Lisa Margonelli
Author, "Oil on the Brain"
Thursday, February 15, 2007
12:00 PM
Journalist and New American Foundation Fellow Lisa Margonelli was online Thursday, Feb. 15 at noon ET to discuss her new book, " Oil on the Brain: Adventures from the Pump to the Pipeline," which tells stories of the places and people along the petroleum trade route -- from an Iranian oil platform to a New York trading floor to the station down the block.
The transcript follows.
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Lisa Margonelli: Hello -- thank you for logging in on such a cold, blustery, fuel-ish day there in the D.C. area.
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Washington: Ms. Margonelli, I have heard an increasing amount of discussion in recent years about the concept of "peak oil." It's the idea that we are at, or near, the point at which the discoverable amount of oil has reached its peak, and that it now will decline steadily -- slowly but surely dragging down industrial productivity and economic production along with it. (The idea being that economic productivity worldwide is hopelessly dependent on oil.) Is this potentially very serious scenario something you discuss in your book -- or that the sources you talked to spoke about?
Lisa Margonelli: Hello -- while there's a consensus that oil production will "peak" sometime during this century -- probably sooner rather than later -- there isn't consensus on when. In my book I spoke with people in the U.S., Iran and China about the political and economic consequences of a peak in oil production in non-OPEC, non petro-states (Norway, Britain, the U.S., Egypt, Argentina, Australia, China and eventually Mexico) and how that will concentrate the remaining oil resources in the hands of big petro-states like Saudi Arabia, Iran, Iraq, Russia and Venezuela, giving them more sway over prices. I find the implications of this very interesting.
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Fairfax, Va.: I have not yet had the good fortune of reading your book. I do remember reading a book some years ago, entitled "The Seven Sisters," which was a very enlightening account of the oil industry at that time. I haven't been able to get the awful taste for the industry that book left me out of my mouth to this day. Does your research leading to your book leave you with a similar conclusion?
Lisa Margonelli: As long as there's been an oil industry in the U.S., Americans have hated it. Oil companies were the first huge corporations, and (to effectively produce and market their products) they were integrated in a way that previous companies hadn't been; to keep prices from seesawing they were monopolistic in the early days. I doubt you'll come to love the oil companies while reading my book, but I did come to appreciate the work they do and the risks they take. On the other hand I think we as citizens really need to take control of our energy destiny -- we need to push for better efficiency in our vehicles and economy and really take responsibility for the energy we use, rather than blaming the oil companies for being a conspiracy.
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Princeton, N.J.: They keep telling us that the price of oil is set by supply and demand, and talk about China and India, blah, blah, blah. That may be true in the long-term, but in reality isn't the price fixed by speculators and hedge funds? If so, if the President announced some drastic program to cut down our use of oil (e.g. $10 billion for research into alternative fuels), wouldn't that lower the price of oil immediately?
Lisa Margonelli: The basic oil price is set by supply and demand, while speculators keep the market moving. But when demand falls short of supply -- as it did during the Asian economic crisis in the '90s -- the price of oil falls for real. The president's investment in alternative fuels may or may not pan out -- it's far more of a speculation and even a hope -- oil prices won't respond to that.
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Ann Arbor, Mich.: The title of your book did not attract me as a text that would explain the intricacies and the facts of the industry to the average econ-illiterate but sounds rather like some "lite" bedtime dumbed-down reading. What makes you an expert like Pulitzer-winner Dan Yergin of "The Prize" fame?
Lisa Margonelli: I'm not an expert like Daniel Yergin, whose book I respect very much. I am a reporter and I spent four years following the supply chain and talking to people in the industry. While "The Prize" tells the story of oil from 20,000 feet, mine is set right along the pipelines. I believe that everyone should understand how oil is produced and sold, because we as a country have a lot of strategic decisions to make in the near future. Thanks for tuning in.
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Washington: Does your book examine the public heath impacts of the oil industry? I'm surprised how little this huge issue tends to be covered. Most people seem to think that air pollution is a problem that came and went, but in reality the production, and use of oil still have huge negative impacts on the air we breath.
Lisa Margonelli: Yes, the book does look at the health impacts -- both of oil production, refining, and in the burning of it. The Texas City refinery explosion report shows how important these air pollution issues are. The Baker report suggested that if small accidental emissions had been better tracked and averted the huge disaster that killed so many people might have been avoided.
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washingtonpost.com: What kinds of impacts did you find the oil industry was having on the masses in third-world countries such as Nigeria, Chad and Venezuela?
Lisa Margonelli: Hello -- honestly, you'll have to read the book to get all of the details, since I spent a month each in Venezuela and Nigeria. In Chad, the effects of petro-dollars on the political system have been fast and horrifying. Many Chadians now feel themselves in the midst of a civil war. Rebel groups reportedly are attacking the capital in part because they know they will be paid off with the oil money, in part because they hope to take the capital and get the money for themselves. This conflict reportedly is making the violence in Darfur harder to control.
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Tulsa, Okla.: There seems to be the idea that, if we develop more offshore or Alaskan production, the U.S. will be able to have this oil for our domestic use. I never have heard anyone demanding that this would be the case. What would keep such oil from simply being added to the international crude market?
Lisa Margonelli: True, generally oil developed in the U.S. is available on the world market. (This wasn't the case with the Alaska pipeline oil for a while during the '80s and '90s, which resulted in the West Coast getting very cheap crude.) I think the feeling is that producing more oil in the U.S. would mean that less would have to be imported and the U.S. might have more influence over prices. But as you point out, that's not necessarily true.
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Ottawa, Canada: Do you think that the vast reserves in the Canadian Oil Sands will allow North America to become self-sufficient in petroleum?
Lisa Margonelli: The Canandian Oil Sands are expensive both economically and environmentally to extract. They'll require huge amounts of energy to get them out of the ground, enormous investments in equipment and infrastructure, and will produce huge amounts of CO2. I think they are an unattractive route to energy self-sufficiency. Instead, I think we should conserve and replace fuel through efficiency, and work on more economically and environmentally sound alternative fuels for the longer term.
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Washington: "I think we as citizens really need to take control of our energy destiny ... rather than blaming the oil companies for being a conspiracy."
Can't we do both? The lengths the oil and coal industries go to "debunk" global warming, and fight or ignore any and all regulations on their operations is amazing. Sure, we as citizens need to become more engaged in our energy future but let's not let the fossil fuel companies (or their cheerleaders like CEI and AEI) off the hook too easy.
Lisa Margonelli: I agree that companies spending big to debunk global warming is bad, and it drives me nuts that they're dodging taxes and royalties on federal land with a wink from the regulators. But really, with energy no one gets off the hook. It's us, it's them -- we all have to work towards many solutions to our problems. Some oil companies are making investments in controlling greenhouse gases--that's great. We need to encourage their good behavior and really work to regulate the bad. For too long, I think, government has done nothing because it didn't want to anger citizens or companies.
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Washington: Can you talk about the temperature correction issue? Is the consumer really losing money at the pump on hot days, or is this just another way to get back at big oil?
Lisa Margonelli: What is the "temperature correction issue?" Do you mean that because gasoline is gassier on hot days, taking up more volume with less fuel, there's a need to temperature-correct for volume?
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Washington: What about shale oil and tar sands? I read somewhere that there has been a large increase in the number of miscarriages in the area of Canada around which this type of oil is being produced. That's kind of scary.
Lisa Margonelli: I haven't heard about miscarriages around the tar sands area. I'll have to go look that up. I have heard of high numbers of miscarriages near a petro chemical plant in Venezuela. As I said in an earlier post -- the ratio of cost (economic and environmental) to return on the tar sands just doesn't look good to me.
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washingtonpost.com: Any thoughts on the North Korea fuel oil deal announced yesterday? Or for that matter today's story about the ties between a resigned Justice Department official and an oil lobbyist?
Lisa Margonelli: I have not had time to read about the ties between the Justice Department and the lobbyist yet, but there does seem to be a real need for the Justice Department and the minerals management service to do a better job of regulating the oil industry and charging for the extraction of federal oil.
As for the North Korea fuel deal -- I wish the U.S. would try to negotiate with Iran as well. Of course, Iran's ready access to oil revenue's makes it easier for them to do whatever they want and they're not up against the wall as North Korea is. I still think the U.S. and Iran have enough in common stop escalating hostility in the Gulf and to work together towards stability for Iraq.
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Freising, Germany: The review of your book in the San Francisco Chronicle states, "weapons of mass destruction don't have to be bombs; oil fits the bill quite nicely." Do you agree with this? Is oil going to be the crisis point of future conflicts or do you think that people, companies or governments will start looking for a replacement for crude oil sooner than later?
Lisa Margonelli: Good question. I'm not sure I agree with the reviewer on that. Oil will be a crisis point in future conflicts if we don't work to prevent that. I think we're at a unique point in history where we can look ahead and imagine the sorts of conflicts that could arise over oil -- everything from oil-hungry states attacking those with reserves (and I'm not saying the U.S. is the only oil-hungry state here) and gangs of criminals taking over oil producing states or shipping lanes, or huge economic gains going to the countries that manage to wean themselves from oil faster -- say if China really worked on cheap alt-fuel cars, for example. We're at a place where we can imagine a lot of bad futures, and it's time to start trying to figure out how move forward. I don't think there's one replacement for crude -- it's too early too tell for that. Instead I think there are lots of smaller replacements.
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washingtonpost.com: The well-blasters down in Texas and Oklahoma seem like a wild bunch. What was your time with the drilling rig like?
Lisa Margonelli: I had fun. Of course I went there with a stereotype of what kind of guy worked on an oil rig -- "swashbuckling" comes to mind (too much John Wayne). But what I met was mostly a bunch of older dads struggling to get by. When the oil business was booming it attracted a lot of smart risk takers, brilliant and a bit caught up in the romance -- and C.D. Roper, who spent a lot of time with me, was one of those guys. But the swashbuckling is gone (at least on the rig I was on). Instead, everyone was interested in their health. They were very into juicing on the rig I was on -- everyone gathered at midnight to drink carrot parsley juice. Not my stereotype at all.
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washingtonpost.com: How can the U.S. wean itself off oil dependency when the petroleum and auto industries have such a loud voices in the government's policies?
Lisa Margonelli: We as citizens have to make our voices louder. We have to change the cultural norms so that gas-guzzling isn't cool. Policy makers need to realize that it's in the U.S. strategic interests to be more efficient. Maybe they can think of efficiency as a tax break to ordinary citizens -- in the past five years Americans have paid an extra trillion dollars in high energy costs. In California electrical efficiency programs mean that each Californian saves about $400 a year in electrical costs. We spend that on all sorts of things -- it's good for us, the economy and the environment. We need more synergistic policies like this, but to get them we have to ask policy makers for complex, thoughtful solutions.
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Re: Tar sands and miscarriage: From "The Party's Over" by Richard Heinberg (page 128): "Residents of northern Alberta have initiated lawsuits and engaged in activist campaigns to close down the tar-sands plants because of devastating environmental problems associated with their operation, including the displacement of native peoples, the destruction of boreal forests, livestock deaths, and a worrisome increase in human miscarriages."
Lisa Margonelli: I'll look that up -- thank you. I wonder what the rate is like near Houston, where much of the country's gas is refined. I read recently that 78,000 Houston kids go to school within a mile or two of a petrochemical plant.
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Lisa Margonelli: Thank you for logging in. If you're interested visit the book's Web site, where you'll find tons of statistics. Thank you.
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