[ad#post_ad]I had the chance to interview Jim Woolsey, the former CIA Director, who has long been an active proponent of reducing US oil dependence. He is also one of the 17 members of the Chevrolet Volt advisory board, who along with me has been living with a captured test fleet Chevrolet Volt.
What is your present occupation and activities?
I’m a venture capital partner in a venture capital fund in Silicon Valley, Vantage Point, and I look into start up companies for them in the clean-tech space which is renewable energy and energy security and water purification.
I look for startups that are particularly creative even if they don’t meet all the criteria one would look for in a sound investment, looking especially for ones with creative technology. I found Tesla for them back five six years ago when it was about eight to ten people in a garage.
I found them through a friend who is one of my co-authors, Chelsea Sexton. She and her husband met me at a speech I gave in Southern California back then and I said something about batteries not quite being ready for electric vehicles. She said ‘you’re wrong about the batteries’, and took me a month or so later to Tesla. You can’t always come up with investments through those sorts of contacts but that’s one in which the electric vehicle community actually introduces an EV company to the venture capital world. Once we looked into it Vantage Point decided to invest in it.
Are you one of the founders of the firm?
No. Vantage Point has been around for years. I am a part-time partner for about three and a half years.
But you’ve been particularly interested in this space for much longer than a few years?
Oh Yeah. Ive been interested in doing something about oil since October 1973 when I was general counsel of the Senate Armed Services Committee and I was late to run an important hearing because it was the middle of the Yom Kippur war and the Saudi’s had cut off our oil and I got stuck in a gas line at a gas station for several hours. I remember sitting there seething about it then and I’ve been interested in this space in one way or another; biofuel, electricity, efficiency of engines since then.
I understand you were the director of the CIA for several years; would you say that work opened your eyes to more concerns about energy security and energy dependence than other things you’ve done?
Well I was in the government five times and four of them Presidential appointments in the executive branch, two Republican, and two Democratic administrations and all of it related to national security. I’ve been thinking that our oil dependence is a serious security problem since 73. I wrote a piece called ‘New Petroleum’ about moving towards biofuels, to a Senator Richard Luger back in 1999 in foreign affairs. So this has been a subject that I am especially concerned about but I think it’s fair to say that beginning with the Iranian revolution in 1979 and with each terrorist attack or incident whether its hostage seizing or 9-11 or anything else that has come out of the Middle East, it just doubly underlines how important it is that we not be dependent on oil for transportation. You do not deal with this by just buying less foreign oil.
The only thing you do by drilling more domestically is you help to balance the payments, and that’s not negligible. We borrow a billion dollars a day to import oil and if we cut our imports by ten percent, through efficiency or biofuels or electricity, the Saudis and their colleagues in OPEC will just pump a million barrels of oil a day less to keep the price jacked up. They already are pumping slightly less per day than they did in the early 1970s. World demand for oil has certainly gone up but during that time they got close to 80 percent of the world’s reserves and they (OPEC) are only producing about 40 percent of the world’s oil each day, and the reason they withhold so much from the market is to keep the price up and keep control of the market.
We’re not going to change the dominance that they can create with several dollars barrel oil that they sell for eighty. By us being able to produce oil for about 50 to 60 dollars per barrel, we’re not in any terms going to halt or to interfere with their cartel operation just by making moderate reduction in the amount of oil we use. If we try to do it regionally if we buy less from the Saudis and more from Norway then somebody else will just buy less form Norway and more from the Saudis.
So an awful lot of the solutions that people come up with have almost nothing to do with the problem of oil dependence.
Cap and trade may be a reasonable way to eliminate emissions from power plants but it has virtually nothing to do with oil because a dollar a ton of CO2 price is a penny a gallon at the pump.
A lot of people get enthusiastic about nuclear power or wind and cleaning up our emissions from power plants and that’s important, those are some of the way to do it, but they don’t have anything to do with oil dependence. Since only about 1 percent of our electricity comes from oil you can switch around between coal and nuclear as much as you want and not do anything about our oil dependence.
So the public debate insofar as it’s been focused on ‘drill baby drill’, cap and trade, and so forth has virtually nothing to do with oil dependence.
We got to go right at it, and I think electrification is an important way to go right at it. Biofuels and efficiency of internal combustion engine are important too.
Besides the financial and national security consequences of oil dependence how to you feel about the concept of peak oil, and do you think the oil supply will become very tight over the next 10 or 20 years especially with China and Indian demand growing?
You’ve got several things going on, one is increasing Indian and Chinese and other demand as a result of those countries getting more prosperous and buying more and more cars. There’s also the possibility of peak oil. The range of disagreement about that is not huge. It’s between whether it’s occurring around now or will occur within the next ten or twenty years. It will be different times in different fields but if you talk about net overall based on what we know, most people think even if we’re not in peak oil now it will be another twenty years max.
That will put pressure on the price, because it doesn’t mean you run out right away but it means that an oil field like the big one in Mexico is past its peak it means cost of production goes up and cost goes up and that looks like its happening in more than a few oil fields round the world.
Looking at the EV early adopters its seems like national security is the main interest but marketing people talk about environmental impact and global warming as motivators. What’s your feeling on that?
I think CO2 is part of the story and quite probably an important part of the story of the risk of producing anthropogenic climate changes, and there are a lot of other things going on as well, it’s a very complex subject. There are very complex models dealing with it, but I don’t think one has to believe that CO2 emissions from largely oil and coal are the entire story in order to be concerned about the amount of CO2 emissions.
Even if cigarette smoking is 50 or 55% creating the risk of lung cancer, and there are other factors, it doesn’t mean we should dash out and start smoking five packs a day.
I think climate change is part of it but I think because the administration and Congress have emphasized the cap and trade so much they’ve really gotten away from doing anything about emissions from oil. They need to focus more on that. They’ve done some positive things like the tax credit on the batteries and some aspects of R&D on biofuels, but they really need a concerted program to go after oil dependence. I think one important part of that is the so-called aromatics that replaced lead to increase the octane in our engines.
About a quarter of what is in your gasoline tank is benzene, toluene, and xylene and those are highly carcinogenic. If you emitted even tiny bits of those form a chemical plant, you would be in deep trouble with the regulatory system but that junk can come out the tailpipes of every car in substantial quantities and it is not effective regulated under US law. EPA has the authority to regulate the aromatics but they haven’t done it for the forty years of the existence of the Clean Air Act.
So there are a lot of reasons to move off oil, and cancer is one. There’s an added cost of 200 billion per year due to health consequence of the aromatics.
We see GM, Nissan and others are producing electric cars finally. Do you feel these companies’ moves and motivations are going to produce a lasting change or do you think the oil industry will try to limit this to an extent?
I think the big danger is not from the international oil companies, it’s from OPEC. The international oil and gas companies don’t really own the oil they produce and some of them including Exxon are very heavily and increasingly selling natural gas. That’s a whole separate issue. Once you get the cleanup of the hydrofracturing water from the gas shale done right I think there’s at least a reasonable opportunity that we could be relying substantially more on natural gas for electricity generation and for transportation both if you end up with open standard flexible fuel vehicles with methanol made from natural gas that you can make now for about eighty cents per gallon. And also even directly putting CNG into vehicles particularly for interstate trucking, since you don’t need a lot of natural gas pumps to do that. I’m not much of a fan of natural gas for the family car. Because you’d have to have natural gas filling stations all over. But for fleet vehicles like city buses and interstate trucking there’s potentially a lot of utility there. A lot of the big international oil and gas companies are pulling a lot of their exploratory and other interests towards gas. But for OPEC and even those countries that do produce gas going to LNG increases the cost and most of those places don’t have pipelines. And in any case they make more money on oil. They control much more of the market to jack prices up anyway they want. So I think the real folks who are solidly opposed to electrification of transportation, biofuels, and efficiency is OPEC and their national oil companies, not so much the internationals.
Do you think OPEC can possibly influence the growth of the EV industry?
Well they’ll do their darnedest with lobbying. Look up the registered law firms, lobbyists, and advertising agencies for the Saudis alone and those OPEC countries that do nothing but pump oil. If you have some institution directly or indirectly speaking for ARAMCO let’s say, in Washington, that’s OPEC governments at work.
Influencing policy in this country?
Oh sure. Absolutely.
Do you think the current efforts of companies like GM and Nissan as real efforts that will change the nature of our automotive fleet, or do you think this is greenwashing?
I think certainly the hydrogen highway business back at the beginning of the decade was greenwashing. But I think EVs are different because we all have access to electricity and more public charging networks will come in and things will get easier. And if you’ve got a garage you got it already.
I think the existence of the electric infrastructure and I think for the new era of EVs for a lot of people even if they very rarely use a vehicle to go more than 30 to 40 miles per day, the range anxiety is always there. That’s one reason why the plugin hybrids and vehicles like the Volt with extended range are so important because you can have confidence that you can stop by any filling station to extend the range. In a Volt three out of four days for the average drive it’s an all-electric vehicle. To be able to have the liquid fuel in the tank in case you have an emergency and you don’t want to have to worry about stopping for an hour and finding a plug, the extended range from the liquid fuel is I think a very important aspect of bringing about change.
Now in time the batteries may get good enough and cheap enough that it won’t matter, and for people who may only use EVs as a second car, or as fast chargers start appearing, this may all go away in a couple of decades, but initially being able to have the liquid fuel extend the range is a really important aspect of the whole thing.
So I guess on a personal level you had been looking forward to getting your Volt?
Absolutely. I also drive a plugin converted Prius with an A123/Hymotion batter and it’s got a bumper sticker on it that has a picture of Bin Laden and it says Bin Laden hates this car.
I have one ready to go for the Volt, and will be even more deserved for the Volt as 40 miles is certainly better than 10 or 15.
Do you have any comments on your experience so far driving the Volt?
Terrific to drive. The panels, gauges, etc. are easy to read and driver-friendly. The 25-50 mile electric range is just right to let you drive all-electric most days, not need a huge battery, and have no range anxiety (because of the liquid fuel). Really looking forward a lot to Volt ffv’s (I understand 2012-ish) so I can use virtually no petroleum products at all.
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