Saudis terrified we might actually reduce oil dependence (World Streets launches campaign for compassionate aid)

Thanks to environmental writer and columnist Jay Bookman for this heads-up, and right behind him the New York Times, World Streets now has a new thing that keeps us up at night. Any reduction on our part of oil consumption, say through some of the projects and measures being pushed by World Streets and others, is (do we have this right?) a form of theft. Fair is fair we would say, so let’s get together and work this one out. Get out your checkbooks. Compassionate capitalism.

From the New York Times of 14 October:

Saudis Seek Payments for Any Drop in Oil Revenues

– by Jad Mouawad and Andrew C. Revkin

Saudi Arabia is trying to enlist other oil-producing countries to support a provocative idea: if wealthy countries reduce their oil consumption to combat global warming, they should pay compensation to oil producers.

The oil-rich kingdom has pushed this position for years in earlier climate-treaty negotiations. While it has not succeeded, its efforts have sometimes delayed or disrupted discussions. The kingdom is once again gearing up to take a hard line on the issue at international negotiations scheduled for Copenhagen in December.

The chief Saudi negotiator, Mohammad al-Sabban, described the position as a “make or break” provision for the Saudis, as nations stake out their stance before the global climate summit scheduled for the end of the year.

“Assisting us as oil-exporting countries in achieving economic diversification is very crucial for us through foreign direct investments, technology transfer, insurance and funding,” Mr. Sabban said in an e-mail message.

This Saudi position has emerged periodically as a source of dispute since the earliest global climate talks, in Rio de Janeiro in 1992. It is surfacing again as Saudi Arabia tries to build a coalition of producers to extract concessions in Copenhagen.

Petroleum exporters have long used delaying tactics during climate talks. They view any attempt to reduce carbon dioxide emissions by developed countries as a menace to their economies.

The original treaty meant to combat global warming, the 1992 United Nations Framework Convention on Climate Change, contains provisions that in Saudi Arabia’s view require such compensation.

Mr. Sabban outlined his stance at climate talks in Bangkok this month.
Environmental advocates denounced the idea, saying the Saudi stance hampered progress to assist poor nations that are already suffering from the effect of climate change, and that genuinely need financial assistance.

“It is like the tobacco industry asking for compensation for lost revenues as a part of a settlement to address the health risks of smoking,” said Jake Schmidt, the international climate policy director at the Natural Resources Defense Council. “The worst of this racket is that they have held up progress on supporting adaptation funding for the most vulnerable for years because of this demand.”

Saudi Arabia is highly dependent on oil exports, which account for most of the government’s budget. Last year, when prices peaked, the kingdom’s oil revenue swelled by 37 percent, to $281 billion, according to Jadwa Investment, a Saudi bank. That was more than four times the 2002 level. At one point in 2008, the average gasoline price in the United States surpassed $4 a gallon.

Saudi exports are expected to drop to $115 billion this year, after oil prices fell. American gasoline prices are hovering around $2.50 a gallon.

The one-year swing in the kingdom’s revenues shows that oil prices are likely to be a bigger factor in Saudi Arabia’s future that any restrictions on greenhouse gases, said David G. Victor, an energy expert at the University of California, San Diego.

Mr. Victor dismissed the Saudi stance as a stunt, saying that the real threat for petroleum exporters came from improvements in fuel economy and rising mandates for alternative fuels in the transportation sector, both of which would reduce the need for petroleum products. “Oil exporters have always, in my view, far overblown the near-term effects of carbon limits on demand for their products,” Mr. Victor said. “For the Saudis this may be a deal-breaker, but the Saudis are not essential players. In some sense, one sign that a climate agreement is effective is that big hydrocarbon exporters hate it.”

A recent study by the International Energy Agency, which advises industrialized nations, found that the cumulative revenue of the Organization of the Petroleum Exporting Countries would drop by 16 percent from 2008 to 2030 if the world agreed to slash emissions, as opposed to the projection if there were no treaty.

But with oil projected to average $100 a barrel, the energy agency estimated that OPEC members would still earn $23 trillion over that period.

Mr. Sabban, however, cited an older study by Charles River, a consulting firm, which found that the losses in revenue for Saudi Arabia alone would be $19 billion a year starting in 2012.

The Copenhagen talks were a major point on the agenda of the last OPEC conference.

But not every oil-exporting country is falling in line with the Saudi position. Some have been trying a different approach that has earned the backing of environmental groups. For example, Ecuador, OPEC’s newest member, said last year that it was willing to freeze oil exploration in the Amazon forest if it got some financial rewards for doing so.

The Saudi negotiator said that the compensation mechanism was an integral part of the global climate regime that has been in place since the 1990s and that was not up for renegotiation.

“It is a very serious trend that we need to follow and influence if we want to minimize its adverse impacts on our economies and our people,” Mr. Sabban said in an e-mail message to other OPEC officials. “That does not mean we would like to obstruct any progress or that we do not want to join any international agreement. We will do that if the deal is fair and equitable and does not transfer the burden to us.”

# # #

Thanks to Jay Bookman for his good heads-up on this important news. He maintains a very interesting blog specializing in foreign relations and environmental and technology-related issues. which you can check out at http://blogs.ajc.com/jay-bookman-blog\

And here you have our editor, overcome with emotion as he tries to figure out how World Streets is ever going to find the wherewithall to compensate for our actions leading to all those big number reductions in oil imports. (He really should have thought of that first.)

New York City Congestion Pricing Wars: Ideas vs. politics vs. indifference

This is the first of a two part series by New Yorker Charles Komanoff, an activist, energy-economist and policy-analyst, taking on the loud (and so far powerful) opposition to the concept of bringing road pricing to provide some relief to New York City’s crowded streets.

We are pleased to reprint this short piece with the author’s permission, as published last week in the pages of our diligent Streetsblog New York colleagues, on the grounds that this debate has implications that stretch far beyond that great city’s crowded streets.

We particularly recommend that you take a few minutes to review the Comments that follow this piece. Many of which are informative and quite thought provoking. They provide a good idea of the mental landscape in that city. Click here to view those comments.

Paradox, Schmaradox. Congestion Pricing Works.

– by Charles Komanoff

We’re used to seeing bizarre patterns of thinking on the Wall Street Journal’s editorial pages, but an op-ed in Friday’s Journal took it to a new level: “How Traffic Jams Help the Environment.”

Still more bizarrely, the author was New Yorker writer David Owen, promoter of the commonsensical idea that urban density is energy-efficient, hence big cities are green.

For some reason Owen has taken a dislike to congestion pricing, and it has led him to construct an elaborate Rube Goldberg argument to prove that congestion pricing leads to more driving:

If reducing [congestion] merely makes life easier for those who drive, then the improved traffic flow can actually increase the environmental damage done by cars, by raising overall traffic volume, encouraging sprawl and long car commutes.

What a lovely paradox … and how ridiculous, as Owen could have discovered by giving London’s congestion pricing experience (or Stockholm’s or Singapore’s) more than a cursory glance.

As any student of urban traffic now knows, London’s cordon pricing scheme cut traffic within the charging zone an average of 15 percent, raised travel speeds 30 percent, and greatly expanded bus ridership and cycle commuting — with little increase in traffic outside the zone or other negative effects. (http://www.tfl.gov.uk/assets/downloads/Impacts-monitoring-report-2.pdf)

Nearly seven years on, the reasons are fairly obvious:

* Raising the price to drive into the center of London made car commuting less attractive.

* The gain in driving speeds attracted some new trips but not so many as to cancel the lost ones.

* Bus transit benefited from a virtuous cycle in which improved speeds attracted riders, further reducing traffic and also financing service improvements which attracted still more riders, further reducing traffic, etc.

* Ditto for cycling, though here the synergy was via safety in numbers.

All this was intuited back in the day by Transport for London staff, including Jay Walder, who has subsequently become the new MTA chief. The only uncertainty was the extent to which new car trips attracted by the time savings would undercut the reduction in trips from the congestion charge.

As it happened, some “induced traffic,” as Owen might have termed it, did materialize, but at far less than the one-for-one rate he assumed in his article. Without it, the drop in traffic might have been 20 percent or more. But the actual equilibrium, a settled 15 percent reduction in cordon traffic, was robust enough to achieve the desired results: faster travel by every mode, greater use of transit, and less VMT (vehicle miles traveled). Congestion pricing is indeed green.

To trace Owen’s error, look no further than his hypothesis: “If reducing [congestion] merely makes life easier for those who drive …”

Emphasis added; the “merely” is quite important. When the reduction in traffic is caused by a congestion charge, life is not just easier for those who continue driving but more costly as well. Yes, there’s a seesaw between price effects and time effects, but setting the congestion price at the right point will rebalance the system toward less driving, without harming the city’s economy.

What’s that right price point, then? It’s not quite rocket science to figure it out, though it does take some thinking (not to mention continual tinkering if exogenous reductions in road capacity erode the original congestion benefits, as TfL reported recently). It’s a subject Ted Kheel and I have in fact been thinking about for quite a while now, and if you would like to do some thinking about it too, start with our Balanced Transportation Analyzer — http://www.nnyn.org/kheelplan/BTA_1.1.xls –and contact us with questions or criticisms (email: kea AT igc.org).

In his piece, Owen linked former Londoner and current MTA honcho Walder with the idea of congestion pricing. One can’t help wondering whether he or the Journal intended it as a pre-emptive strike against a possible renewed push for congestion pricing in New York City. Whatever the motivation, it’s disappointing to see a writer who has rightly urged Americans to “live closer” peddling the defeatist — and false — notion that the price of urban virtue is eternal gridlock.

# # #

* Click here to read the original piece in Streetsblog (with Comments)

The author:
Charles Komanoff “re-founded” NYC’s bike-advocacy group Transportation Alternatives in the 1980s, helped found the Tri-State Transportation Campaign in the 1990s, and co-founded the Carbon Tax Center in 2007. Charles’s writings include books, articles, and landmark reports such as Subsidies for Traffic, Killed By Automobile, and the Kheel Report on financing free transit in New York City. A math-and-economics graduate of Harvard, Charles lives with his wife and two sons in lower Manhattan