Iraq Goes Green

EVERYDAY, AMERICANS FOCUS ON COUNTLESS problems that have arisen due to the war in Iraq. One of the clear problems we’ve come across has been the supply and price of the world’s oil. No matter what side of the issue you’re on, it’s hard not to notice the effect this conflict has had on our number one source of fuel.

Iraq, under Saddam Hussein, was one of the world’s largest oil producers. Many experts predicted that with Hussein out of power, Iraqi oil production would only rise. This has not been the case. If anything, the war with Iraq has significantly harmed the production of oil and raised the price to record levels. Tensions in the area continue to grow, and recently the threat of an invasion by Turkey sent the price to its highest mark.

So that’s the bad news. Despite what many people think, there actually is good news coming from Iraq. This is news that should delight the very people who have been opposed to the war from the beginning. According to Gallup, the majority of Americans who oppose the Iraq war are Democrats. The same can be said for the majority of Americans who believe global warming to be a major problem. Based on those facts, it may be safe to assume that the same people who oppose the war are the ones asking for changes when it comes to global warming. Many of these people want the government to do something significant about this problem, but the free market should be figuring it out for them.

As more and more people talk about global warming, millions are looking for alternative forms of energy that are cleaner and more environmentally friendly than oil. The technology for alternative fuels is there. The solutions are just way too expensive.

Take hybrid cars, for example. Right now, the Honda Civic sedan starts at $15,010. The popular family vehicle gets 36 miles per gallon. The hybrid version of the Civic starts at $22,600. The hybrid operates at 45 miles per gallon. Clearly, owning a hybrid will have you fueling up fewer times a year and is better for the environment. But are the savings in gas consumption and environmental effects worth it for the average customer to pay over $7,000 more for the “green” vehicle? Based on an average of 12,000 miles driven per year and paying $3.09 for every gallon of gasoline, the savings you get by choosing the hybrid car are only $207 per year. It would take over 33 years to make up for that extra cost. That hardly sounds worth it to me.

One of the only ways these hybrid cars will become more affordable and then be used by more people will be if oil prices begin to rise. The higher oil gets, the more affordable by comparison environmentally friendly alternatives will become. Not only will rising prices balance the differences between oil and alternative energies, but the more expensive oil gets, and the greater a national emergency it becomes, the more incentives to improve energy technology rise.

The incentives will also rise when further political pressure is put on the government. When that happens, subsidies for alternative energy programs will increase. If political unrest continues in the Middle East and the countries that control OPEC refuse to step up production, Americans will have no choice but to curb their use of oil and will then be forced by the market to become part of the ecological solution.

You can already tell that the issue of government subsidies for alternative fuel is one that companies in the energy business are pushing for. According to the National Venture Capital Association, startup companies that focus on clean technologies attracted more than $800 million in venture capital last quarter alone. That shows that there are plenty of investors willing to put up their money hoping the winds are changing toward clean products.

In fact, just last week, the world’s most famous environmentalist, Al Gore, became a partner in Kleiner Perkins Caufield & Byers, a successful venture capital firm that backs many eco-friendly startup companies. Kleiner Perkins claims that Gore will be an integral part of the running of the firm, but many believe that he will be used for his vast connections in Washington. If Gore can help get more subsidies from the government, the money that a firm like KPCB stands to make could be huge. And of course, the politicians that will provide those subsidies will also be answering to the concerns of their constituents. If the price of oil becomes the biggest problem facing Americans, you can be sure that Congress will attempt to do something to appease the voting public.

What stands in the way of these companies is the threat that oil could somehow become cheap again. What if the U.S. leaves Iraq and tensions in the world begin to ease? What if that led to Iraqi oil production on the levels we saw before 2003? If such a thing would happen, then the American people would continue to drive their gas-guzzling cars and polluting the environment. That is the exact opposite of what many global warming activists want.

Of course, this rationale sounds absurd when compared with the money that could have been saved had we not gone to war. That money could have been used by the government to directly subsidize alternative energies sooner. But would they have used it that way? Probably not. Governments usually tend to respond to problems only when they become a crisis.

This goes to show you that by creating an oil crisis, the government may finally be able to solve it. It may be hard to swallow, but believe it or not, people interested in America cutting down on its use of oil and stepping up cleaner initiatives may have George W. Bush and the Iraq war to thank.

Until next time,
Jamie Ellis

November 23, 2007