Exclusive: Ex-CIA Chief Says Saudi Arabia Is Vulnerable
In early December, General Motors loaned a pre-production Chevy Volt to James Woolsey. The former CIA director—who served under Bill Clinton from 1993 to 1995—promptly slapped a bumper sticker on the car, reading “Bin Laden Hates This Car.”
I spoke with Woolsey about his experience behind the wheel of the Volt, political unrest in the Middle East, and the current price of oil. He believes the Volt is a major success, and sees widespread adoption of (and conversion to) plug-in hybrids—especially if running on biofuel—as an effective strategy for alleviating our vulnerability to oil price shocks. "If new cars had that, they don’t need to be all electric," Woolsey said. "Three-quarters of the cars in the country go less than 40 miles a day."
Moreover, Woolsey believes that it's "quite possible" that the recent political unrest in Egypt, Tunisia and Yemen could reach Saudi Arabia, with profound impacts on global oil markets.
Public Enemy Number One: Petroleum Fuels
As a member of G.M.’s V'olt customer advisory board, Woolsey has been evaluating the extended-range electric vehicle, and providing feedback to the company. “I take my hat off to Chevy,” Woolsey told me. “It’s a nice car. Good pickup, nice looking, and I average about 65 miles a gallon on a mix of gasoline and electricity.” Through the winter months, Woolsey has been getting about 30 miles of all-electric range—enough for half of his daily round-trip commute into the nation’s capital.
Woolsey’s experience with the car has been so positive that he plans to lease a Chevy Volt after he returns the loaner later this month. At that point, the Volt will become the garage-mate to a Toyota Prius converted to run for about 20 miles purely on electricity via an after-market 5 kWh battery pack—along with a 10-year-old Ram diesel truck that “happily runs on 100 percent biodiesel” in the driveway.
Woolsey is opting for a lease, because he hopes that it in the next year or two, G.M. will offer a version of the Volt that can use an 85-percent blend of ethanol or methanol in its engine, after the car’s battery is depleted. “I really want a Volt that’s a flexible-fuel vehicle (FFV) because I would be getting [the equivalent of] about 400 miles per gallon of gasoline. I’m an enemy of petroleum fuels.”
In Woolsey’s view, the biofuel-powered plug-in hybrid—whether using the technology strategy of the Volt or a Toyota Prius Plug-in Hybrid—is the holy grail of energy security. “Brazil went in two years from 5 percent of cars as FFV to 75 percent,” explained Woolsey. He believes America can do the same. “It’s ridiculously easy and cheap, but right now, Detroit and the oil companies have decided that fuel lines in cars will be made of a kind of plastic that won’t let them take alcohol fuels.”
Q and A
Do you have any reflections on the fact that your first months with the Chevy Volt are coming just as we’re experiencing another oil price shock?
If anything in this world is predictable, it’s oil price shocks—given the volatility of the Middle East, given the possibility of peak oil, and given the nature of OPEC.
“People pretend the oil market is a real market. Nonsense. It’s a real market that’s controlled by a very powerful oligopoly and cartel, OPEC. So much of the world is sort of like Charlie Brown in which Lucy keeps pulling the football away, time after time after time. And he falls on his back. Darn, she fooled me again.”
OPEC has close to 80 percent of the world’s proven reserves of conventional oil. And they’re pumping about 40 percent of the market. So, they’re withholding about half of what a normal market would do, because they’re a conspiracy in restraint of trade. And they want the price high.
People pretend the oil market is a real market. Nonsense. It’s a real market that’s controlled by a very powerful oligopoly and cartel, OPEC...Any pretense that we are not tools of OPEC is fantasy. It’s been a fantasy for 35 plus years.
Has something fundamentally changed in the Middle East, and as a result with oil markets, in 2011?
It’s more demonstrable. It’s easier to see if people can look at television and see rioting in the streets. But the exercise of power has been there for over 35 years. Anybody who didn’t think that the Saudis are running the world oil market is naïve.
Could the political unrest spread to Saudi Arabia?
It’s quite possible. Yemen is in flames. Bahrain is at least seriously shaken. And they’re both right on the borders. And the Saudis in the eastern province have a huge population of Shia that they’ve treated very badly. And Iran is almost certainly using Hezbollah and Al-Quds [Iran’s revolutionary guard] to stir things up in the Gulf, in Bahrain, in Yemen, and quite possibly soon in Saudi Arabia. We just don’t know.
Will the U.S. work to quell those movements in Saudi Arabia, considering what would happen to oil markets?
If we will not even criticize Ahmadinejad in the mildest terms when a year and half ago he stole the election and there were millions of Iranians in streets risking their lives, and the most we could say is “Hmm,” then how in the world does anybody think that we can affect something in that part of the world?
How are we going to keep Iran from funding Hezbollah and the Al-Quds force from creating disruptions and problems in much of the Gulf, when we won’t even criticize them?
Is the U.S. better positioned in Saudi Arabia to work behind the scenes, or in some other fashion, to make sure the country and oil markets remains stable?
How? The Saudis don’t want us there. That’s one of their great things—not having any Americans in country, except employees of Aramco. They’re not going to invite us in.
They did back when Saddam was sitting 100 miles from their biggest oil field in 1991, but they immediately starting griping that we were there, and Jewish and Christian American troops couldn’t wear Stars of David or crosses, and had to have their bibles confiscated even though we were spending billions of dollars protecting the Saudis. They don’t want us.
Given how long market adoption takes, can electric cars and plug-in hybrids roll out fast enough to make a real impact on energy security?
We’ve got to have conversions of existing vehicles both to FFVs and to plug-ins. If you can convert existing vehicles to be plug-ins, and come up with something that’s a few hundred dollars to convert existing vehicles—whether they’re hybrids or not—to be FFVs, then you can strike a blow against oil really fast because you don’t have to wait for the automotive companies to tool up, do studies and so forth.
Short of conversions, you’re talking very incremental change—single percentage points of new car sales.
The reason we want to look at conversions is you can go so much faster. Even if conversions don’t work for 75 percent of the vehicles out there, if they work for 25 percent, that’s still going 25 times faster than several years of waiting for new cars to come into the market.
Given what you’re saying, what is the accomplishment of seeing the first wave of Volts and LEAFs out there? Is it more symbolic?
No, it’s destroying OPEC. You want to destroy OPEC’S monopoly over oil—and the only way to destroy that is to destroy oil’s monopoly over transportation.
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