TIME Environment

See a Massive Oil Slick in the Pacific Ocean After Spill

21,000 gallons of crude oil spilled into the Pacific Ocean off the Santa Barbara County coast on Tuesday after an underground pipeline ruptured. The oil slick spread to at least 9 miles long by Wednesday afternoon

TIME Middle East

These 5 Facts Explain the Troubled U.S.-Arab Relationship

Obama Hosts Gulf Cooperation Council Summit at Camp David
Kevin Dietsch—AP Obama encourages Kuwaiti Emir Sheikh Sabah Al-Ahmad Al-Sabah to make a statement alongside Qatar's Emir Sheikh Tamim bin Hamad Al-Thani, following the Gulf Cooperation Council-U.S. summit at Camp David on May 14, 2015.

A summit in Camp David shows the growing gap between the U.S. and its Arab allies, thanks to changing oil politics and aging leaders

President Barack Obama just concluded a two day summit with America’s Arab allies. The meeting wrapped up a rocky week that started when Saudi Arabia’s King Salman publicly withdrew from the summit and sent his son and his young nephew in his place. These 5 stats explain the tense relationship between the U.S. and its Persian Gulf allies, and the challenges those alliances will face going forward.

1. It’s the Oil, Stupid.

Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates and Saudi Arabia comprise the grouping of monarchies in the Persian Gulf known as the Gulf Cooperation Council (GCC). They are all major oil producers, with Saudi Arabia the heavyweight of the lot. Together they account for 24% of the world’s crude oil production. But after decades of critical dependence on their oil, America, thanks largely to the mid-2000s shale boom, has surpassed Saudi Arabia and Russia to lead the world in oil production. The GCC has felt this acutely—Saudi Arabia saw its oil exports to the US plummet 23.74% between 2008 and 2014. The Saudis are not content to take this lying down. Riyadh is busy ramping up its own production (achieving a record high of 10.3 million barrels per day this past April) in an effort to drive down oil and price more expensive U.S. shale producers out of the global market.

(Middle East Monitor, Bloomberg, Energy Information Administration, Financial Times)

2. The Paradox of Plenty

While Saudis are increasing production largely to strengthen their long-term market position, the gambit poses significant short-term risks. Oil prices had already been tumbling for months, and the price of oil directly affects economies like that are heavily reliant upon the commodity. 45% of Saudi Arabia’s GDP comes directly from oil and gas, 40% of the UAE’s, and around 50-60% each for Qatar, Kuwait and Oman. By keeping production high, Saudi Arabia is helping to keep oil prices low.

Economists often talk about the “resource curse,” when a country’s abundance of natural resources stunts the rest of its economy. In a healthy and balanced economy, the private sector should drive research, development and innovation. But only 20% of Bahraini nationals work in the private sector. The rest of the GCC are worse: a pitiful 0.5% of UAE nationals have the misfortune of private employment. The GCC countries have relied so long on oil that their workforces can’t compete in a globalized world. The ruling powers are keenly aware of this fact.

(Forbes, OPEC – UAE, OPEC – Qatar, OPEC – Kuwait, EIA, Al Jazeera)

3. Arab Spring, Still Blooming?

The GCC countries had a front-row seat to the Arab Spring. Beginning in 2011, countries throughout the Arab World erupted in demonstrations and protests, even bleeding into Bahrain and Kuwait. One of the main drivers of the movement was mass unemployment, which afflicts the affluent GCC as well. Ernst & Young estimates that unaddressed unemployment of youths aged 20-24 could eventually reach 40% across GCC member states. Those are numbers ripe for revolution.

The only thing scarier than the uprisings to the Gulf monarchs must have been the U.S. response to them. For years the understanding was that so long as the Gulf countries would keep the world market flush with oil, the U.S. would provide them with protection. Egypt had a variation of this type of relationship with Washington, but Obama wasted little time in throwing Hosni Mubarak under the bus in 2011—at least as the GCC see it. If Egypt could be sacrificed at the altar of democracy, why couldn’t Saudi Arabia be next?

(Bloomberg, Ernst & Young)

4. The Threat of Iran

Looming over the GCC Summit is America’s reengagement with Iran. Washington’s greatest leverage over Tehran is the possibility of lifting sanctions in exchange for a nuclear deal. Experts estimate that Iran’s economy could grow anywhere from 2% to 5% in the first year after lifting sanctions, and then 7-8% the following 18 months. Those are rates on par with the remarkable growth of the ‘Asian Tigers’ in the 1990s.

It’s not just the additional economic competition that worries the GCC. Saudi Arabia has spent the better part of the last decade combatting Iran’s influence across Lebanon, Iraq, Syria, Yemen, even Bahrain—the end of sanctions would give Tehran additional financing to escalate the regional rivalry. Further destabilizing the region are serious threats posed by groups like ISIS. This is why the GCC sought a formal, Japan-style security alliance with the U.S. The leaders who showed up in Washington couldn’t get the pact they wanted—a treaty requiring Congressional approval is a nonstarter—but they did get assurances of America’s continued military support and significant arms sales.

(Financial Times, Vox, Reuters, Economist)

5. Age Matters

The absence of the Saudi king, along with his counterparts from the UAE, Bahrain and Oman, sent the message that the status quo in the Middle East cannot continue. Their snub of Obama was intended to project an image of strength in the region. But the reality is that the oil-dependent GCC countries have serious structural problems that will take generations to solve. Instead of dealing with four rulers with an average age of 75, Obama sat across from representatives with an average age of 56. This younger generation is poised to lead their countries for decades to come. After 70 years of intense engagement, it is clear that the GCC countries need America as much as ever. The question is how much America needs them.

(Crown Prince Court – UAE, Kingdom of Bahrain (a), Kingdom of Bahrain (b) AlJazeera, Reuters, BBC, Forbes, Al-Monitor, White House )

TIME China

China Has Become the World’s Biggest Crude Oil Importer for the First Time

Holiday travel rush congests roads in Chinese cities
Feng lei—Imaginechina/AP Masses of vehicles move slowly during a traffic jam near the entrance to Lianhuo (Lianyungang-Khorgos) Expressway during the Labor Day holiday in Zhengzhou city, central China's Henan province, 1 May 2015.

The news reflects both China's soaring energy consumption and America's shale revolution

China is now the largest importer of crude oil in the world. In April, it surpassed the U.S., which has traditionally held the slot, with imports of 7.4 million barrels per day (bpd) or 200,000 more than the U.S., according to the Financial Times.

The news comes as a surprise because the Chinese economy has been slowing and just this weekend, in an effort to stimulate growth, the People’s Bank of China cut interest rates for the third time in 6 months.

Over the next few months, the U.S. and China may be in and out of the top spot, but because American imports dropped by about 3 million bpd in the last decade (thanks in large part to shale extractions) and because China’s purchases have boosted seven-fold, the Chinese should be the top crude oil importer on a long term basis.

China overtook the United States as the world’s top energy consumer in 2010 and is already the number one purchaser of many commodities, such as coal, iron ore and most metals.

MONEY Gas

Gas Prices Rise 3 Weeks Straight. Are You Getting Gouged?

150506_EM_GasPrices
Stewart Cohen/Pam Ostrow—Getty Images

Gas prices have increased for 21 consecutive days, and a consumer watchdog group says that greedy oil companies are gouging drivers filling up at the pump.

As of Wednesday, the national average for a gallon of regular gasoline was $2.64, according to AAA. That’s $1.03 cheaper than it was exactly one year ago. Still, prices at the pump have been on a steady incline lately, rising 21 days in a row. The average is now 8¢ higher than one week ago, and it’s up 25¢ over the last month. The last time gas was this expensive nationally was early December, per data from the U.S. Energy Information Administration.

California drivers have special reason to be upset about gas prices. They are currently paying the highest prices in the country, averaging $3.71 per gallon. That’s significantly more than even Alaska ($3.13) and Hawaii ($3.20), the two states that are usually outliers in terms of having the nation’s priciest gas.

The high gas prices in California have been blamed on issues with refineries, including at least one worker strike and one fire that caused a shutdown. Refinery problems have affected gas prices throughout the West: Prices at Nevada gas stations, for instance, leaped 20¢ to 30¢ per gallon in the last week alone, reaching $3.20 as of Wednesday.

However, a new report from the Consumer Watchdog group says that West Coast refinery profits have soared in early 2015, leading them to believe that the “problems” are being used as an excuse to fleece drivers.

“The proof’s in the oil companies’ own profit reports,” Jamie Court, president of Consumer Watchdog, said in a press release. “California drivers are getting gouged and California refineries are getting richer every time a refinery goes down and gasoline prices go up.”

Consumer Watchdog’s review of the data shows that over the past 10 years, spikes in prices at the pump have corresponded with profit surges for Valero and Tesoro, two major California refineries. During the first quarter of 2015—when California prices remained stubbornly high compared with most of the country, where drivers were enjoying exceptionally cheap gas—Valero recorded a profit of $82 million, far above its $25 million in profit for an average quarter.

To some extent, it sure looks like high prices at the pump on the West Coast are not reflective of higher costs being incurred by refineries. “The refiners’ costs are stable, but they are gouging on the prices they charge at the gas station,” Liza Tucker, a co-author of the Consumer Watchdog report, explained to the San Jose Mercury News. “We’re not saying that oil companies can’t make a profit but we are saying that they can’t gouge consumers.”

Consumer Watchdog is asking for government intervention to prevent refineries from restricting supply and inflating gas prices purely for their own profits.

As for gas prices around the country, the consensus seems to be that the recent spike in the cost of fueling up is a blip on the radar, and that prices will flatten out or perhaps even retreat a bit in the near future. Crude oil prices are expected to fall thanks to the continued strength of the U.S. dollar, among other factors, and that should translate to cheaper prices at gas stations.

Refinery disruptions should cease to be problems soon too, GasBuddy analyst Patrick DeHaan said in a CNBC interview. “Average prices nationally will be in the mid-$2 range for much of the summer,” he said.

Still, California drivers should expect to keep on seeing prices at the pump that are far higher than the national average.

TIME Autos

Audi Just Invented Fuel Made From CO₂ and Water

Water, CO2 and green power are the ingredients for Audi e-diesel
Audi Handout Water, CO2 and green power are the ingredients for Audi e-diesel

The next step for the project will be industrial scale production

An Audi research facility in Dresden, Germany, has managed to create the first batches of diesel fuel with a net-zero carbon footprint — made from carbon dioxide (CO2), water and renewable energy sources such as wind or solar power.

Germany’s government has welcomed the new technology, created in partnership with a greentech company called Sunfire. Johanna Wanka, Germany’s Federal Minister of Education and Research, even test drove the fuel and called it, “a crucial contribution to climate protection and the efficient use of resources,” according to an Audi press release.

Manufacturing involves first breaking down steam into hydrogen and oxygen through high-temperature electrolysis. The hydrogen then reacts with CO2 to create a liquid called “blue crude.” This is then refined to make the e-diesel.

A visual infographic released by Audi explains the steps in detail.

Visual representation of Audi e-diesel
Audi Handout

The next stage for the project will be industrial scale production because Sunfire only has capacity to produce 3,000 liters (792.5 gal.) of e-diesel in coming months.

“If we get the first sales order, we will be ready to commercialize our technology,” said Sunfire CTO Christian von Olshausen in a company press release.

Read next: This Is How Much OPEC Really Earns

Listen to the most important stories of the day.

TIME Innovation

Five Best Ideas of the Day: April 20

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. America loves to take sides in regional conflicts. In Yemen, we shouldn’t.

By Paul R. Pillar in the National Interest

2. Here’s why Congress should drop the ban on federal funds for needle exchanges. (It’s because they work.)

By Kevin Robert Frost at CNN

3. Cheap coal is a lie.

By Al Gore and David Blood in the Guardian

4. How small-batch distilling could save family farms.

By Andrew Amelinckx in Modern Farmer

5. Can you fix city management with data? Mike Bloomberg is betting $42 million you can.

By Jim Tankersley at the Washington Post

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Environment

Obama Administration Plans New Offshore Drilling Rules to Prevent Oil Spills

The goal is to prevent disasters like the BP oil spill

The Obama Administration is planning to announce new safety regulations for offshore oil and gas drilling to help prevent a major explosion like the one that caused the BP oil spill, according to a report.

The announcement is expected to coincide with the disaster’s five-year anniversary later this month, the New York Times reports.

The new regulations would likely tighten safety requirements on blowout preventers. The devices, seen as a last line of defense, malfunctioned and failed to stop the explosion of the Deepwater Horizon oil rig on April 20, 2010.

Read more at the New York Times.

MONEY investing strategy

16 Facts You Never Would Have Believed Before They Happened

"History never looks like history when you are living through it." — John W. Gardner

A reminder for those making predictions.

You would have never believed it if, in the mid-1980s, someone told you that in the next two decades the Soviet Union would collapse, Japan’s economy would stagnate for 20 years, China would become a superpower, and North Dakota would be ground zero for global energy growth.

You would have never believed it if, in 1930, someone told you there would be a surge in the birthrate from 1945 to 1965, creating a massive generation that would have all kinds of impacts on the economy and society.

You would have never believed it if, in 2004, someone told you a website run by a 19-year-old college dropout on which you look at pictures of your friends would be worth nearly a quarter-trillion dollars in less than a decade. (Nice job, Facebook.)

You would never have believed it if, in 1900, as your horse and buggy got stuck in the mud, someone pointed to the moon and said, “We’ll be walking on that during our lifetime.”

You would have never believed it if, in late 1945, someone told you that after Hiroshima and Nagasaki no country would use a nuclear weapon in war for at least seven decades.

You would have never believed it if, eight years ago, someone told you the Federal Reserve would print $3 trillion and what followed would be some of the lowest inflation in decades.

You would have never believed it if, in 2000, someone told you Enron was about to go bankrupt and Apple would become the most innovative, valuable company in the world. (The opposite looked highly likely.)

You would have never believed it if, in 1910, when forecasts predicted the United States would deplete its oil within 10 years, that a century later we’d be pumping 8.6 million barrels of oil a day.

You would have never believed it if, three years ago, someone told you that Uber, an app connecting you with a stranger in a Honda Civic, would be worth almost as much as General Motors.

You would have never believed it if, 15 years ago, someone told you that you’d be able to watch high-definition movies and simultaneously do your taxes on a 4-inch piece of glass and metal.

You would have never believed it if, in 2000, someone said the biggest news story of the next decade — economically, politically, socially, and militarily — would be a group of guys with box cutters.

You would have never believed it if, in 2002, someone told you we’d go at least 11 years without another major terrorist attack in America.

You would have never believed it if, in 1997, someone told you that the biggest threat to Microsoft were two Stanford students working out of a garage on a search engine with an odd, misspelled name.

You would have never believed it if, just a few years ago, someone told you investors would be buying government debt with negative interest rates.

You would have never believed it if, in 2008, as U.S. “peak oil” arguments were everywhere, that within six years America would be pumping more oil than Saudi Arabia.

You would have never believed it if, after the lessons of World War I, someone told you there’d be an even bigger war 25 years later.

But all of that stuff happened. And they were some of the most important stories of the last 100 years. The next 100 years will be the same.

For more on this:

MONEY energy

These Americans Are Being Hurt By Low Oil Prices

Low-cost oil is making more and more drilling operations unprofitable, leading to heavy U.S. job losses.

TIME Iran

These 5 Facts Explain the State of Iran

Secretary of State John Kerry, Iranian Foreign Minister Javad Zarif and others wait for a meeting at the Beau Rivage Palace Hotel on March 27, 2015 in Lausanne, Switzerland.
Brendan Smialowski—Reuters Secretary of State John Kerry, Iranian Foreign Minister Javad Zarif and others wait for a meeting at the Beau Rivage Palace Hotel on March 27, 2015 in Lausanne, Switzerland.

Sanctions, demographics, oil and cyberwarfare

As leaders in the United States and Iran maintain laser focus on the ongoing nuclear negotiations, it’s valuable to take a broader look at Iran’s politics, its economy, and its relations with the United States. Here are five stats that explain everything from Iran’s goals in cyberspace to its views of Western powers.

1. Sanctions and their discontents

Sanctions have taken a heavy toll on the Iranian economy. According to the Congressional Research Service, Iran’s economy is 15 to 20% smaller than it would have been without the sanctions that have been enacted since 2010. They leave Iran unable to access nearly four-fifths of the $100 billion in reserves the country holds in international accounts. Iran’s oil output has fallen off a cliff. Four years ago, Iran sold some 2.5 million barrels of oil and condensates a day. Over the last year, the country has averaged just over a million barrels a day. Even as the exports have fallen and the price has plummeted, oil still accounts for 42% of government revenues. Iran’s latest budget will slash spending by 11% after accounting for inflation.

(Bloomberg, The Economist)

2. Cyber-spending spree

But despite the belt-tightening, Tehran has been willing to splurge in one area. Funding for cyber security in the 2015/16 budget is 1200% higher than the $3.4 million allotted in 2013/14. Up until 2010, Iran’s chief focus in cyberspace was managing internal dissidents. But after news of the Stuxnet virus—a U.S.-led cyberattack on Iran’s nuclear program—went public in 2010, Iran’s leaders shifted gears. According to one estimate, Iran spent over $1 billion on its cyber capabilities in 2012 alone. That year, it conducted the Shamoon attack, wiping data from about 30,000 machines belonging to Saudi oil company Aramco. In 2013, the Iranian Revolutionary Guard publicly declared that Iran was “the fourth biggest cyber power among the world’s cyber armies.”

(Global Voices, Wired, Strategic Studies Institute, Wall Street Journal)

3. New generation and old leadership

The median age in Iran is 28, and youth unemployment in the country hovers around 25%. Nearly seven out of ten Iranians are under 35 years old, too young to remember the Iranian revolution of 1979. But the country is controlled by older men, many of whom had an instrumental role in the revolution. Supreme Leader Ayatollah Ali Khamenei is 75 years old; there have been concerns about his health and Iran’s eventual succession plan. Iran’s Assembly of Experts is an opaque institution with huge symbolic importance: it is tasked with selecting and overseeing Iran’s Supreme Leader. The Assembly’s Chairman passed away in October at the age of 83. His replacement? Ayatollah Mohammad Yazdi, who is…83 years old.

(New York Times, CIA World Factbook, BBC)

4. The feeling is mutual

Over 70% of Iranians view the United States unfavorably—and 58% have “very unfavorable” views. On the flip side, more than three-quarters of surveyed Americans have unfavorable views of Iran. But that’s a more modest stance than some other European powers: 80% of French and 85% of Germans have unfavorable views of Iran. According to recent polls, Iran is no longer considered “the United States’ greatest enemy today.” In 2012, 32% of those polled chose Iran, good for first place. In 2015, just 9% selected Iran, placing it fourth behind China, North Korea and Russia, respectively.

(Center for International & Security Studies, Pew Research Center, Vox)

5. Support for a deal?

Negative views of Iran haven’t undermined Americans’ desire to try and cut a deal: 68% of Americans favor diplomacy with Iran. It’s a bipartisan majority: 77% of Democrats and 65% of Republicans are in favor of talks. Iranians have mixed expectations: only 48% think that President Rouhani will be successful in reaching an agreement. But if we do see a final deal, a lot more than Iranian oil could open up. Western businesses would love to break into a country that is more populous than Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman, Israel, Bahrain, Lebanon and Jordan combined.

(Center for International & Security Studies, CNN survey, CIA World Factbook)

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