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Addicted to Oil: U.S. Oil Policy Simulation

A paper published last year by Resources for the Future made the point that our oil vulnerability has less to do with the amount we import than simply with the staggering amounts we consume period. In addition, energy independence, a favorite rallying cry of politicians, is an unachievable myth.

Energy independence has been a rhetorical and political rallying cry for nearly 40 years—President Nixon presided over the massive 1974 Project Independence Report—and it is as flaccid a concept today as it has been over the decades.

There are for sure excellent reasons for reducing dependence on oil, particularly imported from unfriendly or unstable countries. If you are interested in understanding better what’s involved with moving towards reduced dependence on oil, you’ll want to check out this cool tool I heard about from reading the Water Cooler Games web site. This is a simulation game (a sim) that’s available free from Forio Business Simulations. In this sim, you have the goal to reduce U.S. dependence on imported oil within a specified time period.

In this sim, you are the President of the United States. You’ve been elected on a platform of reducing U.S. dependence on oil imports. There are a variety of options available to you to alternately reduce consumption and increase production. These range from opening oil fields in Alaska to mandating improved fuel efficiency of new vehicles. After selecting your policy options, you write a speech to the American people outlining your policies and click the "start" button. The simulation then shows if you were able to achieve your goals.

These are the policy options:

Transportation Initiatives

* Alternative fuels research.
* Encourge production of hybrid vehicles.
* Launch a nationwide promoting carpooling.
* Improve jet engine and airplane technology to reduce airline fuel consumption.
* Convert trucks and trains running diesel to biodiesel or other alternative fuels.

Domestic Supply Initiatives

* Open the Arctic National Wildlife Refuge to oil development.

Residential and Commercial Initiatives

* Launch a campaign to encourage Americans to lower their thermostats during the winter.
* Sponsor a nationwide conservation program to reduce residential and commercial uses of petroleum.

Industrial Initiatives

* Sponsor a nationwide program to replace industrial use of petroleum with synthetic alternatives.

Electric Utility Initiatives

* Convert oil-based electrical generation to natural gas, solar and wind technologies, and nuclear power

The goal is to reduce oil imports by 25% of the 2005 level by 2025. Here are some simulation results with various scenarios I tried, along with the percent increase or decrease in oil imports, and the percent of U.S. oil that comes from imports:

1. Do Nothing – 43% increase in imports, 72% of U.S. oil will be imported in 2025. This requires no sacrifices from Americans, but fails to meet the simulation goal.

2. Open the Arctic National Wildlife Refuge to oil production starting in 2008 (in three years) – 29% increase in imports, 65% of U.S. oil will be imported in 2025. Again, this requires no sacrifices from Americans, but also fails to meet the simulation goal (ANWR performed better than I had expected – I had thought it was the proverbial "drop in the barrel").

3. Implement all initiatives to improve transportation energy use except for conservation (carpooling). This represents a relatively modest improvement in energy efficient transportation, though probably not from the political perspective: 1) in 2007 (in two years), start selling new vehicles that run on ethanol, cellulosic ethanol or biodiesel - 25% of all new vehicles sold will run on alternative fuels within three years of the start date (i.e. by 2010); 2) in 2007 (in two years), start selling hybrids that achieve 50 miles per gallon fuel efficiency, to be achieved within three years of the start date (by 2010); 3) starting in 2008 (in three years), reduce jet fuel use by 25%, to be achieved within four years of the start date (2012 – the airlines and aircraft manufacturers have better lobbyists); 4) in 2008 (in three years), reduce diesel consumption in trucks and trains by 25%, to be achieved within three years (2011 – Congress takes pity on the trucking and rail industries). This doesn’t involve much sacrifice on the part of most Americans, except perhaps for some new taxes for incentives and research, and possibly some job dislocations (layoffs or relocations), but reduces oil imports by 21%. There is still 58% of U.S. oil consumption being imported.

3a. As a variant, I tried more aggressive measures to reduce transportation energy use (doubling all of the goals to 50%). This does achieve the goal, reducing oil imports by 42%. However, 51% of U.S. oil consumption is still imported in 2025. Moreover, the simulation does not explore the technical feasibility of, say, reducing jet fuel consumption by 50%, much less the political feasibility. There probably would be some sacrifices required of Americans to achieve this goal because the research, engineering and manufacturing effort required to reshape the transportation sector probably would rival the Manhattan Project.

4. Vice President Cheney said in 2001 "Conservation may be a sign of personal virtue, but it is not a sufficient basis for a sound, comprehensive energy policy". So how about it? The conservation scenario involves: 1) instituting carpooling starting in 2007 (two years out) in order to reduce an individual’s vehicle-miles traveled by 25% with two years; 2) turning down thermostats 5 degrees, starting in 2007 (two years out), and instituting a residential and small business conservation program starting in 2009 (four years out) to reduce petroleum consumption by 25% within three years of the start of the program. Conservation results in reduced oil consumption, but petroleum imports still increased 16%, with 67% of U.S. oil consumption being imported by 2025. When you double the percentages conserved (to 50%), oil consumption is reduced by 6.67 million barrels per day, but overall imports only decrease by 8%, and 62% of oil consumption is imported. [Wingnut note: before you shout heh, indeedy – Vice President Cheney is right, be aware that conservation when combined with technology initiatives is probably the edge we need for energy independence, and what do you have against personal virtue anyway?]. However, this would involve considerable reshaping of our work and leisure lives, so there would be significant sacrifices involved with conservation alternatives.

5. Large manufacturing and utilities scenario: this involves 1) industries finding substitutes for petroleum feedstocks and fuels starting in 2008 (three years out – they have better lobbyists), achieving 25% reduction in petroleum consumption in four years (2012); 2) utilities replacing petroleum-fired electrical plants with natural gas, solar, wind and nuclear starting in 2008 (three years out), within 5 years. The sacrifices involved may include higher prices and utility rates, since this again may involve a Manhattan Project-style effort. And, it isn’t terribly effective by comparison, with oil imports increasing 31% by 2025, and 70 % of our oil consumption coming from imports. This makes some sense – a relatively small fraction of total petroleum use goes to industrial feedstocks, and fuels such as coal and natural gas are already the major generators of electricity.

There is a wide range of scenarios that you can try out, but it becomes clear how much we need to do in terms of reorienting our lifestyles if the goal is to reduce dependence on imported oil. It’s a consistent message with the Hirsch report, which recommends that we get off our asses now and start working on implementing strategies to reduce oil consumption. This game may help some understand better what’s involved.

This is an example of a "serious game" which can be helpful in understanding a complex issue such as the outcomes energy policy choices (Forio provides some additional information here). "Addicted to Oil" is a bit on the dry side, but probably highly useful as a classroom demonstration. However, Forio does sell web simulation tools, so those who are inclined probably could try to jazz it up a bit (check out their web site for other user-created sims). In addition, I’m always interested in "looking under the hood" and checking out the equations and assumptions used in the modeling – but the game does provide references to its data, and presumably a subscription gets you access to the model equations. However, at the end of the day, I agree with Clive Thompson about sims such as "Addicted to Oil" for understanding environmental problems:

This, ultimately, is the brilliance of using game-like simulations to teach people about politics. Because the best way to learn about a complex system is by poking and prodding it. Indeed, that might be the only way to truly internalize something really complex: You have to experience it for yourself. If you'd explained to me, in words, just how hard-core our conservation would have to be to truly reduce oil usage, I probably wouldn't have believed you. But after playing around with the sim for a while I'm kind of stunned into re-appreciating the magnitude of our oil problem.

Editorial Notes: Contributor Liz Bryant writes:

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