Karl Marx

Last week, on the free-market energy blog MasterResource.Org, I posted a two-part column on climate change and national security. In a nutshell, I argued that global warming is likely not an important geopolitical or military “threat multiplier,” and that the national security risks of climate change policies likely outweigh those of climate change itself.

One of the great things about “publishing” on the Internet is that readers can quickly and easily share other insights and information the author had not considered.

Climate scientist and fellow blogger Chip Knappenberger called my attention to a remarkable essay in Nature magazine by Wendy Barnaby, editor of People & Science, the journal of the British Science Association — and to Chip’s review of Barnaby’s essay on WorldClimateReport.Com.

One of the principal ways climate change supposedly acts as a “threat multiplier” is to intensify drought and water shortages, leading to crop failure, famine, and armed conflict within and among nations. Barnaby had written a book about biological warfare, and the publishers suggested she write a book about the coming century of “water wars.” 

At the outset, she assumed that water scarcity is a signifcant source of armed conflict in the world – a pervasive problem just waiting to be ‘threat multiplied’ by climate change. The book was to include a history of water wars, but, as she dug into her topic, she found there wasn’t much history to write about. ”Cooperation, in fact, is the dominant response to shared water resources,” she discovered. The data are overwhelming:

Between 1948 and 1999, cooperation over water, including the signing of treaties, far outweighed conflict over water and violent conflict in particular. Of 1,831 instances of interactions over international fresh water resources tallied over that time period (including everything from unofficial verbal exchanges to economic agreements or military action), 67% were cooperative, only 28% were conflictive, and the remaining 5% neutral or insignificant. In those five decades, there were no formal declarations of war over water (emphasis added).

It is true that many nations are water-stressed, but this has not meant that their people must either perish or go to war to seize another country’s water supplies. Usually, it means that countries cooperate and import “virtual water” in the form of agricultural produce. It takes lots more water to grow crops than it does to supply households with drinking water. So where water is scarce, people tend to substitute grain imports for home-grown produce. Israel, Jordan, and Egypt are a case in point:

Israel ran out of water in the 1950s: it has not since then produced enough water to meet all of its needs, including food production. Jordan had been in the same situation since the 1960s; Egypt since the 1970s.  Although it’s true that these countries have fought wars with each other, they have not fought over water. Instead, they all import grain. As [U.K. social scientist Tony] Allan points out, more ‘virtual’ water flows into the Middle East each year embedded in grain than flows down the Nile to Egyptian farmers.

Climate change-related drought would pose challenges to resource managers but should not lead to armed conflict where nations are free to cooperate and trade. (As noted in my MasterResource column, cap-and-trade treaties require carbon tariffs for enforcement — a recipe for conflict and trade war rather than cooperation and trade.)

Barnaby’s conclusion is worth reproducing in full:

Book or no book, it is still important that the popular myth of water wars somehow be dispelled once and for all. This will not only stop unsettling and incorrect predictions of international conflict over water. It will also discourage a certain public resignation that climate change will bring war, and focus attention on what politicians can do to avoid it: most importantly, improve the conditions of trade for developing countries to strengthen their economies. And it would help to convince water engineers and managers, who still tend to see water shortages in terms of local supply and demand, that the solutions to water scarcity and security lie outside the water sector in the water/food/trade/economic development sector. It would be great if we could unclog our stream of thought about misleading notions of ‘water wars.’

Waxman-Markey would increase U.S. dependence on petroleum product imports

As discussed in my column on MasterResource.Org, U.S. dependence on oil, including oil imports, is not a “crisis.” Nonetheless, many eco-warriers and defense hawks claim that it is. They also claim that Waxman-Markey would enhance U.S. energy security by inaugurating the transition to a “beyond petroleum” economy.

Well, another colleague sent me a report showing that Waxman-Markey would make us more dependent on petroleum product imports.

The report, prepared by EnSys Energy for the American Petroleum Institute, finds that by 2030, Waxman-Markey would:

• Significantly increase U.S. refining costs;
• Reduce U.S. refining volume by up to 4.4 million barrels per day (mbd);
• Reduce annual U.S. refining investments by up to $89.7 billion (up to an 88% decline in investment);
• Reduce refinery utilization rates from 83.3% to as low as 63.4%;
• Create competitive advantage for non-U.S. refineries; and, hence
• Increase U.S. reliance on petroleum product imports.

EnSys analyzed three scenarios: a “Base Case” (EIA’s reference case projection of future liquid fuels supply and demand without climate legislation); a “Basic Case” (EIA’s analysis of Waxman-Markey assuming timely development of key low-emission technologies and no severe policy constraints on the use of both domestic and international offsets); and a No International/Limited Case (EIA’s analysis of Waxman-Markey assuming limited access to international offsets, and no deployment of key technologies beyond EIA’s reference case).

Okay, now that we understand the terminology, let’s look at some graphs from the EnSys report. First, the impact of Waxman-Markey on U.S. refinery output:

Next, the impact on U.S. refining investments:

Next, the impact on petroleum product imports by volume:

Next, the impact on petroleum product imports by percent:

Finally, the impact of Waxman-Markey on U.S. refining global market share:

Bottom line for “energy security” mavens: Waxman-Markey grows foreign refining output at the expense of U.S. output, and increases U.S. dependence on petroleum product imports.

The EnSys report very likely understates the impact of Waxman-Markey on U.S. refining. A modeling study can only estimate how carbon constraints will affect refining via their impact on fuel prices. Models cannot estimate how carbon-constraints might affect refining via their impact on investor psychology.    

Investors can get spooked when government declares regulatory warfare on an industry, and the Waxman-Markey bill does just that. Consider the gross disparity between the refining industry’s share of covered emissions (43%) under Waxman-Markey and its share of emission allowances (2.5%).

Investors cannot be blamed if they view Waxman-Markey as the proverbial “writing on the wall” for the U.S. refining industry. From this I conclude that Waxman-Markey’s adverse impacts on U.S. refining – and thus on the volume and percent of petroleum product imports – could be substantially greater than those EnSys projects.

Conclusion

Waxman-Markey will not take us “beyond petroleum.” Instead, it will make gasoline more costly to consumers while making America more dependent on imported petroleum products.