Thanks, Iran, for the reminder
President Mahmoud Ahmadinejad of Iran has done more to ensure that the green revolution moves forward than a dozen presidential speeches or a score of low-carbon targets.
By putting the fear of God, or Allah, back into oil markets, the Iranians have made a major step toward making sure that this time around, the shift away from fossil fuels will really happen - that investment in alternatives, in substitution, in low-energy technologies and conservation techniques will really go forward and pay handsomely, that this time something serious will be done about America's "addiction to oil."
Last time none of these things happened. Last time oil prices really exploded, at the end of the '70s and in the early '80s - triggered then, as now, by events in Iran - most hopes and expensive plans for a cleaner, greener future ended in the dust.
On Nov. 20, 1985, the price of Brent Crude reached $42.50 ($95 at today's prices). This was, and remains, the highest price in history for a barrel of oil. Yet less than four weeks later the price was $10.
Energy investment plans, left in tatters, were rapidly revised. America's auto industry went back to bigger gas-guzzlers than ever, plans for wind farms and solar-heated homes were shelved, biofuels were tried and then discarded, a thousand energy-saving initiatives were declared "uneconomic" and plans for tidal power projects and new nuclear power stations were abandoned.
In the Arab oil-producing countries, investments in new oil fields were written off, government budgets slashed and promises of jobs withdrawn, creating fertile ground for a disillusioned younger generation to turn to violence - which they duly did. Gurus and oil company economists who had been confidently forecasting $90 or $120 a barrel by 1990 folded their tents and departed. Cheap oil was back.
Most of our troubles today stem from that see-saw pattern of disaster. At the time, however, there was general rejoicing that everyone could go back to getting high on oil. Dependency on Middle East oil, which policy makers had vowed to reduce, increased. American crude oil imports - which Jim Schlesinger, then the U.S. energy secretary, said were dangerously high and would lead to great grief - more than doubled.
This time around, we might be luckier. Just as world oil prices were set to cool after the huge jumps of the past 18 months, with production in 2006 predicted to exceed demand and oil stocks piling up again, along has come Ahmadinejad with his determination to defy America and the West, and his bloodcurdling threats to sabotage oil markets if his plans to go nuclear are thwarted. In the words of Iran's top nuclear official, "If these countries use their means to put Iran under pressure, Iran will use its potential in the region."
That potential should not be underestimated. Iran, the world's second-biggest oil exporter, is capable of wreaking havoc in energy markets. It is not just a question of cutting production (despite Iran's assurances to OPEC officials that it won't). If they come under real pressure, the Iranians are perfectly capable of blockading or mining the Straits of Hormuz at the entrance to the Gulf.
While Western forces and aircraft might be groping around for Iran's well-dispersed and extremely well-protected nuclear and other military facilities, the Iranians could inflict huge damage on the world economy by halting from 15 to 18 million barrels a day of world oil production.
But if it is Ahmadinejad who collects the first prize for making the green age more likely to happen, the runners-up must be Russian operators like RosUkrEnergo who have masterminded the gas threats against Ukraine and helpfully reminded a dangerously dependent Western Europe that if oil is unreliable and costly, pipeline gas is not much better, and that switching from addiction to oil to addiction to gas - as Britain, for example, is busily doing - is no escape.
In the end, of course, if the mullahs cannot check Ahmadinejad he will ruin Iran and impoverish his people. But not before he has proved to the world more vividly than ever before that continued heavy dependence on oil and gas means constant nasty surprises. No amount of diversifying among oil and gas suppliers will avert the inherent dangers in an increasingly interconnected world system.
These are the beautiful fuels, but they are the dangerous ones. It is now more obvious than ever that heavy investments in alternatives, in nuclear power and in energy-saving technologies are not only going to be environmentally highly desirable but also going to pay handsomely in terms of cost and of security of supply.
Thank you, Mr. Ahmadinejad, for a most valuable lesson.
(David Howell, a former British secretary of state for energy, is spokesman on foreign affairs for the Conservatives in the House of Lords. Carole Nakhle is an energy research fellow at the University of Surrey.)
LONDON President Mahmoud Ahmadinejad of Iran has done more to ensure that the green revolution moves forward than a dozen presidential speeches or a score of low-carbon targets.
-Quote from David Howell and Carole Nakhle International Herald Tribune
THURSDAY, FEBRUARY 9, 2006