Expert View: Oil and terror - such tricky bedfellows for Mr Bush

I fear China's President Hu may have told Mr Bush where to go
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The Independent Online

Having sat for a couple of hours in 12 lanes of traffic, my satisfaction on reaching Los Angeles airport was diminished by the smog. The giant jumbos danced around in the thick clouds like a series of performing circus elephants. Visibility was so bad I certainly couldn't even make out the control tower - I just hoped the pilots could. America's oil addiction has never been worse.

Oil tops everyone's agenda at present. The price rises we have seen (it broke through $75 per barrel last week) show no sign of abating. Demand is surging ahead while supply growth is a trickle. With many oil companies stubbornly insisting that new fields must be justified on the assumption of a price in the $20-$30 range, development is far too slow. Worse, as much as a quarter of existing claimed reserves are thought to be accounting fictions. Shareholders of Shell could tell you a thing or two about that.

The surge in the price of oil may not have caused an economic crisis of the kind experienced in '79 or '73, but it certainly is having dramatic political effects. The world's booming economy has never co-existed with so much geo-political insecurity. Pick your crisis - civil war in Iraq, nuclear weapons in Iran, Latin American sabre-rattling. All all of them oil-related.

Washington is concentrating hard on what diplomatic initiatives it can make to "slow global competition for energy resources", but what an uphill struggle. It seemed almost ludicrous listening to President George Bush take such a line with China's President Hu Jintau on his visit to the America this month. The US consumes 20m barrels of oil a day, while China (with around four times the population) a mere 6.5m.

True, Chinese demand is growing at an incredible rate in percentage terms, but demand growth is still half that of the US in absolute numbers. And how can Americans tell the Chinese to curb demand when they own 40 times as many cars per head as the Chinese do? I fear Mr Hu may have told Mr Bush where to go. He headed straight for Nigeria to try to tie up more supplies.

Thanks to the Bush administration's constant rhetoric about the "war on terror", these "security issues" are also bringing oil into US domestic politics. With mid-term elections around the corner and US public outcry at $3 a gallon reaching almost hysterical proportions, Mr Bush is talking a radically different tune. All of a sudden, this Texan oilman is stressing energy conservation and alternative fuel sources.

On the latter point, we Europeans often forget what efforts the United States has already made in the alternatives field - I visited a field of 300 giant windmills in the Joshua Tree desert last week. But Mr Bush is suddenly enthusiastic about ethanol as a fuel, with Congress introducing a wide range of tax incentives for US farmers to grow corn for conversion to ethanol.

This programme is not without its critics, however, who point to the much better energy release from sugar-cane-based ethanol. In Brazil, 73 per cent of cars use this fuel.

Which is why it was announced last week that Mr Bush was inviting the chief executives of America's largest automobile manufacturers to the White House for crisis talks. Something must change. Far from cooling down, the US love affair with the car that transformed the landscape of 20th-century America seems actually to be heating up.

At the New York Auto Show a couple of weeks ago, no less than 12 new SUV (sport utility vehicle) models were on display. Some estimate that that brings the number of SUV models the US public has to choose from up to 80. Many of these vehicles consume 100 per cent more gallons per mile than alternative family saloon cars, let alone smaller cars. Current fuel consumption rates in the US equate to what a Porsche would have delivered in the 1980s.

Many Americans have never felt so afraid; many Americans have never felt richer. Something's got to change.

Christopher.walker@tiscali.co.uk

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