The Weekly Wrap — Jan. 21, 2012

The U.S. presidential election, energy and saving America: In the 2008 U.S. presidential campaign, one defining difference in the two major candidates was their approach to energy. Barack Obama promised green jobs and a cleantech-based manufacturing resurgence, and John McCain’s supporters retorted "Drill, baby, drill." So far, the signs are that these themes will be ...

Mark Wilson/Getty Images
Mark Wilson/Getty Images
Mark Wilson/Getty Images

The U.S. presidential election, energy and saving America: In the 2008 U.S. presidential campaign, one defining difference in the two major candidates was their approach to energy. Barack Obama promised green jobs and a cleantech-based manufacturing resurgence, and John McCain's supporters retorted "Drill, baby, drill." So far, the signs are that these themes will be reprised just as volubly four years later. For their part, the Republican candidates are pounding the table that, though faced with almost 9 percent unemployment, Obama is failing to tap a fail-safe job creator --the oil patch. So far, the cream of the U.S. energy braintrust is more in line with Republican thinking. This week, BP joined prior forecasts by Goldman Sachs, Edward Morse, Daniel Yergin and others in suggesting that the U.S. is on the cusp of a new industrial revolution based on a shift that, as far as I can tell, none of them was talking about until about four or five months ago.  At once, say these Wise Men, the U.S. along with the whole of the Western Hemisphere is about to be saturated in fresh oil reserves on top of the shale gas already in abundance. This fossil fuel bonanza - in the ultra-deepwater Gulf of Mexico, the shale of North Dakota, the sands of Canada and elsewhere -- will put millions to work, and activate a boom in energy-intensive industries, they say. In Alberta a few days ago, Citibank's Morse, the most formidable intellect in the bunch, described a generations-long, petro-driven economic boom built on petrochemicals, fertilizers, steel, housewares, pantyhose and more. Social thinker Joel Kotkin places these energy developments within a larger narrative that he calls "America's Moment." This group is battling it out for when it all begins, ranging somewhere in the next five to 30 years.

One Republican talking point is to scorn Obama's rejection of the 800,000-barrel-a-day Keystone bitumen pipeline from Canada to Texas. Here is Newt Gingrich, the winner of today's GOP primary in South Carolina (also pictured above):

The U.S. presidential election, energy and saving America: In the 2008 U.S. presidential campaign, one defining difference in the two major candidates was their approach to energy. Barack Obama promised green jobs and a cleantech-based manufacturing resurgence, and John McCain’s supporters retorted "Drill, baby, drill." So far, the signs are that these themes will be reprised just as volubly four years later. For their part, the Republican candidates are pounding the table that, though faced with almost 9 percent unemployment, Obama is failing to tap a fail-safe job creator –the oil patch. So far, the cream of the U.S. energy braintrust is more in line with Republican thinking. This week, BP joined prior forecasts by Goldman Sachs, Edward Morse, Daniel Yergin and others in suggesting that the U.S. is on the cusp of a new industrial revolution based on a shift that, as far as I can tell, none of them was talking about until about four or five months ago.  At once, say these Wise Men, the U.S. along with the whole of the Western Hemisphere is about to be saturated in fresh oil reserves on top of the shale gas already in abundance. This fossil fuel bonanza – in the ultra-deepwater Gulf of Mexico, the shale of North Dakota, the sands of Canada and elsewhere — will put millions to work, and activate a boom in energy-intensive industries, they say. In Alberta a few days ago, Citibank’s Morse, the most formidable intellect in the bunch, described a generations-long, petro-driven economic boom built on petrochemicals, fertilizers, steel, housewares, pantyhose and more. Social thinker Joel Kotkin places these energy developments within a larger narrative that he calls "America’s Moment." This group is battling it out for when it all begins, ranging somewhere in the next five to 30 years.

One Republican talking point is to scorn Obama’s rejection of the 800,000-barrel-a-day Keystone bitumen pipeline from Canada to Texas. Here is Newt Gingrich, the winner of today’s GOP primary in South Carolina (also pictured above):

Read on for more on American reindustrialization, and the rest of the Wrap.

Another GOP mantra is that Obama’s green revolution has not yet materialized. For fairness, how realistic is the GOP-touted scenario? As discussed previously, one wonders at the credibility of the assertions when last July, Goldman Sachs forecast critically tight global supplies for 2012, and three months later said the U.S. is undergoing a petro-renaissance that by 2017 will make it the world’s largest oil producer. ExxonMobil did not mention a coming North American boom in its 2040 outlook, which was released just last month. Nor did Yergin in his book, The Quest, published in September. It is a bit pat, and seems glib, when the crowd suddenly shifts in a contrary direction like gazelles fleeing a lion.

As hard as it is to experience the whiplash, the convergence of serious names forces one to keep these rosy predictions among one’s future scenarios, right alongside another emerging narrative — that of a U.S. manufacturing renaissance.

Here are Morse and Oppenheimer’s Fadel Gheit discussing the big picture of oil prices and geopolitics on Bloomberg TV.

Iranian presidential elections and the virtues of a crisis: Do Iranian leaders worry more at the moment about their right to build nuclear arms, or a repeat of 2009 anti-regime street demonstrations? The Financial Times’ Carola Hoyos writes that it may be the latter: Tehran may be forcing the current brinksmanship with the West — including a threat to cut off oil and gas shipments to the world through the Strait of Hormuz — as a strategy to win next year’s presidential elections. Hoyos quotes Christopher Parry, the former director-general of development for the U.K.’s Ministry of Defense: "What they are trying to do is create a state of crisis and emergency, which I think will lead them to defer the election because they know they are going to get hammered unless they are able to rig it," Parry told Hoyos.

The United Kingdom would be among the biggest losers should Hormuz be closed. Some 80 percent of the U.K.’s gas comes from Qatar, all of whose exports — 30 percent of the world’s liquefied natural gas — transits Hormuz. Saudi Arabia meanwhile has stepped in and promised to compensate for any oil shortfall should Iran act. On American Public Media’s Marketplace program, I noted that this is self-interest on the Saudis’ part, and not altruism.

 

A word on conspiracy: Did President Barack Obama dispatch Mike McFaul as his new ambassador to Moscow in order to overthrow Vladimir Putin? That is the much-publicized assertion of Mikhail Leontyev, a sharp-tongued commentator on Russia’s main state-run television station, along with a variety of other screeds against McFaul, who just arrived in Moscow. Writes the Wall Street Journal’s Alan Cullison:

Noting the title of Mr. McFaul’s 2001 book was "An Unfinished Revolution in Russia. The political change from Gorbachev to Putin," Mr. Leontyev asked, "Has Mr. McFaul arrived in Russia to work in the specialty? That is, finish the revolution?"

Leontyev’s indignation was staged to a degree, but it also reflects a clutch of Russian realities at the moment. First is that Putin faces re-election in March, and talk of spies, anti-Russian conspiracy and especially American treachery is thought to play well with Russian voters. The second, and more important, is that many Russians including Putin do seem truly to believe that Washington is responsible for the various revolts and revolutions over the last decade in the former Soviet Union (Ukraine, Georgia, Kyrgyzstan) and the Middle East (Tunisia, Egypt, Libya). Putin seems sincerely upset about the murder of Libyan ruler Moamar Qaddafi. Why? Because he (and a number of other former Soviet autocrats such as Uzbekistan President Islam Karimov) are furious that they themselves might be on this feared American black list. Who is Washington after all to decide who can and who cannot rule over a foreign land?

 

Back to the business of selling cars at GM: A decade or so in the future, when the Harvard Business School writes up a case study on the Chevrolet Volt, one aspect that seems likely to easily pass scrutiny is the company’s response to the vehicle catching fire. U.S. government investigators yesterday closed their probe of the Volt, the plug-in electric hybrid that caught fire weeks after being impaled, rolled and variously crushed in severe safety tests. This punishment, and not any shortcoming in General Motors’ showcase vehicle, was responsible for three Volt fires since last summer, write the New York Times’ Nick Bunkley and Bill Vlasic (I am currently reading and very much liking Vlasic’s latest book, Once Upon a Car). That is a happy ending to what could have been the Volt’s early demise given consumer impatience with products that burst into flames. As discussed previously, GM rolled out a model PR response, which was to rapidly and aggressively get in front of public opinion by offering to take back any Volt, no questions asked, and personally telephoning all 14,000 owners of the vehicle on the Earth to answer any questions. Indeed, Harvard might do best to reposition its evaluation into a case study not of the Volt per se, but of the best and worst corporate PR crisis responses of the last few years. As for the latter, it would be a close call between BP and the shale gas industry for tin-eared public relations.

<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>

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