Fueling Israel’s future

In light of recent gas finds, the country must navigate its energy policy wisely.

July 24, 2011 22:29
Alex Joffe

ALEX JOFFE 58. (photo credit: Courtesy)

The writer is a research scholar with the Institute for Jewish and Community Research. This article was first published by Jewish Ideas Daily (www.jewishideasdaily.com), and is reprinted with permission.

Are abundant natural resources a blessing or a curse? This is the sort of question that economic theorists love to play with, usually concluding that they can be either or both. Israel, thus far burdened with a crippling dependence on imported oil and gas, has had astonishing success in developing its human resources – so much so that it has flourished economically even in the current global recession.

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Would it do even better with adequate sources of domestic energy? Or would it do worse? A formerly theoretical dilemma is about to become a pressingly practical one.

Trillions of cubic feet of natural gas have been discovered in several huge fields off Israel’s coast. They promise both an abundance of domestic energy – as much as 200 years’ worth by some estimates – and the possibility of becoming a major energy exporter. The total value of the gas is currently close to a half-trillion dollars. On the macro level, and from the point of view of ensuring the country’s national security, the prospective boon is almost unimaginably beneficial. The question, as always, is what realizing it will entail, and how to mitigate any attendant social and political costs.

BEGIN WITH the issue of where to locate a gas terminal.

Israel’s coastline is 170 miles long, the site of several cities and numerous competing uses, including ports, water-desalinization and sewage-treatment plants, military operations and recreation. Thanks in part to ecological changes in the Nile delta (themselves the long-term effects of the Aswan dam built in the early 1960s), the coastline is also being eroded and becoming more vulnerable to storm damage. Millions of Israelis – Jews and Arabs – vie for access to the few parks and undeveloped beaches on the seafront.

One pressing issue is strategic. Gas-receiving terminals include the infrastructure to process raw natural gas and remove contaminants, as well as storage tanks and links to distribution systems. They may also include facilities to create liquefied gas for stotage and transportation.

Such facilities have the explosive potential of small nuclear bombs. In Israel’s case, any such facility will thus become a major target for adversaries ranging from Hamas to Iran. Already the single pipeline carrying natural gas from Egypt to Israel and Jordan has been attacked repeatedly since the fall of the Mubarak regime, and the electrical-power stations at Hadera and Ashkelon have been targeted by Hezbollah and Hamas rockets.

If the strategic implications of locating a gas terminal are significant, the domestic aspects are almost equally problematic. One plan would have placed the terminal at Dor, just south of the Hadera power station, effectively cutting through a beachfront kibbutz, nature reserve and major archeological site. Another proposal would expand the existing gas terminal at Ashdod, which currently serves a smaller offshore field. In both cases, those affected would be among the less-powerful sectors of Israeli society – kibbutzniks and residents of outlying cities. (For both strategic and domestic reasons, there is no chance the terminal will be located anywhere near north Tel Aviv or its affluent suburbs.) And in both cases the sites have already been targeted by rockets.

More recently a proposal has been presented to locate a floating liquefied natural-gas terminal a few miles off the shore of Hadera, in what would amount to a giant ship that could be moved out of missile range. Australia is building a similar facility 120 miles off its western coast, at a cost of $10 billion. In Israel, the state will of course remain responsible for its citizens’ security, but the size of the price tag inevitably raises the vexing question of who will pay for the infrastructure, and who will enjoy the proceeds.

The Israeli and American companies that have invested hundreds of millions for exploration stand to reap a windfall of billions. In January, the Israeli cabinet overwhelmingly approved taxing oil and gas profits at between 50 and 62%, effectively doubling the tax rate under which exploration had been conducted. The new rates are in line with those in most Western countries, but prompted a complaint from the US State Department about the retroactive effect on American investors. For their part, some MKs have been railing about “greedy tycoons.” Prime Minister Benjamin Netanyahu has promised that the state’s share will be put toward education and security, but these debates can only become more heated, and more polarized, as time goes on.

No less fraught are the regional and international implications. Israel’s gas discoveries have prompted negotiations with Cyprus regarding the delineation of the two countries’ maritime borders and exclusion zones. Some entrepreneurs are talking about an undersea pipeline heading toward Europe. And, as has been well reported, there have been threats from Lebanon, which has already accused Israel of stealing “its” offshore natural gas.

JUST SOUTH of the national park at the imposing ruins of Roman and Byzantine Caesarea, which contain the remains of ancient aqueducts that supplied muchneeded fresh water, and of the modern town of Caesarea that is home to some of Israel’s elite citizens, lies the Hadera power station. Its smokestacks dominate the horizon; a jetty protrudes offshore to carry coal from cargo ships.

The view from Caesarea beach thus already offers a juxtaposition of old – very old – and new infrastructure, as well as of the conflicts and divides that characterize Israeli society and its relations with its neighbors. One can only hope that, with agility and political wisdom, the Jewish state will successfully navigate between the blessing and the curse of immense amounts of fuel, and the forms of power that come with it.

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