- By Steve LeVine<p> Steve LeVine is a contributing editor at Foreign Policy, a Schwartz Fellow at the New America Foundation, and author of The Oil and the Glory. </p>
The New York Times’ Leslie Kaufman and Kate Zernike had some fun over the weekend at the expense of an apparently large number of Americans, including a top presidential contender, who think clean energy is a subversive plot to create a world government led by the United Nations. Many people are merely annoyed by smart meters, bicycle lanes and added home insulation, but these folks say such ideas are seditious.
In 1841, Charles Mackay wrote a gem called Extraordinary Popular Delusions and the Madness of Crowds, a history of market bubbles based on misperceptions of reality. Call it what you will, but we are in a period of unusually high erroneousness when it comes to energy and the places it’s produced.
Consider the petro-state of Russia. Over the weekend, tens of thousands of people stood outside in minus-10 degree frost in Moscow in order to inform leader Vladimir Putin that he could not simply presume to swap places with President Dmitry Medvedev. What did Putin hear and see? Treacherous protestors acting under orders from Washington.
The Wall Street Journal’s Alan Cullison explains Putin’s assessment as a campaign strategy. Yet the last six years of history suggest that the former KGB officer does actually perceive a White House plot behind the outbreak of popular uprisings of recent years, including the color revolutions of the former Soviet Union and the Arab Spring. (This delusion extends to Washington, where current and former U.S. officials have informed me with serious brows of their decisive role in the color revolutions; these hands still believe that democracy is exported.)
Then there are electrified vehicles. Cars including the Chevy Volt are not selling well, writes Kevin Bullis at the MIT Technology Review. The biggest reasons are the price and range — relatively few motorists are willing to pay a stiff premium for a car that may peter out before they reach their destination. And ExxonMobil, the world’s richest publicly owned oil company, is betting that car companies and labs seeking to bridge the gap will make virtually no progress for at least another three decades.
That’s right: Exxon’s outlook for the year 2040 asserts that electrified cars will remain in precisely the same disadvantaged position — handicapped by up to a $12,000 pricing premium compared with gasoline-driven vehicles. Throwing plug-in hybrids, electrics, plus vehicles operating on liquefied petroleum gas and compressed natural gas into the same category, Exxon says all these vehicles will comprise 5 percent of the global vehicle fleet in 2040. BP concludes similarly, writes Reuters’ Tom Bergin.
I can see wishful thinking in many of the sales prognoses of the car companies themselves, gambling on a consumer embrace of electrified vehicles. Yet the oil company projections seem singularly courageous. Exxon and BP might argue that the internal combustion engine is a moving target — Exxon’s outlook, for example, forecasts a 30 percent increase in gasoline-engine efficiency by 2040. Yet I am troubled by the embedded presumption that time effectively stands still — that the thousands of battery scientists at work in companies, national labs and universities around the world manage to make zero effective advances in battery efficiency, weight and performance.
Finally we have the recent case of much of the U.S. energy establishment abruptly reversing itself 180 degrees, and asserting that the U.S. is on the verge of long-term self-sufficiency in oil, and creating an alternate center of energy gravity to the Middle East.
This collective assessment bears a striking resemblance to the claims of peak oil theorists — super-smart people creating impressive, number-filled projections that omit critical data. Interestingly, these opposing groups disregard some of the same data, and that is the role of pricing.
Peak oil theory ignores that, at higher prices, hard-to-access hydrocarbons become producible. In a mirror image, the U.S. energy independence crowd says nothing about the price at which the hydrocarbon bonanza they see will be cost-effective to extract. Mackay writes that popular delusions will always be with us, and the noise surrounding energy suggests he is right.