Change of Heart For A Self-Confessed Oil-o-Phobic (Or "Drill, baby Drill")

By most measures, I'm just a typical common or garden-variety environmentalist or at least a person who would rather see environmentally friendly policies than not. I'm a member of the Sierra Club, I recycle religiously, drive a Prius, support a gas tax and more public transportation and would rather sit in front of my TV on a Saturday morning than burn gasoline driving out to some beautiful scenic trail in the middle of nowhere. So, it was with some surprise that I reached the conclusion that it's time to turn right about in our position on exploration for and exploitation of oil resources in continental America.

Naturally, I don't endorse a no-limits "drill, baby, drill" approach where we simply hand the pristine wilderness over to the oil companies. Safeguards, the most rigorous environmental safeguards, would be an indivisible of this new drive to tap our resources. But tap them we must. If the Deepwater Horizon tragedy taught us one thing, it should be that our demand for oil will simply force drilling in ever more challenging regions. And if renowned companies like BP can fail so spectacularly, it would be naive to imagine that something similar or worse will not happen in the Gulf of Mexico or off the coast of Cuba. Cuba is especially dangerous, given their desperation for petrodollars and our continued short-sighted embargo, even to the point of threatening oil companies with sanctions if they work in Cuba; we have simply cleared the more experienced players from the field and left it to companies from India or China, companies with less expertise and technology as best and fewer safeguards or concerns for the environment. Companies in USA and Europe may not have any inherent interest in environmentally responsible practices, but they are forced to follow them nevertheless, while companies from elsewhere may not operate with the same constraints.

Perhaps the greatest issue for me however is not the risk that the beaches of Florida may be threatened by an accident in Cuba. Great as that tragedy would be, the sad fact is that other areas stand at greater risk or are even now suffering the effects of crude methods of oil extraction. Brazil has planned deep sea exploration every bit as dangerous as Deepwater Horizon; the Amazon jungle and especially the Niger delta have been under attack for the past decade, to the point that damage may be past repair.Do we care about environmental degradation only when it happens on our yard? More pertinent, perhaps, should we care? We know well that the ocean currents care not for our maritime boundaries around Hispaniola and hence we fret about Cuban wells, but the damage farther off the horizon may escape our notice while causing as much damage to the world as a whole.

We occupy a crucial, unique position in the world. By virtue of our enormous consumption, approximately a fifth of the total world's output, we enjoy leverage over the producers as much as they enjoy over us. The difference is that OPEC has consciously used that power to further their own interests, while we turn away from our power. The time has come to embrace our power and embrace reality. Environmentalists would like to believe that we can shed our dependence on oil and sustain ourselves on green energy, and perhaps someday we will get there. But that day is not today, nor even tomorrow. And as long as we pursue cheap gas as state policy, there is little incentive to make the switch. But we may change that if we wish. For starters, we must tap our domestic oil producing capacities to the fullest. I know this idea is almost criminal in environmentalist circles, but I prefer a wider worldview; we can force the companies to protect the environment here and work in a responsible manner (assuming a political will to enforce the laws) while we have next to no control over the depredations of the Niger. And while the arctic ecology may be delicate and easily damaged so is nearly any natural ecosystem and we can minimize the damage at home, keep the wells away from the wildlife reserves.

But this is the season of grand bargains, from debt ceilings to professional football, and increasing domestic production is but one leg of my proposal. In addition, we would introduce a higher gas tax, sufficiently large to generate significant revenues and nudge consumer behavior, with the revenue being used partly for mass transit systems and partly for more green energy. But, truth be told, if petroleum based solutions become more expensive, investment will automatically seek out greener solutions. And I am enough of a believer in markets that I think the government should not be betting on a specific technology but should simply signal a general shift away from oil and let the market find the best solution - it may be totally different from anything we've imagined so far.

But the real power of our top consumer status lies in the third leg of my strategy - we need to impose a green tax on all petroleum products imported into the US, based on how the company produces it's oil. If it's destroying the environment in Africa or southeast Asia, we would impose a higher tax on them than if the oil came from the North Sea. Exactly how we would rate the oil sands of Canada or the oil rigs in the Gulf of Mexico is debatable, but I suspect they would fall somewhere in between.  Companies may seek to get around the system by claiming the oil they give us is produced from "good" locations while the bad stuff is sold to other countries; we can combat that trick easily enough by basing the tax on total production of the company, with a company that has more responsible methods attracting a lower tax rate. The other trick would be for a company to sell it's "bad" stuff to a company that produces "good" oil and let the second company sell to us at their low tax rate. Again, a little vigilance would go a long way to negating this trick, with the "good" company getting tainted since a part of it's total production would now include the "bad" stuff it bought and it would still attract the same higher tax rate as the original bad producer.

The other argument to address is the danger that companies facing a "green" tax will place an embargo on us. I would counter that it is precisely there that our power of consumption comes into play - companies simply cannot refuse to sell to us, we are too important to their balance sheets. Unlike the seventies and the oil embargo, we are talking about private companies driven by profit, not states that can live with financial losses in pursuit of a strategic objective. When you control a fifth of the market, no one can ignore your demands. The many leading oil companies that are based in the US or Europe already possess the technology to operate in a responsible manner but see no reason to to so in the less regulated corners of the world. At the risk of being a global cop again, we are going to make it less advantageous to destroy the environment, no matter where. Further I think, with companies vying for the newly available lucrative drilling contracts in the US, objections will be somewhat muted. The net result will be more revenue for mass transit and greener gasoline for everyone. As a bonus, dearer gasoline will also nudge all of us towards more responsible driving choices, be they smaller cars, gas-sippers instead of guzzlers, occasional bicycle rides in place of the SUV and maybe a rediscovery of the advantages of city life over the suburban experience.