The real costs of a tank of gas

Paul Salopek has a truly remarkable set of articles in the Chicago Tribune: A Tank of Gas, A World of Trouble. A two-time Pulitzer winner who is known for his Africa coverage, he explores America’s dependency on foreign sources of petroleum in a four-article series that ranges from a suburban Chicago gas station to Nigeria, Venezuela and Iraq, which extracted the petroleum sold to Chicago consumers.

The heart of the story is an analysis of a “crude slate” – the “recipe” for the crude oil that a specific refinery receives. With the cooperation of Marathon, Salopek obtained the crude slate for a refinery in Illinois, which supplied a tank farm near O’Hare airport which, in turn, supplied the gas station where he centers the story. (To capture the vibe of the station, Salopek volunteered as a clerk at the station in South Elgin, IL.)

The crude slate is designed to allow a refinery to produce usable gasoline at certain polution levels, and at a profitable level for the refiner. This involves balancing more expensive, low-sulfur petroleum with cheaper, high-sulfur petroleum. One slate for the Marathon station in South Elgin:

Gulf of Mexico crudes–31 percent
Texas crudes–28 percent
Nigerian crudes–17 percent
Arab Light from Saudi Arabia–10 percent
Louisiana Sweet–8 percent
Illinois Basin Light–4 percent
Cabinda crude from Angola–3 percent
N’Kossa crude from the Republic of Congo–.01 percent

This breakdown gives Salopek the opportunity to explore oil extraction in the Gulf of Mexico and in Nigeria, as well as excursions to Iraq and Venezuela. The reporting in each country isn’t as deep as one might hope – I’d love more insights into his Niger Delta experiences, for instance – but taken collectively, it paints a powerful picture: we’re getting a lot of oil from some pretty scary places.

(Actually, one of the most interesting parts of the story, in my opinion, is the un-scary picture Salopek paints of Venezuela. Yes, almost everyone he quotes is spouting anti-Bush, pro-Chavez rhetoric, but it’s quite clear that Venezuela’s national petroleum company is dumping tons and tons of money into rural development projects. This contrasts pretty sharply with the picture we get of the Niger Delta, where the projects appear pretty cosmetic in relation to the environmental impact oil extraction has had, especially on the fishing industry. I’d much rather bet on buying oil from happy people spouting angry rhetoric than from angry, poor people who have every incentive to destroy petroleum production.)

The story also pointed me to some fascinating research by Milton Copulos, president of the National Defense Council Federation, a right-leaning thinktank. In a 2003 paper titled “America’s Achilles Heel: The Hidden Cost of Imported Oil”, Copulos calculated the “real cost” of a gallon of gasoline, including the costs the US pays for military presence in unstable regions like the Persian Gulf. In 2003, his paper added $3.68 to a gallon of gasoline from Persian Gulf oil. Recalculating his statistics for a presentation in front of the Senate Foreign Relations Committee in March, he now finds a real cost addition to $4.10 for a gallon of gas from anywhere in the world, and $7.41 for a Persian Gulf gallon.

(By the way, a search for the phrase “America’s Achilles Heel” on Google yields several vulnerabilities – health care for the elderly, job-based health care, nuclear and biological attack, as well as oil dependency. We’re either in more trouble than anyone acknowledges, or we need some new cliches.)

Anyway, Salopek’s article is terrific. Exactly the sort of stuff that makes you grateful that professional journalists get budgets to research and cover complex stories…