In this excerpt of our interview with Lisa Margonelli, author of Oil on the Brain: Adventures from the Pump to the Pipeline, we examine China’s rising demand for oil.
Leapfrogging, In Which Direction?
Bradley Berman: You’ve said that if we’re going to do anything about reducing oil use, it will be on the demand side. And yet China’s rising demand is eclipsing any measure that we might take to incrementally decrease demand in the United States. You paint a fairly rosy picture of China leapfrogging the rest of the world on fuel-saving technologies.
Lisa Margonelli: I wouldn’t say it’s rosy. I would say that it’s a big gamble on their part, but what’s interesting about that gamble for China to leapfrog is that the potential rewards are so huge for the government, and because the government does central planning, it can actually imagine doing something like that, and can imagine the rewards. What that would do for the world economy if they were to leapfrog in terms of efficiency or in terms of using a dramatically different kind of fuel or producing very cheap cars with no greenhouse gas emissions, that could really change things. Will they do it? I doubt it. It’s awfully hard to pull that off. But China’s government’s hold on power is intimately tied to being able to supply energy for that growing economy.
BB: A much faster path to economic growth is to use the same kinds of energies that we use, like coal and oil.
LM: Right. But it’s much less secure.
BB: But leapfrogging is predicated on the technology cooperating, which may not happen.
LM: Partly it’s the technology, but partly it’s the ability to create markets. And to potentially force people to buy those cars, and to force a market that allows you to develop a car where you can export it.
BB: Do you find it ironic that China’s move in terms of personal transportation from bicycles to cars is exactly the opposite direction from what we should be doing in the United States?
LM: Yeah. I studied in China in the early 1990s, and I had a bike. You could buy an old bike for 20 bucks. What I loved were these freeways for bikes. You had special roads and a special bicycle roundabout, where you would be next to a donkey cart. It was great. I went everywhere in Beijing on the bike. Going back to Beijing [recently] and realizing that you didn’t want to get on your bike because you couldn’t breathe, and it was so dangerous and many of those bike paths had disappeared. It was no longer the People’s Republic of Bicycles. It was pretty sad.
They are taking a path that is very energy intensive. What’s interesting is that the combination of government, industry, and universities has a slightly different set of incentives than we do in the U.S. And they have a different set of tools available to them, and they could do something. We don’t know that they will. The odds are definitely stacked against them. I think it’s clear from the reporting in the book that the chances of China pulling this off are slim. But the rewards are huge.
The car designers there are saying that only 12 percent of the world has cars, and if we want to make money, we need to make cars for the other 88 percent. Someone else says that China doesn’t believe that what’s good for GM is good for the country. They are not necessarily protecting their auto industry. They are thinking about ways to use it. They want to push it in certain directions to create jobs. So, the rewards for figuring out how to create a car for the other 88 percent that doesn’t pollute—because they see pollution as a binding condition for the growth of China’s auto industry—those are very interesting rewards and certainly those are things which are not internalized here in the U.S. where have the Big Three showing up in Congress and saying, “We can’t have any more CAFE standards. We can’t make our cars more efficient.” What are you talking about? You sell more efficient cars in Europe under your own brands. You know how to do that.
BB: And yet the move to cars at all is problematic.
LM: Yes. On the other hand, you can see why it’s so attractive. It’s like the [Chinese] woman I met who said, “I’ve seen so many American movies. I really wanted to drive a car. Then, I got on the freeway, and all the people around me looked worried and it was really crowded.” So now she’s thinking of flying an airplane. The dream of the car is not exactly about a car. (Laughs). It’s about a lot of other things.
BB: It’s powerful.
LM: At one point, I was in the Shanghai subway and there were a lot of signs up for a car by GM. It had the car up on the mountaintop all alone. Here you are, walking with thousands of people in the crowded Shanghai subway, and you see a vision of a car on the mountaintop. And you think, “Ooh, I’ll be all alone in my car.” You’ll never be all alone in China, but the biggest chance you’ll have of it is in your car. Unfortunately. (Laughs). If they can make cars in this context, then they can bring other ideas about what a car is.
BB: That’s what is required. A redefinition of what a car is, and the relationship between car and driver and society. And you can’t drive a car without gasoline.
LM: At that moment. Plug-in hybrids would make a big difference in the amount of gas that was used. You can see how China could try to figure out how to make plug-in hybrids happen faster, or make electric cars happen faster.
BB: Tying cars into the grid, regardless of whether there’s a gasoline engine on board or not, offers some hope. You’ve been on worldwide adventure examining the issue of oil, does it all come down to removing our need for petroleum?
LM: Reducing demand is a big part of the solution. Planning for what happens when oil becomes more fraught and higher priced. And also, as a personal thing, the amount of violence associated with oil is striking. Going to Venezuela, going to Nigeria, a lot of people will see a moral dimension to the environmental costs of oil, and definitely that’s true. But there’s also a huge human cost, not strictly caused by the oil, but around the oil and the institutions that have grown up around it, and the kind of governments that exist in oil-producing countries, and how they see their loyalties as not to their citizens but to the people who they are supplying the oil to, so they can continue to get money.
Oil is all about perverse incentives. Going to Nigeria, I felt that buying gasoline is morally fraught. A lot of people are paying for my gallon of gas. And they are paying for it in a lot of ways that are unsavory. We’ll need to process not only the greenhouse gases but the human rights aspects, and the poverty aspects, and the infrastructure in the U.S., we’ll need to work on all of those things.
We need to process all of those things together, and one response that we can do is reduce our demand. That’s one thing we can do. Fixing the government of Nigeria is huge task. We have some tools, but it’s not in our hands. But changing the kind of car that you drive, and changing the way you use gas, and getting the system as a whole to reduce the amount of fuel we use, we’ll actually yield some things.
BB: Currently, there’s a techno-utopian trend. We just came out of it with hydrogen. Is hydrogen eventually going to work out? Maybe. We may be simply replacing other technologies, like cellulosic ethanol or advance batteries, for what we’ve now discovered that hydrogen is not able to do. We’re not going to solve our problems with one technology or even one legislative act. It’s going to take time.
LM: That’s why we need to get to work. It’s not like we’re going through a bad patch, and we’ll be coming into a sunny period. We’re not. The bad patch that we’re seeing is the beginning of future bad patches. That said, I’m an optimist. I don’t believe that any history is inscribed before the fact. I think that people make choices and dramatic things happen. People do things that change the world. I think it’s foolish to count on some technology to save us, but I think everybody doing small things could really make a big difference.
- From the Pumps to the Refineries
- Petroleum Reserves and the NY Mercantile Exchange
- Venezuela and Iran