Of the hot topics discussed in Washington and the media, there is probably none where the substance-to-blather ratio is higher than in energy, where slogans substitute for serious thought, and where pointing out unwelcome facts is frowned upon as a moral failing.
Shallow thought on energy can be found on all parts of the political spectrum; while environmentalists are the worst offenders, they have plenty of company on the Right.
Energy has rightly been called the “master resource” because it powers everything else in the economy. And we will need more energy — not less — in the United States and the world over the next 50 years to accommodate growing economies, populations and living standards.
Even with major increases in efficiency and conservation efforts, the world must triple its energy supplies over the next 40 years. Where will this energy come from? The answer is — where it comes from now: mostly conventional fossil fuels (coal, oil and natural gas), with a limited amount coming from boutique “renewable” sources such as solar, wind and biofuels.
Fossil fuels will remain pre-eminent for a simple reason: They are abundant, cheap and offer energy superior to so-called renewables. One pound of gasoline, for example, has 100 times more energy than a 1-pound lithium ion battery, which is one of the reasons why electric cars still aren’t very practical.
Renewables — solar, wind and biofuels — are vastly more expensive, often five to 10 times more expensive than fossil fuels, and their costs are not coming down quickly. Nuclear power is cheaper than renewables, but still pricier than fossil fuels.
And even if renewables fell in price, they couldn’t be deployed on a large enough scale to replace fossil fuels completely, which is the professed goal of environmentalists and the Waxman-Markey “cap and trade” bill that passed the House in June.
Even if all the mandates and subsidies of Waxman-Markey work as designed, renewable sources will only provide about 20 percent of our energy needs a generation from now.
This means despite all of the hot talk, the cold truth is that we’re going to keep using fossil fuels. You can forget the “peak oil” theorists who say oil production has or is about to top out. (The Massachussetts Institute of Technology’s Michael Lynch offered the most recent debunking of this fad recently in the New York Times).
Even if traditional oil supplies do become tight, there is an abundance of “unconventional” hydrocarbons, such as oil shale and methane hydrates, both of which would become economical to develop on a large scale if conventional oil supplies dwindled.
On the Right and elsewhere, the leading shibboleth is “energy independence.” Although it sounds attractive, the idea of total self-sufficiency in energy makes no more sense than total self-sufficiency in textiles, food, autos or timber. (The U.S. currently imports about one-fourth of its timber: Where are the calls for “ending our dependence on foreign timber”?)
The merits and benefits of free trade and globalization are just as strong for energy as for any other commodity or economic activity. Energy independence as self-sufficiency is tantamount to energy protectionism, and, like all kinds of protectionism, would make us poorer in the end.
A more sensible policy goal is “energy resilience,” that is, a diversified portfolio of minimally regulated or subsidized energy technologies and global supplies that minimize the economic and political risk of disruptions from any particular region or energy source.
The confluence of abundant fossil fuels and the desire for energy independence brings us to the nub of the matter. The reason energy independence and energy security are popular themes is that we dislike having to import oil from nations that hate us.
Fair enough, though it turns out we only import about 15 percent of our total oil use from the Middle East. Our leading foreign oil supplier is the suspect nation named Canada. No. 2 is Mexico.
It would be easy enough to replace Middle Eastern sources with our own if we removed the political obstacles to more domestic exploration and production of oil and natural gas.
Limiting oil exploration in U.S. territory has been a sacred cow for environmentalists and liberals for more than a generation, but maybe we will rethink this for a simple reason: Opening up more U.S. territory to production could generate more than $1 trillion in royalties for the treasury. That might be enough to pay for health care reform.
Steven F. Hayward and Kenneth P. Green are resident scholars at the American Enterprise Institute.
