A session with the US Energy Security Council

Gustavo Coronel 10/16/13
A session with the U.S. Energy Security Council 

The U.S. Energy Security Council is a group of very distinguished Americans: former Washington cabinet members, top military leaders and former CEO’s from big corporations, coming together to address the issue of oil’s monopoly over transportation fuel. 

The Council “advocates proven transformational policies designed to diminish oil’s strategic value by opening the transportation fuel market to competition”. 

See http://www.usesc.org/energy_security/index.php/members

In March of this year I was honored to address this group by telephone on the outlook of the oil Venezuelan oil industry, see http://lasarmasdecoronel.blogspot.com/2013/03/my-opinion-on-pdvsa-in-oil-journal.html . 

Tuesday, October 15, I was invited to a meeting of the Council, held at the National Press Club, in downtown Washington. I took it to be an invitation to listen, but I ended up as a member of a round table, sitting together with many legendary figures: TV’s Ted Koppel, James Schlesinger (former Secretary of Energy and of Defense), Norman Augustine (Former CEO, Lockheed Martin), John Hofmeister (Former CEO, Shell), Robert McFarlane (former National Security Advisor) and several other political and corporate big leaguers. 

The meeting began with a conversation between Ted Koppel and James Schlesinger about the Arab Oil embargo of 1973. Both Koppel and Schlesinger were main actors in that drama and they recounted it for us, Schlesinger providing very interesting recollections. After the Koppel-Schlesinger conversation, the Council discussion began. I felt more like asking for autographs from these people than as a participant in the round table. 

I was the second person to be asked for comments by the Moderator, Anne Korin. Her question had to do with the current situation within OPEC, given that some of the members have an excess of money (Saudi Arabia) while others need it desperately (Venezuela). I said that (see  http://www.c-span.org/Events/Energy-Security-Conference-Looks-at-Alternatives-to-Foreign-Oil/10737442057-1/  , at about minute 57) Venezuela was no longer a powerful member of OPEC and that OPEC itself had lost much power since it was not a monolithic block. 

In parallel the U.S. was riding a big wave of energy abundance, thanks to shale gas and oil and did not need to import as much oil as before. I added that Venezuela/PDVSA were technically broke and depended on China to provide funds since oil production had declined and much of the oil exports went to ideologically friendly countries that did not pay. I said OPEC was no longer the powerful cartel of yesteryears. 

This opinion of mine seemed to run against the perception of some of the members of the Council that still see OPEC as holding consumers hostage. 

The fact is that OPEC provides today a much smaller share of the global oil supply. Consuming countries, on the other hand, enjoy many energy source alternatives: conventional oil, unconventional oil (Canada), shale oil and gas (several countries), and renewables, particularly the rather new alternative of producing Methanol (not to be confused with Ethanol) from natural gas. 

This alternative is gaining great momentum in the U.S. since it is both economically and technically feasible. 

An article in the Wall Street Journal, October 10 , : “A chemistry breakthrough that could fuel a revolution”, by George Olah and Chris Cox, describes how shale gas and recycled carbon dioxide can be converted into methanol, a fuel that can be mixed with gasoline to be used as transport fuel. 

As this technological breakthrough is taking place, the Council’s priority task is to promote the legislation that could put methanol on the same tax footing as ethanol, in order for the new technology to become an alternative at the pump. Dr. George A. Olah, the co-author of the WSJ article, is a Nobel laureate in Chemistry. 

In the round table the person sitting next to me was Dr. Surya Prakash, a partner of Dr. Olah in Methanol research. It was announced during the meeting that this team had been awarded a one million dollars prize by the government of Israel, as the best energy initiative of the year to find alternatives to gasoline as a transport fuel. I congratulated my neighbor. 

Statements supporting methanol as an alternative to gasoline came from MIT expert Daniel Cohn ( MIT Energy Initiative), Greg Dolan( Methanol Institute), Deron Lovaas (Natural Resource Defense Council), Joseph Cannon ( Fuel Freedom Foundation) and Frank Gaffney ( Center for Security Policy). 

The meeting was open to members of the China Embassy in Washington and to Chinese experts such as Dr. Liu Quiang. I had a brief talk with Dr. Liu and he said they were producing methanol from coal and that this process proved to be economic. I asked him about the position of China in Venezuela but he just smiled.

The message of the Council is that there is a need for free choice of fuel at the pump. This choice should not simply be, as Mr. Augustine pointed out: premium, extra and regular, but it should include alternatives that would make transport fuels cheaper and environmentally safer, certainly methanol. I will elaborate on this topic in another post.

Differ on Politicizing OPEC

Thanks God not everyone is like Chavez. King Abdullah, separete from Chavez, saying to the OPEC shouldn't be political. The Oil energy is to bring prosperity and not to create political conflicts.

vdebate reporter

Saudi, Venezuela Leaders Differ on Politicizing OPEC (Update3)

By Maher Chmaytelli and Ayesha DayaNov. 17 (Bloomberg) -- King Abdullah of Saudi Arabia said OPEC shouldn't make oil a source of conflict, contradicting Venezuelan President Hugo Chavez who wants the oil exporter group to become an active ``political agent.''`

`Oil is an energy for building and prosperity, it shouldn't become a means of conflict,'' King Abdullah said at the start of the group's heads of state summit in Riyadh today. ``

[b]Those who want OPEC to become an organization of monopoly and exploitation ignore the truth.''

[/b]The Organization of Petroleum Exporting Countries, provider of more than 40 percent of the world's oil, is holding its third heads of state summit since it was founded in 1960. The Saudi foreign minister clashed yesterday with a push by Iran and Venezuela to debate pricing oil in currencies other than the U.S. dollar.`

`OPEC was born as a geopolitical force and not only as a technical or economic one in the '60s,'' Chavez said, speaking before King Abdullah. ``We should continue to strengthen OPEC, but beyond that, OPEC should set itself up as an active political agent.''

The contrasting view on OPEC's role in the world comes a day after a disagreement between Venezuelan Oil Minister Rafael Ramirez and Saudi Foreign Minister Prince Saud Al-Faisal on whether to move away from the dollar was accidentally broadcast on live television.

`Fair' LevelChavez said in his speech today he's confident OPEC will do what it can to keep oil prices at a ``fair'' level, adding that if Iran was invaded, prices could easily rise to $200 a barrel.

Crude oil for December delivery yesterday rose $1.67 to $95.10 a barrel on the New York Mercantile Exchange.`

`The current price of oil if we take into consideration inflation is less than what it was in the early 1980s,'' Abdullah said. High taxes in consuming nations were hurting consumers more than the producers, he said.

The last OPEC heads of state summit was in 2000 in Venezuela and was hosted by Chavez, who was sworn in as president a year earlier. Iran and Venezuela both have tense political relations with the U.S.Ibrahim Ibrahim, an executive at Qatar Petroleum, said that while Venezuela has helped OPEC become a stronger organization over the years, ``there is no need for OPEC to be a political force now.

It just has to ensure that the oil market is stable.''

To contact the reporters on this story: Maher Chmaytelli in Riyadh at mchmaytelli@bloomberg.net Fred Pals in Riyadh at fpals@bloomberg.net

Last Updated: November 17, 2007 16:27 EST