MCFARLANE: Bin Laden-proofing America’s economy

We can disarm our enemies by investing in flex-fuel vehicles

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There is a great deal of hand-wringing - actually sweaty palm-wringing - going on throughout the third tier of Osama bin Laden’s followers around the world - men who now fear for their lives as a result of the treasure trove of information gleaned from the capture of his records.

There remain, however, several capable zealots who aspire to avenge his death and perhaps to succeed him as leader of the movement. As this next generation of radical Islamists seek to establish their credentials in the weeks and months ahead, we can expect to experience attacks of varying scale.

For maximum impact among their peer groups, as well as upon the targeted “infidels,” such an attack must satisfy several informal measures of “professional- ism,” the most important of which is lasting strategic - and, if possible, global and catastrophic - damage. One such event could be the disabling of a major oil terminal, such as Ras Tanura or Abqaiq in Saudi Arabia. Several factors make these oil-processing terminals attractive targets.

The first is that if any of them were seriously disabled, which very nearly happened five years ago at Abqaiq, as many as 4 million barrels of processing capacity per day would be taken off the market for up to a year - enough to push the global price of crude to more than $200 a barrel and keep it there for at least a year. Petroleum-based fuel, which enables 97 percent our road, rail and air transport carriers to move goods from farms and factories to markets, is literally the lifeblood of the global economy.

Without it, nothing moves, crops rot, showrooms are empty, consumers stay home, jobs are lost, paralysis sets in, and our economy grinds to a halt. In short, petroleum-based fuel has become a strategic commodity - a product that, if disrupted or sold at an extravagant price, can cause our economy and our way of life to collapse.

A second appealing element of an attack on these facilities is that it would be relatively easy to carry out, whether by aircraft, indirect fire or simply sabotage. Recall that these facilities are in the eastern (Shia) provinces of Saudi Arabia. Several years ago, bin Laden urged his affiliates to carry out exactly this kind of strategic attack on the global economy by disrupting oil flows from the Persian Gulf.

One may say, “But haven’t we faced - and deterred - these risks before? Aren’t Saudi air defenses better today?” True enough, but two important differences from years past are with us today.

The first concerns the Shia dimension of the “Arab Spring.” The Shia community of Saudi Arabia has faced severe discrimination by the government forever. Recently, their own grievances and bitterness toward the royal family have increased out of sympathy for their Shia brothers in Bahrain as they have watched the Saudi government intervene with overwhelming force to put down the uprising by the Shia majority there.

Second, as events in Bahrain and elsewhere in the Gulf played out, it became clear that Iran had for years been planting scores of agents on the West side of the Gulf, especially among the Shia communities.

Over the years, these cells have focused on stoking Shia passions and giving financial and other paramilitary training to promising leaders. In short, sabotage or an attack such as I’ve described is feasible and virtually impossible to deter or prevent.

This begs the question: What can we and the rest of the world do to prevent this plausible scenario from taking place? The short answer is, not much. What we can and must do is reduce petroleum’s strategic importance to our economy by opening our fuel market to competition. Today, unlike the choices one can make when purchasing toothpaste, clothing, food, movies and virtually any product in our highly competitive marketplace, there is no competition when you go to the pump. Worse, of course, the price you pay for that fuel is set by a foreign cartel, many of whose members don’t like us very much.

The good news is that there are economic alternatives such as methanol, a fuel made from natural gas, coal and biomass. The spot price of methanol is $1.08 a gallon without subsidies. Methanol has about half the energy of gasoline, so that’s about $2.16 on an energy-equivalent basis. Add taxes, distribution and retail markup, and methanol is still more economical than gasoline. Yet very significant investment (but no subsidies) will be needed to ramp up production of meth-anol and other alternatives. Before writing checks, potential investors say, “Yes, I know that the alternatives are proved and scalable, but there just aren’t enough flex-fuel cars on the road that can burn them. Come back to me when 10 percent to 15 percent of cars on the road are flex-fuel. That’s a market I’ll invest in.”

That brings us to Congress.

This year, taking Detroit manufacturers at their word that they are willing to make 50 percent of the 10 million vehicles they produce per year flex-fuel, Rep. John Shimkus, Illinois Republican, and Rep. Eliot L. Engel, New York Democrat, have introduced the Open Fuels Standard Act to buttress that pledge with a law.

Bear in mind that this is neither expensive nor rocket science. About $100 worth of equipment prepares a vehicle to run on a variety of liquid fuels in addition to gasoline. Ninety percent of new cars sold in Brazil today are flex-fuel, and many of them are made by Ford, GM and Chrysler.

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