.
And there’s another twist to this perverse economics: The US oil and gas industry receive billions of dollars in taxpayer subsidies — a kind of expensive phantom limb left from the days early in the last century when oil companies had to actually be encouraged to seek out ever more exotic locales for their oil prospecting.
Photo by b k/Flickr
Parsing the precise quantity of subsidies to the fossil fuel industries can be difficult because the calculation involves a thicket of gifts large and small, from tax breaks to outright R&D support to hidden price props like the Strategic Petroleum Reserve. Estimates of the amounts vary widely, so let’s start with the most direct and conservative, which is quite eye-opening: The OECD offers us an Excel sheet documenting at least $3.4 billion in subsidies to the oil industry in 2011, and another $3 billion to the gas industry. The programs include everything from tax breaks and favorable depreciation treatment for crude oil exploration to a sales tax exemption for the purchase of new oil and gas equipment. (This is the low end of the estimates and excludes some two billion dollars to assist low-income earners to meet their electricity and heating bills, as well as the lost income from below-market rates for drilling on federal lands and in the Gulf of Mexico.) In 2011, the Democratic staff at the House Committee on Natural Resources estimated that the oil and gas industries were slated to receive $43.6 billion in subsidies over the following decade, including things like the foreign income tax credit, which lets oil companies off the hook for a portion of profits generated in lower-tax-rate jurisdictions. Between 1918 and 2009, according to an assessment by DBL Investors, a venture capital firm based in San Francisco, the oil and gas industries received an average of $4.8 billion in government subsidies annually. Whichever number you choose, the taxpayer-funded subsidies buttress the oil companies’ bottom line every year, and enable the world’s primary greenhouse gas pollutant to be sold more cheaply than its actual cost — adding to the perceived price advantage of fossil fuels over renewables. Although the oil industry has been on a steadily profitable trajectory for decades now, congressmen and presidential candidates who have collectively received more than $365 million in contributions from the oil and gas industry since 1990 have been loath to repeal the subsidies (President Obama tried several times, but was rebuffed, with a few small exceptions, by the Republican-controlled House of Representatives).
Globally, the London-based Overseas Development Institute (ODI) estimated that the top eleven “rich country emitters” (a designation that has come to be known as the E11, including the United States, Germany, Britain, Canada, Japan, Australia, and Russia) collectively spent $74 billion in taxpayer funds on fossil fuel subsidies in 2011. That comes down to seven dollars for each ton of greenhouse gases emitted. Even the International Monetary Fund has entered into the lambasting of fossil fuel subsidies, which it sees as not only an inducement for greenhouse gas emissions but also a violation of free-market principles, creating an unjustifiably favored status for fossil fuels. Removing global fossil fuel subsidies, the IMF said, would reduce CO2 emissions worldwide by 13 percent, and produce “major gains” in economic growth by freeing the funds to be used more productively in the economy.
So, not only are we paying for the oil companies’ overhanging costs — covering the climate consequences of their most significant waste product, CO2 — but we’re also paying to facilitate their generation of those costs: Refining, drilling and extracting oil and gas account for at least 390 million tons of greenhouse gases every year in the United States, the second biggest source of emissions after coal-fired power plants.
Thus, the matter of subsidies raises a key question: If we’re paying already to support the oil and gas industry, why not channel those funds instead toward alternatives that will lead to the development of more resilient, renewable, and less destructive ways to power our engines? A hundred years ago, arguably, government subsidies were needed to help promote the rapid development of a revolutionary new fuel source, at a time when few understood its long-term environmental consequences. But now we understand. Today taxpayer subsidies serve to inflate the profit margins of the fossil fuel companies, and in fact encourage the extraction of ever more difficult-to-reach sources of oil—drilling deep beneath the ocean floor, for example, and fracking, which involves breaking apart the earth to extrude oil from the rock. So in effect we pay twice: once to inflate oil companies’ profit margins, and again for the damages those fuels cause to the planet through their emissions of greenhouse gases.
Thomas Schaller, a political science professor at the University of Maryland, suggested that we consider how the flow of capital would differ if we instituted, say, an extra twenty-cent-per-gallon tax on gasoline. The benefits, he argued, would be multiple: We could see a decrease in greenhouse gas emissions due to decreased gas consumption; channel billions of dollars into the government’s ability to respond to the rising costs triggered by climate change and other environmental consequences of oil; and provide resources to further develop innovative technologies to wean us off our reliance on petroleum. Rather than feeding the bottom line of ExxonMobil and the other titans of oil, we could channel our funds to adapt to and mitigate the effects of the greenhouse gases that the oil companies — with our complicity —have been sending into the atmosphere.
An increased tax on gasoline would clearly have a disproportionate impact on people with lower incomes. But there are ways to ensure that they are not the hardest hit. Congress has repeatedly entertained, and defeated, several proposed bills that would impose a gradual increase in the gasoline tax coupled with tax rebates or other forms of compensation to ensure that low- and moderate-income people are not shouldered with the burden. Such an initiative could ensure that the excess price paid for gasoline would be channeled into programs from which we all benefit, rather than the money we pay in other taxes being channeled to enhance the bottom line of oil companies.
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Photo by imelda/Flickr
INCREASING ATTENTION to the greenhouse gas implications of petroleum-based fuels is creating new divisions in the once solid alliance between oil companies and car manufacturers, which have for decades together been the primary obstacle to tightened environmental standards. In 2012, the car companies agreed, after years of protests, to President Obama’s proposal to raise fuel efficiency standards for American cars to an average of 54.5 miles per gallon by 2025 — and have been pouring millions of dollars into developing new engines for electric and biofuel-powered vehicles. When California instituted a low-carbon fuel standard, which requires that the “carbon intensity” of fuels used in the state be reduced by 10 percent by 2020 — a goal accomplished largely through the addition of biofuels to the gasoline mix — the measure was immediately challenged in court by the oil companies and some new allies, biofuel producers in the Midwest concerned that their corn- and soybean-based fuels were rated as higher greenhouse gas contributors than the grass- and waste-based biofuels more prominent in California. They were not joined in the challenge, however, by the auto companies. General Motors, for example, which underwent a resurgence after the Obama administration kicked in fifty billion dollars to prevent the company’s collapse, directed its engineers at research-and-development centers to design engines that could meet the requirement.
“We’re on the opposite side of the oil companies in the battle over the low-carbon fuel standard,” said Shad Balch, a former analyst on climate policy for former governor Arnold Schwarzenegger, and now head of future product policy and communications for GM. The company’s long-term interest, he said, lies with reducing the dependence of the next generation of cars on the erratic supplies, and volatile prices, of oil. “We want to see a new standard so we can take advantage of it,” he told me. “The first company with a no-gas car wins!” California is GM’s biggest market, as it is for all the auto companies, so the cars that meet the state’s relatively tough standards will ultimately be sold throughout the country. Other car companies, like American Honda, have set a goal to reduce greenhouse gas emissions from cars by 32 percent from 2000 levels by 2020. Part of that is by increasing production of e-vehicles.
The sales of electric cars, reliant purely on the electrical grid for power (as opposed to hybrids like the Prius, fueled by a combination of electricity and oil), have skyrocketed as battery technology improves and the price comes down: In 2010, 345 individual e-vehicles were sold in the United States; by 2013, that number had leapt to over 50,000. That’s still a small number relative to cars on the road, but all the major US and European car companies, in addition to new entrants like Tesla Motors, are banking on increasing numbers. The auto industry is global, so what happens elsewhere can also feed into the move toward less-oil-reliant cars. In Europe, for example, where consumers daily face those steep gas taxes, car manufacturers also face an EU Fuel Quality Directive that requires reducing greenhouse gases from transport by 60 percent (from 2009 levels) by 2018, creating an incentive that is helping lead to rapid growth in electric vehicles there. And European cars are already about a third more fuel-efficient than their American counterparts — which has the effect of not only decreasing the car-by-car release of greenhouse gas emissions, but also decreasing expenditures for gasoline. Then there’s the world’s fastest-growing car market, China, which in 2013 announced a national goal of five million electric cars on the road by 2020, a development that could have a transformative impact on the industry.
Critically, however, automobile manufacturers have little interest in how green the grid is that their cars rely on. What do plug-ins plug into? For a car company, it doesn’t necessarily matter how the electricity is generated, as long as it’s there. “Building a market for electric vehicles has nothing to do with greening the grid,” commented Robert Langford, head of the electric vehicle division at Honda, whom I interviewed during an e-car promotional event held at PG&E headquarters in San Francisco.
But for electric cars to truly have significant impact, they must ultimately draw power from a grid that relies on less destructive sources of energy. What is the source of the electricity? How green is the grid? It turns out to vary widely depending on your location.
In California, electric vehicles emit about five times less greenhouse gases over the course of their life cycle than gasoline-powered ones. That’s because California’s Renewables Portfolio Standard — the strongest in the nation — requires that utilities obtain a third of their energy from renewable sources by 2020; the state already draws a significant portion of its power from wind, solar, nuclear, and hydro. In states such as Colorado and Wyoming, where the reliance on coal is greater, that ratio drops to somewhere between two and three to one, according to a joint study by the Natural Resources Defense Council and the Electric Policy Research Institute. Twenty-seven states have some version of a Renewable Energy Portfolio Standard, so the greenhouse gas impact of electric vehicles will vary depending on comparative greening-of-the-grid state by state. The Department of Energy’s budget for 2014 included $615 million to increase the use of solar, wind, geothermal, and hydro sources of energy to further green the grid, and $500 million dollars in research in “cutting edge vehicle technologies” designed to wean American drivers off oil. Meanwhile, there’s been a boom in states like California, New York, Connecticut, and others in what’s known as distributed energy, referring to energy created through wind, solar, and other renewable sources that’s fed into the grid — a phenomenon spreading across the country that presents a direct threat to the long dominion of monopoly utilities over who gets to generate, and profit from, electricity.
However sporadically the greening of the grid is taking shape, one thing is clear about cars powered by electricity or by biofuels, hydrogen, or other technologies on the horizon: They don’t use oil. Just as distributed generation threatens the lock of utilities on our electricity system, electric cars present a direct threat to the lock that oil companies have had on how we move.
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