Oil and gas in the capitals

	Vol. 228 No. 5
JOHN McCAUGHEY, CONTRIBUTING EDITOR, WASHINGTON

Peak oil vies for attention. The issue of oil peaking is a curious one that excites attention in Washington, both among politicians and at the Pentagon. Its core notion is that global oil production is reaching a limit and will, thereafter, go into rapid decline. True believers see this happening as early as 2010. Skeptics say that the whole concept is bull�that the Stone Age did not end because of a shortage of stones, but because the Bronze Age came along. In other words, technology will see us through any problems.

For once, believers and disbelievers are both right. Oil is a finite natural resource that will eventually, and by definition, run out. Recently, the Government Accountability Office (which is the old General Accounting Office that, for obscure reasons of political correctness, was renamed a few years ago) issued a report backing the peaking concept but�employing the old maxim that if you give a number, never give a date and vice versa�dodged the question of when peaking might occur.

There is no question that peaking is a serious business, given that the country's economy runs largely on oil in the form of gasoline and the corresponding transportation of goods. Any severe diminution of supply would cause havoc. Mass unemployment and even starvation figure in the bleaker predictions, which portray peaking as resembling the Black Death that racked Europe in the Middle Ages.

But the devil in this debate is in the details. If peaking does happen, will it be in our lifetimes? Will some nerdy seven-year-old technologist come up with a scheme to rescue us? Can the rescue be effectuated at an economic or affordable cost? Will it be shale oil? Above all, what can and should we do to mitigate the potential damage?

At Sunday morning brunch in the Irish Pub in Washington DC, our little band of earnest strivers, gathered over Guinness, poached eggs and champagne, decides to be on the safe side and to prepare for the worst.

We resolve to sell our houses and to buy new ones within easy walking distance of a supermarket. Should the supermarkets run out of supplies, we are stockpiling potato bulbs to grow spuds, and seeds to grow cabbages, as well as piglets that will grow up to be eaten when the dark days come. Wealthier members of our group are building stables and buying horses for personal transportation.

It is natural to expect that our preparations will excite envy, when the dark day comes, among the proletariat that are too inattentive or too stupid to take similar precautions. Against this threat, regular member Colonel Buffy Frobishier (Household Cavalry, retired) suggests forming a militia.

Accordingly, rifle and bayonet practice will take place every Saturday, and dogs will be kept hungry and tied up, but ready to be released in a moment. Land and anti-personnel mines are being strategically sewn in our grounds or parterres (ornamental arrangements of flower beds) and machine gun emplacements erected. Should the starving brutes find their way into our houses, cucumber sandwiches liberally laced with paraquet (parakeet) are prepared in the refrigerator, to be served by our dear wives.

All of this is great fun, but the real peak oil debate is whether the concept is based on sufficient evidence, plus credible models of how oil markets react to scarcity. Assuming that the concept has merit, which it may, the question reverts to mitigation. The trouble is that mitigation takes time, possibly decades. Politicians don't do time very well�their attention span is limited to the next election. Only a crisis excites their attention, and their reaction is panicked and usually disastrous. Technology breakthroughs are generally slow and incremental, rather than sudden.

Ethanol has its problems. Meanwhile, ethanol is the other subject dominating Washington. President Bush sees it as a magical elixir to solve every economic, environmental and foreign policy question in existence. This is even more nonsense. As Jerry Taylor at the Cato Institute points out, ethanol "is enormously expensive and wasteful." It enjoys grotesque taxpayer subsidies, even by Washington standards, but politicians always love the farm vote. Cheaper imports from places like Brazil are excluded by protectionist tariffs. Ethanol has no commercial merit (except for the bottom lines of Archer Daniels Midland and corn farmers).

It is interesting to note, however, the beginning of a backlash, as in the phrase "Food versus Fuel." Already, unfortunate Mexican peasants, who live largely on corn tortillas, are finding that the prices of such items have become exorbitant. Even in the US, as the price of livestock feed soars, the price of a pork chop in the supermarket goes up.

In addition to being wildly overpriced, ethanol is difficult to transport (it can't be done by pipeline) and potentially damaging to the engines of motor cars. A majority of US stations sell 10% ethanol/gasoline blend. Only 1,100 out of 170,000 US filling stations sell the stuff in its more pure form, as 85% (E85) ethanol. Go figure.

Meanwhile, In Washington, the President and his administration have less and less clout. The phrase in the playbooks is "Exit, Stage Left." And Bush should stop fretting about "The Legacy" There is no legacy. The Iraq War aside, who will ever remember Bush and his staff? Certainly no one involved in energy issues. Samuel Bodman? Sam who? And so it goes, as the late author, Kurt Vonnegut, philosophically said.

Washington politicians strut on their stage for a day or two, votes are votes, and pork is pork. Emergency spending bills are Christmas trees with ornaments or earmarks, credibility is long-dead, and honor and principle are quaint, fairytale concepts. If voting really could change things, they would make it illegal. In Washington, the only unanswerable question is "Why are these lying bastards lying to me?"