"The future of US energy is heating oil," said Pres. Obama to a rapt audience on the grounds of a NJ heating oil storage facility. (image: Nicholas Whitaker via heatingoil.com)

After yesterday’s announcement that the US would expand offshore oil drilling, President Barack Obama dropped another bombshell on the energy world by calling heating oil “the key to America’s future” and pledging to bring heating oil to 10 million more American homes by 2014. To demonstrate his determination on this score, Pres. Obama will be converting the White House to a heating oil system, and dug up the Rose Garden to install a brand-new, 1,000-gallon home heating oil tank. President Obama announced his ambitious plan at a heating oil storage facility in Landon, New Jersey.

As crowds cheered, the President explained the importance of heating oil:

We cannot afford to delay one more day in bringing the citizens of this country the safe, reliable, and affordable heating fuel they deserve. For too long this advance has been held up the partisan squabbles of the past—the time has come to move forward. Heating oil’s high efficiency, low emissions that are getting lower each year, and clear path to 100 percent renewable biodiesel content make it the finest heating fuel in the land. All of America deserves this fuel. We’re starting at the White House, but we’re on our way to your house!

The announcement provoked some flutter in the financial press, as journalists struggled to piece together how heating oil, a close cousin of “oil” oil, was producing so much activity on the trading floor, outperforming metals, gasoline, and crude. Searching for an industry expert willing to explain the frenzy, Bloomberg news could only find the Maine Governor’s Office of Energy Independence and Security:

In Maine, the President’s comments have created a phenomenon. Following the president’s announcement, our office has been flooded with calls from Mainers eager to switch to heating oil for their home heating needs. The excitement has unfortunately led to some unlawful activity in southern Maine, where a band of heating oil marauders is performing involuntary repairs on tanker trucks carrying diesel fuel, flooding the local market with supplies of no.2 oil.

President Obama’s announcement came as surprise to many Americans—especially residents of the West coast and South. Puzzled viewers of the president’s speech in those regions turned to the internet to find out what heating oil is, making “what is heating oil?” the most-searched phrase on Google’s US search engine.

The craze swept the nation in record time, with some citizens driven by their enthusiasm to begin clearing space in their basements and garages on Thursday afternoon to make room for a new heating oil tank.

Following his prepared remarks, the president took questions from the press, and offered some details of how his program, dubbed “Making America Cozier with Oil Heat.” Private citizens will be rewarded with rebates worth 40 percent of the cost of their new oil heat system, including tank and furnace or boiler. New users of heating oil will also receive their first fill-up of the fuel for free, thanks to a cooperative subsidy program administered through the Department of Energy and local state oil dealer associations.

Reached for comment on Air Force One after his speech, the president told HeatingOil.com, “I’m fired up to get more people on board with this great fuel, and I’ll need your help to do it. Keep the good work, and spread the word!”

IEA Chief Fatih Birol addressed the Council on Foreign Relations earlier this week. (image: wikipedia.org and cfr.org)

Monday night at the Council on Foreign Relations in New York, Fatih Birol, Chief Economist at the International Energy Agency (IEA) presented the highlights of the recently released 2009 World Energy Outlook, which was recently completed. Yours truly was in attendance, and got the scoop just for you dear readers.

Mr. Birol knows his stuff- he worked for OPEC for six years, has written lots of articles about energy and energy policy, has won lots of awards for his work and is steeped every day in the numbers and analysis of global energy consumption and production. He’s known for being pretty plainspoken. So when he has something to say, we should listen.

And what he has to say isn’t pretty. Some samples:

• To keep up with global oil demand, the world will need to discover an additional four (yes, he said four) Saudi Arabia’s worth of crude production before 2030

• To keep up with global gas demand the world will need to discover an additional four Russia’s worth of natural gas reserves by 2030.

• Because of the financial crisis, global investment in oil production fell by $90B in 2009, or 19 percent- the first time this has happened in a decade.

• Existing oil fields will lose two-thirds of their productive capacity by 2030

• Between 2008 and 2030, the percentage of GDP spent on energy in the US will double, and in countries like China and India could increase three to six-fold.

• Oil prices were ‘not innocent’ in precipitating the financial crisis of 2008 and will remain a threat to global growth.

Whoa…Fatih…I’m trying to catch my breath here. What are we going to do?

Mr. Birol emphasized that the way to address these threats is to address climate change. In the IEA’s projections they use two scenarios, one they call the ‘Reference’ scenario (no change in our behavior) and the ‘450’ scenario (we keep carbon parts per million in the atmosphere under the critical 450 and thus will save the world- or so Al Gore tells me).

The changes he calls for to reach the 450 scenario are EXPENSIVE. They would cost many trillions—with a capital T. Renewables, electric cars, carbon capture, wind, solar, cap and trade, the works. But, he emphasizes, the cost of waiting will be even more expensive.

During the Q&A session that followed his presentation, someone asked him what his recommendations would be if climate change turned out to be an elaborate hoax (I paraphrase). He said he would still recommend 90% of the changes outlined in the review. Huh?

Birol explained that many people, especially in the developing world, view energy security as a bigger issue than climate change. Countries like China and India may not be very interested in spending money on climate change, but they may be extremely willing to spend on energy security. The same argument could be made to climate change skeptics. In his view, the changes we would make to reduce emissions are the same moves we would make to improve our energy security.

Interesting. Is it possible climate change zealots and national security hawks can fall in love on this? Who’s going to call Al Gore and Dick Cheney for the handshake photo-op? And is this really a way we can convince China it is in their best interest not to turn the planet into the air quality equivalent of my Grandpa’s apartment (Marlboro reds, two packs daily)? Sounds revolutionary to me.

Birol did have some other very interesting comments that we will touch on in future articles, among them:

• Hydrofracking in the US represents a silent energy revolution that no one is paying attention to, but will provide us with oodles of natgas for the next 20 years.
• Oil and coal usage in OECD (developed) countries peaked in 2009
• A natural gas glut is forming globally and will reach its apex in 2015

So put that in your pipe and smoke it. Be back in touch soon.

Muammar Qaddafi, leader of Libya, having a gold day. (image: parade.com)

He walked into the room and up onto the dais and looked expectantly at the audience for a moment. When he recognized that no one intended to stand, he made a slight wave of disgust and proceeded to sit in the wrong chair even after the interviewer gestured he was to sit in the other. It seemed a small act of defiance in the face of our collective lack of respect.

He was dressed all in black, not unlike Johnny Cash, down to the leather boots with a three-inch heel. A garish green broach in the shape of the Continent of Africa hung from his lapel, and he wore a shiny diamond ring on his right hand. If someone were to stage a modernist version of Bram Stoker’s Dracula, he would be a shoe-in for the lead.

His entourage was extensive and jumpy. He seemed sedated. For a moment one of his ‘bodyguards’ peeked into the room. She was wearing a bright red beret and desert cammo, dramatic makeup and hair that was more Beyoncé than secret service.

Surprisingly he dispensed with opening comments and allowed himself to be questioned by the MC and by the audience. He was dismissive of most questions, and evasively encouraged us to become more educated on ‘The Green Book’ and his philosophy of the Revolution, of which his official title states he is both leader of and ‘guide’. During the meeting he frequently beckoned for his handlers and body men to come to his side, and they traded a few hushed words or notes scribbled on tiny pieces of paper. Paranoia seemed to be on the guest list.

So what in the world is Muammar al-Qaddafi doing in New York City? Speaking to the UN and appearing at respectable foreign policy think tanks? He is in short, enjoying a renaissance in his relevance on the world stage and he has Libya’s vast energy resources to thank for it.

Qaddafi is, in many people’s eyes, a terrorist responsible for atrocities around the world, perhaps most infamously the bombing of Pan Am flight 103 over the town of Lockerbie, Scotland. To others, he is simply a head of state eager to turn the page and do business with the West.

The world seems eager to do business with him too. Many believe that the release of one of the convicted Lockerbie bombers—Mohmed Al-Megrahi on ‘compassionate grounds’ by the Scottish government—was motivated in part by pressure from the British government to smooth the way for British Petroleum (BP) to develop oil projects in Libya. (See our article about Libya’s growing role in the global oil economy here)

The Scots’ decision, whether it was rooted in compassion or cynicism, was a terrible mistake, even before Al-Magrahi landed in Tripoli to a hero’s welcome. But it is a reminder of the pressure developed nations are under to secure their access to energy at a point in history where the demand curve is as steep as the production curve is flat.

It also demonstrates how important it is for the United States and its allies to develop a comprehensive energy policy. Not the pork barrel mess being pushed in DC at the moment, but one that is formulated with defense, foreign policy, economic and environmental goals considered holistically and cost effectively. This will be difficult, but certainly no more difficult than holding our noses to do business with the likes of Col. Qaddafi.

As the meeting wound down, Qaddafi indicated to his handlers to prepare his departure. He had we were told, a busy schedule. As he left he received polite applause for his appearance, a showing not of approbation but of high minded civility. He seemed to miss the point however, and pumped his fist a few times above his head before disappearing behind the screen placed on stage by security.