Seeing The Elephant Part 9

42 Friedrich von Hayek, "The Use of Knowledge in Society," Friedrich von Hayek, "The Use of Knowledge in Society," American Economic Review American Economic Review 35, no. 4: 519-530. 35, no. 4: 519-530.

43 Joseph Stiglitz, "The Roaring Nineties," Joseph Stiglitz, "The Roaring Nineties," Atlantic Atlantic, October 2002, http://www.theatlantic.com/doc/prem/200210/stiglitz.

44 Consider two high-profile cases where the United States was hostile toward foreign investment, both of which were read globally as discriminatory and sending the world the wrong message. In June 2005, an unsolicited, all-cash $18.5 billion bid by a state-owned subsidiary of China National Offsh.o.r.e Oil Corporation (CNOOC) for Unocal was shot down for security reasons, which was more d.a.m.ning to the American reputation abroad than beneficial to U.S. security. Again, in February 2006, the sale of port management contracts in six major U.S. seaports to Dubai Ports World (an United Arab Emirates state-owned company) triggered a national security debate.The contracts had already been foreign-owned, by a British company! Consider two high-profile cases where the United States was hostile toward foreign investment, both of which were read globally as discriminatory and sending the world the wrong message. In June 2005, an unsolicited, all-cash $18.5 billion bid by a state-owned subsidiary of China National Offsh.o.r.e Oil Corporation (CNOOC) for Unocal was shot down for security reasons, which was more d.a.m.ning to the American reputation abroad than beneficial to U.S. security. Again, in February 2006, the sale of port management contracts in six major U.S. seaports to Dubai Ports World (an United Arab Emirates state-owned company) triggered a national security debate.The contracts had already been foreign-owned, by a British company!

45 Pioneered in the aftermath of World War II, Bretton Woods was shaped largely by the United States, which in 1944 produced half the world's coal, two-thirds of the oil, and more than half of the electricity, and held three-quarters of world gold reserves. Pioneered in the aftermath of World War II, Bretton Woods was shaped largely by the United States, which in 1944 produced half the world's coal, two-thirds of the oil, and more than half of the electricity, and held three-quarters of world gold reserves.

46 Deborah Solomon and Bob Davis, "G-7 Cites New Yuan Concern and Weighs Rules for Funds," Deborah Solomon and Bob Davis, "G-7 Cites New Yuan Concern and Weighs Rules for Funds," New York Times New York Times, October 20, 2007, A5.

47 Jim O'Neill and Robert Hormats, "The G8: Time for a Change," Jim O'Neill and Robert Hormats, "The G8: Time for a Change," Goldman Sachs Global Economics Paper Goldman Sachs Global Economics Paper 112, June 2004. 112, June 2004.

48 It is estimated that pa.s.sage of the bill will cost the average U.S. family $5,650. PRNewswire-USNewswire, "WashingtonWatch .com Federal Legislative Update," news release, May 27, 2008, It is estimated that pa.s.sage of the bill will cost the average U.S. family $5,650. PRNewswire-USNewswire, "WashingtonWatch .com Federal Legislative Update," news release, May 27, 2008, http://www.foxbusiness.com/story/costing-farm-upcoming-war-spending-debate/.

49 Sallie James and Daniel Griswold, "Freeing the Farm: A Farm Bill for All Americans," Sallie James and Daniel Griswold, "Freeing the Farm: A Farm Bill for All Americans," Cato Inst.i.tute Trade Policy a.n.a.lysis Cato Inst.i.tute Trade Policy a.n.a.lysis 34, April 14, 2007. 34, April 14, 2007.

50 Carol A. Jones, Hisham El-Osta, and Robert Green, "Economic Well-Being of Farm Households," Carol A. Jones, Hisham El-Osta, and Robert Green, "Economic Well-Being of Farm Households," Economic Brief Economic Brief 7, U.S. Department of Agriculture, Economic Research Service, March 2006, 7, U.S. Department of Agriculture, Economic Research Service, March 2006, www.ers.usda.gov/publications/EB7/EB7.pdf.

51 Jonathan Lynn, "WTO Says Cannot Solve Food Price Crisis," Reuters, May 7, 2008, Jonathan Lynn, "WTO Says Cannot Solve Food Price Crisis," Reuters, May 7, 2008, http://www.reuters.com/article/topNews/idUSMAN14118020080507.

52 Yilmaz Akyuz, "Multilateral Financial Inst.i.tutions: Overhauling Development Finance," Yilmaz Akyuz, "Multilateral Financial Inst.i.tutions: Overhauling Development Finance," Social Watch Report 2006, Social Watch Report 2006, 14-17. 14-17.

53 "That Empty Nest Feeling," "That Empty Nest Feeling," Economist Economist, September 6, 2007.

54 Edmund Conway, "Invest in Equities, Expert Tells IMF," Edmund Conway, "Invest in Equities, Expert Tells IMF," Telegraph Telegraph, February 18, 2008, http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/02/18/cnimf118.xml.

55 Stephen Jen, "A US$100 Billion Supra-Sovereign Wealth Fund?" Morgan Stanley, February 8, 2008, Stephen Jen, "A US$100 Billion Supra-Sovereign Wealth Fund?" Morgan Stanley, February 8, 2008, http://www.morganstanley.com/views/gef/archive/2008/20080208-Fri.html#anchor6024.

Chapter 3: The Twilight of the Hydrocarbons.

1 Daniel Yergin, Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power The Prize: The Epic Quest for Oil, Money & Power (New York: Free Press, 1991), 17. (New York: Free Press, 1991), 17.

2 According to the U.S. Energy Information Administration (EIA), world energy consumption was about 447 quadrillion Btu (4.7 10 According to the U.S. Energy Information Administration (EIA), world energy consumption was about 447 quadrillion Btu (4.7 1016 Btu, EIA 2004). The energy expended by an individual doing a hard day's work is about 4,000 Btu, or 1,460,000 Btu a year (R. Loftness, Btu, EIA 2004). The energy expended by an individual doing a hard day's work is about 4,000 Btu, or 1,460,000 Btu a year (R. Loftness, Energy Handbook Energy Handbook, 1984: 2, 756). Energy consumption in the United States is 105.63 quadrillion Btu (EIA, 2007). U.S. population is 304 million (CIA World Factbook, 2008).

3 Bureau of Economic a.n.a.lysis, s.v., "National Income and Product Accounts Table: Bureau of Economic a.n.a.lysis, s.v., "National Income and Product Accounts Table: Table 7.1 Table 7.1, Selected Per Capita Product and Income Series in Current and Chained Dollars," National Economic Accounts National Economic Accounts, http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=253&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Qtr&FirstYear=1929&LastYear=2008&3Place=N&Update=Update&JavaBox=no#Mid.

4 "International Energy Outlook 2007," Energy Information Administration, May 2007, "International Energy Outlook 2007," Energy Information Administration, May 2007, http://www.eia.doe.gov/oiaf/ieo/index.html.

5 Ibid. Ibid.

6 Ibid. Ibid.

7 "Energy for China," "Energy for China," Economist Intelligence Unit Briefing Economist Intelligence Unit Briefing, July 12, 2007.

8 "How Many Drivers in China?" "How Many Drivers in China?" China Car Times China Car Times, April 7, 2007, http://www.chinacartimes.com/2008/04/08/how-many-drivers-in-china/; for U.S. figures see http://www.unece.org/stats/trends2005/transport.htm.

9 Katie Merx, "Compet.i.tion for China's Growing Auto Market Is Heating Up," Katie Merx, "Compet.i.tion for China's Growing Auto Market Is Heating Up,"Detroit Free Press,April 20,2008,http://www.freep.com/apps/pbcs.dll/article?AID=/20080420/BUSINESS01/804200588.

10 Some suggest the world has entered a peak-oil period, referring to Sh.e.l.l geophysicist M. King Hubbert's 1956 theory that oil production mimics a bell curve, rising to a peak when half an oil field had been extracted, and then going into decline. Hubbert focused on continental U.S. production, and in 1956 he forecasted that U.S. oil production (excluding Alaska, which was not a state until 1959) would peak in 1970. He was correct for the 48 states, and the top of the bell curve in oil production became widely known as a "Hubbert peak." Some suggest the world has entered a peak-oil period, referring to Sh.e.l.l geophysicist M. King Hubbert's 1956 theory that oil production mimics a bell curve, rising to a peak when half an oil field had been extracted, and then going into decline. Hubbert focused on continental U.S. production, and in 1956 he forecasted that U.S. oil production (excluding Alaska, which was not a state until 1959) would peak in 1970. He was correct for the 48 states, and the top of the bell curve in oil production became widely known as a "Hubbert peak."

11 A 74 percent increase in total coal consumption. "International Energy Outlook 2007," Energy Information Administration. A 74 percent increase in total coal consumption. "International Energy Outlook 2007," Energy Information Administration.

12 Keith Bradsher and David Barboza, "Pollution from Chinese Coal Casts a Global Shadow," Keith Bradsher and David Barboza, "Pollution from Chinese Coal Casts a Global Shadow," New York Times New York Times, June 11, 2006, http://www.nytimes.com/2006/06/11/business/worldbusiness/11chinacoal.html?_r=1&oref=slogin.

13 "Asthma and Air Pollution," National Resources Defense Council, "Asthma and Air Pollution," National Resources Defense Council, http://www.nrdc.org/health/effects/fasthma.asp (last accessed June 6, 2008). (last accessed June 6, 2008).

14 Ibid. Ibid.

15 Ibid. Ibid.

16 Maria Antonieta Uribe and Hector Tobar, "Leftist Guerrilla Group Claims It Bombed Mexican Pipelines," Maria Antonieta Uribe and Hector Tobar, "Leftist Guerrilla Group Claims It Bombed Mexican Pipelines," Los Angeles Times Los Angeles Times, September 12, 2007, http://articles.latimes.com/2007/sep/12/world/fg-guerrillas12.

17 Rudiger Falksohn, "A Nuclear Power Renaissance," Rudiger Falksohn, "A Nuclear Power Renaissance," Der Spiegel Der Spiegel, January 16, 2007, http://www.spiegel.de/international/spiegel/0,1518,460011,00.html.

18 Jack Spencer and Nick Loris, "Dispelling Myths about Nuclear Energy," Jack Spencer and Nick Loris, "Dispelling Myths about Nuclear Energy," Heritage Foundation Backgrounder Heritage Foundation Backgrounder, December 3, 2007, http://www.heritage.org/Research/EnergyandEnvironment/bg2087.cfm.

19 "The Nuclear Fuel Cycle," Uranium SA, "The Nuclear Fuel Cycle," Uranium SA, http://www.uraniumsa.org/fuel_cycle/waste.htm.

20 Frank Barnaby and James Kemp, "Too Hot to Handle," Frank Barnaby and James Kemp, "Too Hot to Handle," Oxford Research Group Briefing Paper Oxford Research Group Briefing Paper, July 2007, http://www.oxfordresearchgroup.org.uk/publications/briefing_papers/pdf/toohottohandle.pdf.

21 Sam Roe, "An Atomic Threat Made in America," Sam Roe, "An Atomic Threat Made in America," Chicago Tribune Chicago Tribune, January 28, 2007, http://www.truthout.org/docs_2006/013007E.shtml.

22 Cyrus Safdari, "Iran Needs Nuclear Energy, Not Weapons," Cyrus Safdari, "Iran Needs Nuclear Energy, Not Weapons," Le Monde Diplomatique Le Monde Diplomatique, November 2005, http://mondediplo.com/2005/11/02iran.

23 See the 2007 National Intelligence Estimate (NIE), which stated that Iran has not frozen its nuclear program. See the 2007 National Intelligence Estimate (NIE), which stated that Iran has not frozen its nuclear program.

24 As we discuss in the security chapter, uranium enrichment is a huge issue among the nonproliferation community. As we discuss in the security chapter, uranium enrichment is a huge issue among the nonproliferation community.

25 "International Petroleum Consumption," Energy Information Administration, "International Petroleum Consumption," Energy Information Administration, http://www.eia.doe.gov/emeu/international/oilconsumption.html (last accessed June 6, 2008). (last accessed June 6, 2008).

26 Ibid. Ibid.

27 International Energy Agency, International Energy Agency, World Energy Outlook 2006 World Energy Outlook 2006, "Summary and Conclusions," 4f.

28 Michael Klare, "Oil Wars: Transforming the American Military into a Global Oil-Protection Service," Michael Klare, "Oil Wars: Transforming the American Military into a Global Oil-Protection Service," TomDispatch.com, October 8, 2004, www.commondreams.org/views04/1008-23.htm.

29 See Joseph Stiglitz and Linda Bilmes, See Joseph Stiglitz and Linda Bilmes, The Three Trillion Dollar War The Three Trillion Dollar War (New York: W.W. Norton, 2008). (New York: W.W. Norton, 2008).

30 Jay Inslee and Bracken Hendricks, Jay Inslee and Bracken Hendricks, Apollo's Fire: Igniting America's Clean Energy Economy Apollo's Fire: Igniting America's Clean Energy Economy (Washington, DC: Island Press, 2007), 14. (Washington, DC: Island Press, 2007), 14.

31 Zhao Xingjun and Wu Yanrui, "Determinants of China's Energy Imports: An Empirical a.n.a.lysis," Zhao Xingjun and Wu Yanrui, "Determinants of China's Energy Imports: An Empirical a.n.a.lysis," Energy Policy Energy Policy 35 (2007): 4235-4246. 35 (2007): 4235-4246.

32 "Oil/Black Gold/Texas T," "Oil/Black Gold/Texas T," Global Security.org, www.globalsecurity.org/military/intro/oil.htm (last accessed June 6, 2008). (last accessed June 6, 2008).

33 "The Role of Oil Wealth in the World Economy," McKinsey Global Inst.i.tute, "The Role of Oil Wealth in the World Economy," McKinsey Global Inst.i.tute, McKinsey on Finance McKinsey on Finance 26 (Winter 2008): 14. 26 (Winter 2008): 14.

34 See note #10. See note #10.

35 Charles Levinson, "Saudis Announce Slight Oil Output Increase," Charles Levinson, "Saudis Announce Slight Oil Output Increase," USA Today USA Today, May 17, 2008, http://www.usatoday.com/news/world/2008-05-15-saudi_N.htm.

36 Roger Stern, "Iran Actually Is Short of Oil," Roger Stern, "Iran Actually Is Short of Oil," International Herald Tribune International Herald Tribune, January 8, 2007, http://www.iht.com/articles/2007/01/08/opinion/edstern.php.

37 Steven Mufson, "High Oil Prices Push Giant Shifts in Wealth, Power," Steven Mufson, "High Oil Prices Push Giant Shifts in Wealth, Power," Washington Post Washington Post, November 10, 2007; Bloomberg for recent reserve figures.

38 "Country Briefing: Russia," Energy Information Administration, "Country Briefing: Russia," Energy Information Administration, www.eia.doe.gov/emeu/cabs/Russia/Background.html.

39 Judy Dempsey, "Russia Takes Heat over Energy Supply," Judy Dempsey, "Russia Takes Heat over Energy Supply," International Herald Tribune International Herald Tribune, February 12, 2006.

40 "European Customers. .h.i.t by Gas Cuts," "European Customers. .h.i.t by Gas Cuts," CNN CNN, January 2, 2006, http://www.cnn.com/2006/WORLD/europe/01/02/russia.ukraine.impact/index.html.

41 "Ukraine Stealing Europe's Gas," "Ukraine Stealing Europe's Gas," BBC News BBC News, January 2, 2006.

42 In this deal, prices of gas sold to the Ukraine range from around $50 per 1,000 cubic meters of natural gas to $230, with a certain amount of cheaper oil coming from Central Asian supplies."Russia, Ukraine Agree on New Gas Prices," In this deal, prices of gas sold to the Ukraine range from around $50 per 1,000 cubic meters of natural gas to $230, with a certain amount of cheaper oil coming from Central Asian supplies."Russia, Ukraine Agree on New Gas Prices," Kommersant Kommersant, January 4, 2006.

43 See note 10. See note 10.

44 Steven Mufson, "Nigeria's Oil Mora.s.s," Steven Mufson, "Nigeria's Oil Mora.s.s," Washington Post Washington Post, February 1, 2008, http://www.washingtonpost.com/wp-dyn/content/article/2008/01/31/AR2008013103634.html.

45 Ibid. Ibid.

46 Ibid. Ibid.

47 Peter Brokes and Ji Hye Shin, "China's Influence in Africa: Implications for the United States," Heritage Foundation, February 22, 2006, Peter Brokes and Ji Hye Shin, "China's Influence in Africa: Implications for the United States," Heritage Foundation, February 22, 2006, http://www.heritage.org/Research/AsiaandthePacific/bg1916.cfm.

48 Esther Pan,"China,Africa, and Oil," Council on Foreign Relations, January 26, 2007, Esther Pan,"China,Africa, and Oil," Council on Foreign Relations, January 26, 2007, http://www.cfr.org/publication/9557/.

49 a.s.sociated Press, "Brazil Oil Find May Be World's 3rd Largest," a.s.sociated Press, "Brazil Oil Find May Be World's 3rd Largest," CBS News CBS News, April 14, 2008, http://www.cbsnews.com/stories/2008/04/14/world/main4013564.shtml.

50 Magali Devic, "South America's Great Gas Pipeline," Magali Devic, "South America's Great Gas Pipeline," Washington Report in the Hemisphere Washington Report in the Hemisphere 27, no. 4 (April 2007). 27, no. 4 (April 2007).

51 "Chavez vs. ExxonMobil War Escalates," "Chavez vs. ExxonMobil War Escalates," Energy Bulletin Energy Bulletin, February 11, 2008, http://www.energybulletin.net/40184.html.

52 See Roubini's web site at See Roubini's web site at http://www.rgemonitor.com for a variety of interesting articles on Latin American politics related to oil. for a variety of interesting articles on Latin American politics related to oil.

53 "Ecuador Moves to Take Over Occidental Oil Operations," "Ecuador Moves to Take Over Occidental Oil Operations," International Herald Tribune International Herald Tribune, May 16, 2006, http://www.iht.com/articles/2006/05/16/business/ecuador.php.

54 "Ecuador President Wants New Oil Contracts," "Ecuador President Wants New Oil Contracts," MSNBC MSNBC, November 28, 2006, http://www.msnbc.msn.com/id/15936476/.

55 Jad Mouawad, "Rising Demand for Oil Provokes New Energy Crisis," Jad Mouawad, "Rising Demand for Oil Provokes New Energy Crisis," New York Times New York Times, November 9, 2007.

56 "Fighting Poverty: Findings and Lessons from China's Success," World Bank (2002). "Fighting Poverty: Findings and Lessons from China's Success," World Bank (2002).

57 "Energy and Poverty: The World Needs Far More Electricity to Power Development." "Energy and Poverty: The World Needs Far More Electricity to Power Development." IAEA Bulletin IAEA Bulletin, February 2002.

58 Ibid. Ibid.

59 "The Dark Continent," "The Dark Continent," Economist Economist, August 16, 2007.

60 "South Africa Gold Mines Shut by Power Cut," "South Africa Gold Mines Shut by Power Cut," BBC BBC, http://news.bbc.co.uk/go/pr/fr/-1/hi/world/Africa/7208542.stm.

61 "The Dark Continent," "The Dark Continent," Economist Economist, August 16, 2007.

62 Intergovernmental Panel on Climate Change (IPCC), Intergovernmental Panel on Climate Change (IPCC), Climate Change 2007: The Physical Science Basis Climate Change 2007: The Physical Science Basis, "Summary for Policy Makers," http://www.ipcc.ch/SPM2feb07.pdf.

63 "International Energy Outlook 2007," Energy Information Administration, May 2007, "International Energy Outlook 2007," Energy Information Administration, May 2007, http://www.eia.doe.gov/oiaf/ieo/index.html.

64 Inslee and Hendricks, Inslee and Hendricks, Apollo's Fire Apollo's Fire, 220.

65 a.s.sociated Press, "Study Calls for 'Energy Revolution,'" a.s.sociated Press, "Study Calls for 'Energy Revolution,'" New York Times New York Times, June 6, 2008, http://www.nytimes.com/aponline/business/AP-j.a.pan-IEA-ClimateChan.html?ex=1213416000&en=6b1cf64bf9f14336&ei=5070&emc=eta1.

66 Nicholas Stern, Nicholas Stern, The Stern Review on the Economics of Climate Change The Stern Review on the Economics of Climate Change, HM Treasury, October 30, 2006, http://www.hm-treasury.gov.uk/media/3/2/Summary_of_Conclusions.pdf.

67 See critiques of the Stern report by Yale's William D. Nordhaus and Cambridge's Partha Dasgupta, available at See critiques of the Stern report by Yale's William D. Nordhaus and Cambridge's Partha Dasgupta, available at http://nordhaus.econ.yale.edu/SternReviewD2.pdf and and http://www.econ.cam.ac.uk/faculty/dasgupta/Stern.pdf.

68 Inslee and Hendricks, Inslee and Hendricks, Apollo's Fire Apollo's Fire, 20.

69 Ibid., 19-20. Ibid., 19-20.

70 "Fuel for Friendship," "Fuel for Friendship," Economist, Economist, March 7, 2007, 14. March 7, 2007, 14.

71 "Beyond Three Gorges in China," "Beyond Three Gorges in China," International Water Power International Water Power, January 10, 2007, http://www.waterpowermagazine.com/story.asp?storyCode=2041318.

72 "The Coming Wave," "The Coming Wave," Economist, Economist, June 5, 2008, June 5, 2008, http://www.economist.com/search/displaystory.cfm?story_id=11482565.

73 Mathias Akselsson, "The World's Leader in Wind Power," Mathias Akselsson, "The World's Leader in Wind Power," Scandinavia.com, November 20, 2007, November 20, 2007, http://www.scandinavica.com/culture/nature/wind.htm.

74 Tyghe Trimble,"Turbine Turbulence: How to Fix U.S. Wind Power," Tyghe Trimble,"Turbine Turbulence: How to Fix U.S. Wind Power," Popular Mechanics Popular Mechanics, May 17, 2007, http://www.popularmechanics.com/science/earth/4216776.html?page=1&series=15.

75 Office of Harry Reid, U.S. Senator for Nevada, "Democrats' Energy Independence Legislation Will Protect Consumers, National Security, Environment," news release, May 14, 2007. Office of Harry Reid, U.S. Senator for Nevada, "Democrats' Energy Independence Legislation Will Protect Consumers, National Security, Environment," news release, May 14, 2007.

76 Office of the Defense Undersecretary, Defense Budget Materials (2007), Office of the Defense Undersecretary, Defense Budget Materials (2007), www.defenselink.mil/comptroller/defbudget/fy2007/.

77 Office of the Defense Undersecretary, Defense Budget Materials (2006), Office of the Defense Undersecretary, Defense Budget Materials (2006), www.defenselink.mil/comptroller/defbudget/fy2006/.

78 Inslee and Hendricks, 19. Inslee and Hendricks, 19.

79 "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity," McKinsey Global Inst.i.tute, May 2007, 12. "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity," McKinsey Global Inst.i.tute, May 2007, 12.

80 Neil King Jr., "A Difficult Road Awaits for Energy Conservation," Neil King Jr., "A Difficult Road Awaits for Energy Conservation," Wall Street Journal Wall Street Journal, July 22, 2008, A14.

81 "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity," McKinsey Global Inst.i.tute, May 2007. "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity," McKinsey Global Inst.i.tute, May 2007.

82 There are literally countless small power changes like these that can save enormous amounts of energy in the United States. See McKinsey study, "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity." There are literally countless small power changes like these that can save enormous amounts of energy in the United States. See McKinsey study, "Curbing Global Energy Demand Growth: The Energy Productivity Opportunity."