'Oil Shockwave' scenario: How the U.S. might deal with a terrorist strike
Prices suddenly shoot up to $160 a barrel. Former US officials gathered at Harvard University discuss how they'd respond.
News flash: Terrorists sink an oil tanker, blocking the vital Bosporus Strait. Oil rockets to $160 a barrel and gasoline to $5 a gallon in the United States. What can keep the globe's biggest oil-guzzling economy from running dry?
Hunched in a war room, top officials are thrashing out the nation's options beneath illuminated screens depicting diving stock and energy markets. In minutes they must tell the president how to help the nation survive what some call the worst "oil shock wave" since the 1970s.
While the secretary of Defense warns of "a crisis within a crisis," the secretary of Energy is talking about a 55-m.p.h. speed limit. Someone mentions releasing some of the nation's 700 million barrel strategic petroleum reserve stored in salt caverns along the Gulf Coast.
"Let's not do anything with the strategic petroleum reserve until we talk with our allies," the Treasury secretary says emphatically. "It's important that we don't flail."
Fortunately, nobody is really flailing - because this is an "oil shock wave" crisis simulation held at Harvard University in Boston last month. The "Treasury secretary" was Lawrence Summers, who once held that job for real. Ashton Carter, Robert Rubin, Joe Lockhart, and other former US officials joined him in highlighting America's oil vulnerability.
Yet the true shock may be that the US really doesn't have to wait for an attack – because it is already inside an oil crisis whose potential long-term consequences are more serious than today's $3.60 per gallon gas would suggest, and could be as dire as any terror strike, former top government officials and energy-security experts say.
"If you drop a frog into boiling water, it jumps out," says Robbie Diamond, founder and president of Securing America's Future Energy, a nonpartisan group that has sponsored and organized the simulations to draw attention to US energy vulnerability. "But if the frog is in the water while it heats up, it just stays in water. Well, we [in the US] are in the water and the pot is getting hotter."
To get out of that pot, Mr. Diamond's group recommends a raft of measures to reduce demand. While not accepting oil-industry money, SAFE does advocate drilling in areas now prohibited in Alaska and off US coastlines. It also recommends developing new technology to capture and store the carbon from
coal-to-liquids projects so US coal reserves can be developed for fuel without harming the environment. [Editor's note: The original version gave an unclear description of SAFE's position on how to address rising oil prices.]
But others say the oil-shock simulations – which are characterized for the audience as taking place a few years from now when climate-change concerns will be on the front burner for the next president – should logically include a "secretary of Climate Change" on the panel. One is needed to rebut coal-to-liquids and drilling suggestions when they arise during the simulation event, as they did recently at Harvard.
"If I were climate secretary, I would say, 'Mr. President, we have to drive down oil demand in this country quickly with policies that encourage Americans to take public transportation, drive efficient cars," says Deron Lovaas, senior energy analyst with the Natural Resources Defense Council. "We can't drill our way out of this."