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Schwarzenegger Adviser Outlines U.S. Oil Addiction

April 15, 2008 at 6:15 PM EDT
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In the fourth installment of the NewsHour's Costly Crude series, environmentalist and adviser to California Gov. Arnold Schwarzenegger Terry Tamminen discusses the shrinking oil supply with Ray Suarez.

JIM LEHRER: And speaking of fuel prices, we go next to our series on the high cost of oil. So far, we’ve talked to two writers who have reported and commented on the subject and to an executive of a major oil company.

Ray Suarez now has the fourth conversation.

RAY SUAREZ: Tonight’s conversation is with an environmental activist and author who’s also dealt with the realities of government policy.

Terry Tamminen is author of “Lives Per Gallon: The True Cost of Our Oil Addiction.” He was the founder of the Santa Monica Baykeeper, a not-for-profit group protecting the bay. He’s also a former secretary of California’s Environmental Protection Agency and currently serves as special advisor to Gov. Arnold Schwarzenegger on energy and environmental policy. He joins us from Sacramento.

Terry Tamminen, what’s the impact of $100-plus-per-barrel oil been on the United States?

TERRY TAMMINEN, environmental advisor: Well, it’s very significant. I think that the price of oil is one of the main drivers of what I call the Easter Island effect, which is named after that place in civilization which used up all of its resources without any thought for the future and ended up as warring tribes living in caves and resorting to cannibalism.

And we’ve cannibalized so much of our economy to serve our oil addiction it’s been masked by the fact that we had free money almost in our home mortgages, in our credit cards, and in our savings.

And now that all of that is changing — and, certainly, it’s not just the price of oil, it’s that consumer need to have the latest cell phone or other patterns, but oil is very high on that list.

Now that we no longer have a way to pay for these things without really feeling the pain, we’re seeing people changing their lifestyles, less health care, poorer food choices, less clothing for kids, I mean, all the way down the line.

And we’re also seeing businesses having to cannibalize different parts of their businesses. In California, we’ve had farmers who couldn’t get produce to the markets because contracts that they had with truckers.

The truckers couldn’t afford to bring the produce because of the high price of diesel. And so it rotted in the fields, which then just exacerbated the problem even further, making scarce produce even more expensive.

And everything we touch has a component of this, plastics and food and anything else that relies on transportation.

Impact on consumers' daily lives

RAY SUAREZ: You've talked about changing lifestyles and the impact on consumers. Have you been surprised during this past year with the steep run-up in the price of gas that people have been willing to do without rather than change the way they consume petroleum products?

TERRY TAMMINEN: I've been a little bit surprised, but, again, I think it was masked by people having a little bit of free money, or so it seemed, by refinancing homes and doing other things, and buying gas-guzzling cars, and just kind of shrugging it off thinking that the price would go back down.

But if you look at the price of gasoline, the price of oil and gasoline over the years, it always goes up to breath-taking heights, and then seems to settle back down, but never quite where it was. And so there's a steady trend upward that lulls us into the belief that it really hasn't changed and that we're not actually having to give up anything else to pay for our petroleum joyride.

RAY SUAREZ: Well, people who've been watching this program know what the impact has been on their daily lives, but what is $100-plus-per-barrel oil meant in the places where the oil is pumped? Is it making regular people richer?

TERRY TAMMINEN: It appears to be, because, obviously, it doesn't cost a great deal more to get that oil out of the ground, at least not in places like Saudi Arabia.

But it's, also, I think making millionaires out of new people that we haven't even begun to meet. In Canada, for example, where they're starting to try to take oil out of tar sands and tar shale, which takes three and four times more energy to extract than the light-sweet crude that kind of sits near the top of the oil pool in places like Texas or Saudi Arabia, and so they're spending more money.

That is creating more jobs, but it's also, again, much like Easter Island. It's completely unsustainable.

It's also causing us to go back into places right here in Los Angeles, for example, where old, abandoned oil fields are now being re-energized because, at $20 or $30 or $50 a barrel it made no economic sense, but at $100-plus it makes sense to go back in and unearth some of these wells, even in the middle of urban areas.

Experimenting with alternative fuel

RAY SUAREZ: So we're going to get that oil that was uneconomical to pump when oil was cheaper. Have we also, at the same time, rushed in to find out what the next oil is going to be, what the fuel or the energy source of the future is going to be?

TERRY TAMMINEN: I think we are beginning to experiment with that and, unfortunately, we're stumbling. Things like corn-based ethanol, which we're now beginning to understand, is really not sustainable.

There's not enough arable land on Earth to supply all of our transportation needs from that kind of biofuel and making it from corn. Using a lot of energy inputs and fossil fuel inputs for fertilizer and that type of thing actually doesn't give you much of a net benefit for the environment, either.

And so the real answer for the future is not a silver bullet; it's silver buckshot. We're not going to move from petroleum to one other thing.

I think we're going to move toward, first of all, more fuel efficiency. We're seeing that in moves by even Congress to improve our corporate average fuel economy standards and promote plug-in electric hybrids.

We'll see it with other choices, like battery-electric cars, which are making a comeback, entirely new companies that are actually being formed around that industry.

And then hydrogen, where I actually personally drive a hydrogen car, and here in California we have the Hydrogen Highway that Gov. Schwarzenegger created, with 24 operating hydrogen stations already.

Calculating hidden costs

RAY SUAREZ: Well, let's stick with that silver buckshot metaphor for a moment, because we've spent the last 100 years evolving an economy that's built around the automobile and personal vehicle with an internal combustion engine, a tremendous infrastructure to both service that machine and get the energy to fuel it.

How can we have multiple sources of energy standing side by side along that all at once?

TERRY TAMMINEN: I think much like anything else, you know, when we go to have dinner, we don't have the same thing every night. When we go to the closet, we don't wear the same clothing everyday. It's just time to change our thinking and our mindset. The only barriers are in our minds.

But the barriers are also political. I mean, right now, even at $3.50 to $4 a gallon for gasoline, we're not paying the true cost of our oil addiction. It's probably more like $10 to $12 when you factor in the subsidies that the government provides, tax subsidies to oil companies, which hardly need it anymore, as well as the cost of health care related to air pollution for the illnesses and the deaths that are caused by this air pollution, and now the tightening noose around our neck related to climate change and the actual cost that that's having, not just to the environment, but to the economy.

So I think all of these things will drive us to level that playing field to some degree. You're already hearing Congress talking about taking away some of the tax breaks to the oil industry and putting it into renewable fuels and these other choices so that we can bring them along and help this silver buckshot approach.

'Lies, politics' shield industry

RAY SUAREZ: Well, in your book, you try to illustrate what those uncounted costs are. How come Americans have had such a hard time seeing them, feeling them, paying them, and really fixate instead on the cost per gallon of a gallon of gasoline?

TERRY TAMMINEN: I think there's two answers to that question, one is lies and one is politics. The politics are very straightforward. In the last decade or so, the oil and auto companies have spent $186 million in campaign contributions at the federal level alone.

And for that, they've reaped these hundreds and hundreds of billions of dollars of subsidies year after year, despite the fact that the oil industry in particular is enjoying record revenues. And ExxonMobil has reported the highest quarterly net profit in the history of commerce.

This is hardly a start-up industry that needs our help anymore. So I think the real issue here is people are not really aware of what's happening because of the politics.

But then it's, also, as I outline in the book, these industries have gone, just like tobacco companies, to regulators and they've lied about the impacts of their products, about their need for these various kinds of subsidies, and about the effects of their products on the economy, and, time after time, taken away our other choices or made the actual cost of their products hidden and paid for by someone else.

RAY SUAREZ: Terry Tamminen, thanks for joining us.

TERRY TAMMINEN: My pleasure.