Amy
Myers Jaffe, speaking to the All-Convention Luncheon in Dallas,
not only presented her synopsis on a looming oil crisis, but warned
that geopolitical issues could lead to a déjà vu of the energy crises
of 1973 and 1979.
Those crises
precipitated frantic lineups at gasoline pumps, panicked the American
public and led to the introduction of smaller, more energy efficient
vehicles across the nation.
Today,
however, the pendulum has swung back, with a large percentage of
Americans driving gas thirsty sport utility vehicles.
That's
a sign, Myers Jaffe suggested, that the lessons of the oil crises
in America have been forgotten during the intervening 30 years.
She added, tongue-and-cheek, that a paper she wrote as an eighth
grader on the 1970s oil crisis could be dusted off and published
today in a learned journal.
In a sobering
message, she said that while energy consumptive Americans are a
large part of the problem, they nonetheless represent part of the
future solution.
"In the
United States, we have a tendency to externalize oil problems,"
she said. "We ought to look in the mirror, because the problem is
us."
And she
pointed to the serious consequences of not having a national energy
policy: "The U.S. Senate is a group of people who can't even pass
an energy policy."
Provoking
thought and discussion amongst the audience, Myers Jaffe asked:
"Do we really want to be in exactly the same place again in 30 years?"
Myers Jaffe
is an associate director of Rice University's energy program, and
a Wallace Wilson Fellow for energy studies at the James A. Baker
III Institute for Public Policy at Rice University. An expert in
Middle East oil geopolitics, she recently contributed to the joint
Baker Institute/Council on Foreign Relations task force on the Guiding
Principles for the U.S. Post-Conflict Policy in Iraq.
She described
the disconnect in public attitudes in the United States: Americans
want cheap domestic energy sources but don't want oil and gas drilling
or liquefied natural gas terminals in their communities.
She said
the AAPG membership has a significant role to play in the process
of public education and awareness building, of dispelling the NIMBY
("not in my backyard") response by the general public.
AAPG should
focus on the importance of a strong domestic industry, she said,
and should highlight the technological breakthroughs that make drilling
safer and lessen the environmental footprint of oil and gas operations.
"Our nation's
geologists are a brain trust that can be tapped to enhance public
understanding of the importance of a strong domestic industry,"
she said. "There is no question that the United States should be
doing more exploration at home. We have vast resources that could
be brought to bear to lower energy costs for all Americans, especially
natural gas resources that lie off the coast of Florida, off the
East Coast and in the Rocky Mountain areas."
Challenge
the Paradigms
Myers Jaffe
challenged AAPG members to question several paradigms, chief amongst
them the assertion that Americans should have access to cheap oil.
"We cannot
understand the oil world today unless we understand a fair price
for oil," she said. "Three dollars per gallon for gasoline is cheap
compared to Europe. The long-term trends in the United States will
eventually marry itself with those in Europe."
In today's
global marketplace — driven by the free trade of goods and services
— Myers Jaffe questioned why oil should be treated differently
than any other commodity.
"One-third
of the world's population (or 1.8 billion people) lives with no
modern energy services (electricity) so that 10 countries can have
a high standard of living," she said, showing the audience a "map
of global energy poverty."
The developing
nations are questioning the paradigms embraced by the developed
nations, she said, asking: "Why should our economies stand still
so yours can grow?"
"We're
not debating the right issues," she said of the geopolitical factors
affecting global oil prices. "The U.S. needs to go back to its lies;
OPEC needs to go back to its lies. We need open access to energy
policy so that more than 10 countries can prosper."
Myers Jaffe
presented a scenario for a sustainable future for the entire international
community that was predicated on a fair price for oil. She laid
out a theoretical road map to create a sustainable future for Iraq's
oil production — a permanent government with an elected representative
body empowered to establish a natural resources policy.
"Iraq's
national oil industry must have clear authority to make investments
and have access to funds to invest in oil field refurbishment and
enhancement," she said. "This requires the creation of a national
budget. Longer term, a national resources law is needed if the country
wants to solicit foreign investment.
"The U.S.
and the United Nations have an obligation to do the thing properly,"
she added. "They have to define the role of the state, of the oil
ministry and set up independent oil and gas regulators."
And she
was adamant that the introduction of petroleum laws in developing
nations include a framework of environment, health and safety laws.
"The system
in Iraq should be set up to the best international best practices,"
she said. "What's the point of being 30 years behind the world's
standards?"
Working
Smarter
AAPG member
Tom O'Connor echoes Myers Jaffe's comments on the importance of
building environment, health and safety legislation into a modern
oil and gas regulatory regime.
O'Connor,
an international petroleum management adviser, is one of three editors
of the AAPG Special Publication, International Oil and Gas Ventures
— A Business Prospective.
"It's completely
unacceptable for oil companies to enter into the developing world
and muck up the place in ways that would not be acceptable in their
home neighborhoods," O'Connor said. "Shell is trying to deal with
that issue right now in Nigeria."
However,
O'Connor, the former principal petroleum engineer of the World Bank,
approaches these issues pragmatically: "The Russian Federation has
some of the best environmental laws and regulations in the world,"
he commented, "yet the place remains a mess because there are no
effective regulatory compliance mechanisms."
O'Connor
attended the Dallas meeting with guest Chaman Shah Ahmady, the chief
of Afghanistan's Department of Oil & Gas Assessment and Contracts
& Projects. Afghanistan is attempting to reorganize its oil
and gas sector — despite ongoing battles with the Taliban — to
attract foreign investment dollars.
Ahmady,
he said, was educated in Romania, and has traveled extensively throughout
the Eastern Block and the Former Soviet Union but had never visited
the West before, let alone participated in an professional meeting
like the AAPG session in Dallas.
"It was
amazing to watch his transformation from day one to the day he left,"
O'Connor said. "His English got better."
O'Connor
agrees with Myers Jaffe that Americans need to change their paradigms
on access to energy — "but, you cannot be prescriptive," he added.
"You can't tell people what to do. Over time, you can present issues
and a series of options with associated costs."
Despite
the fact that many American E&P firms had left the continental
United States, he said, "There's plenty of hydrocarbons in the United
States — it's just a question of cost."
O'Connor
also called for a domestic energy policy that would meet the nation's
future demands.
O'Connor
said that OPEC stopped being a cartel during the 1970s oil crises,
with the emergence of Alaskan North Slope and North Sea oil.
"As a cartel,
it's been difficult to police," he said. "Many OPEC countries are
actively trying to dodge the quota system."
O'Connor
described OPEC instead as a "blunt tool" to increase and decrease
production that has little control over the global market." OPEC
controls only 25 of the 75 million barrels sold in the marketplace
daily, he said.