The Drama of Deepwater: an Opportunity for Obama

Who is at fault? Honestly, the anger directed toward BP in America is surprising. This is the classic story of the heroin addict who complains of a dishonest dealer — a dealer who has ransacked the garden while delivering drugs. The Gulf of Mexico disaster has an air of inevitability; it was the necessary price for an addiction long denounced by critics.

The April 22 tragedy was caused by the explosion and sinking of the Deepwater Horizon platform; such offshore drilling has been exploited by multinational BP. 40,000 barrels of oil each day escape from a well that is drilled 1,500 meters deep off the coast of Louisiana. The leakage could be even greater as U.S. authorities on June 16 claimed a torrent of 60,000 barrels, or 9.5 million liters, per day is being released. In two months, more than 300 million gallons of fuel has spilled into the ocean. President Barack Obama refers to it as an ecological September 11th.

In addition, the consequences are well known. Hundreds of thousands of jobs in fishing, oil drilling and tourism are at risk in the four Gulf states of Louisiana, Mississippi, Alabama and Florida. It will take years to erase the stain from blackened beaches and mangroves. This tragedy will ransack the Mississippi Delta wetland haven. The damage is in the billions of dollars during a time when these four states are struggling to emerge from a recession.

The root cause of this plague is called oil, and it has struck a region known for centuries as the bayou, where fundamentalist pastors promise the Apocalypse. More than any other country, America is extremely dependent on oil. It depends on oil in 90 percent of the transport sector. It has 3 percent of the world’s reserves of black gold, and it imports the rest for $1 billion per day. The U.S. represents less than 5 percent of the world population, but it consumes 25 percent of global oil production.

It is not only an environmental scourge, measurable in tons of emissions of greenhouse gases — responsible for part of global warming — but it is also a constraint on the economic balance of this country since oil imports account for half of the U.S. trade deficit. This will contribute to an increase in oil prices in the coming years, affected also by the consumption of large emerging economies such as China and India. Finally, it is also a strategic disadvantage, as it will lead to dependence on the Middle East, where the U.S. buys 70 percent of its oil.

For decades, America’s speculations regarding energy and other wise political strategies have sounded the alarm. Every four years, the White House publishes a document entitled “National Security Strategy.” In 2010, the White House points to the dependence on oil as a weakness of the United States. In agreement with the White House, the CIA in its evaluation of future threats, cites the same issue — oil.

Alternative fuels are available: ethanol, methanol and electric batteries, which may sustain the American way of life in regard to maintaining large SUVs and the modern comforts of home, among other things. The American lifestyle remains unchanged, but only as long as oil continues to be a fuel option — and not as a strategic commodity, the likes of which the country cannot allow to occur.

Lack of tax incentives, short of massive intervention by the federal government, has resulted in the move from one model to another. Brazil has made the transition from oil to alternative sources, and within a few years, this should be within reach of the U.S. A solemn President Obama said on Tuesday night from the Oval Office: “The time to embrace a clean energy future is now.”

But President Obama’s bill on energy and climate, which is expected to allow the U.S. to break their addiction to fossil fuels, is being blocked in the Senate for six months due to pressure from the oil lobbyists, among other factors. As a result, America is falling behind. It lags behind many of its competitors in research on alternative energy. A group of top CEOs, including Microsoft founder Bill Gates, is increasing pressure on Congress to pass the energy and climate bill. Objective: Washington needs to triple — from 5 billion to 16 billion dollars — the research budget devoted to new energies. In The New York Times, Gates summarized the concern of these CEOs: “With my partners, we find that the best fuel cells and the best technologies for energy storage are all born outside the United States.”*

If the federal government is not ready to meet the challenge, the private sector will not make the necessary investment, said Gates.** This has been proven in the past, according to Felix Rohatyn, banker and former U.S. ambassador to France. Rohatyn explains the fundamental role played by the state in his fascinating book on the American saga, “The Men Who Made America” (Saint-Simon, pg. 204, 23 euros). Rohatyn tells the story of 10 major public initiatives in the United States, such as the digging of the Erie Canal; the laying of the transcontinental railway lines; the electrification of the countryside; and the creation of the GI Bill, the teaching scholarship available to 15 million soldiers returning from World War II.

Each time the government takes the initiative, along with innovation and finance, it is a flagship project, often voted on in a recession, to stimulate public investment. This cycle is observed by Rohatyn, a true Democrat, but non-partisan. Every time Rohatyn cites a key moment in American history, a phase of momentum had occurred. One of these key moments now centers around the Gulf of Mexico. President Barack Obama has the opportunity to leave his mark on the future and forever be known as the president who initiated the post-oil era in the United States.

*Editor’s note: The actual New York Times quote is attributed to venture capitalist John Doerr of the Silicon Valley firm of Kleiner Perkins Caufield & Byers.

**Editor’s note: In the New York Times article, this statement was attributed to the CEO group, of which Gates is a member.