On March 30, with prices at the pump surging toward four bucks a gallon, President Barack Obama strode to a podium at Georgetown University to deliver what the White House had billed as a major speech. The president’s message was simple: the time had come, he said, to “get serious about a long-term policy for a secure, affordable energy future.”
Obama went on to offer a hallmark centrist vision – a little energy efficiency here, some renewables and alternative fuels there, plus a dash of carefully expanded domestic oil production – that impressed neither climate-change worrywarts nor the drill-baby-drill crowd. But it did accomplish one thing: It kept alive the uninterrupted streak of presidents emphasizing the importance of energy security.
Energy security is the issue that always gets rhetorically addressed, but never solved. It was born of the 1973 Arab Oil Embargo, which – as the story goes – awakened the American public to the shattering possibility that whatever blessings God had bestowed upon the nation, cheap gas forever might not be one of them.
Richard Nixon responded to the embargo by outlining a strategy for freeing the country from dependence on foreign oil. His successor, Gerald Ford, did likewise, and on down the line it went. Republican, Democrat, it didn’t matter: like Bill Murray continually waking up to find it was Groundhog Day, with every new president we woke up to find a new strategy for solving the energy security dilemma. It’s enough to make you wonder if “energy security” wasn’t dreamed up by Washington think tanks, all of which boast rosters of experts devoted to producing chart-filled reports aimed, ultimately, at untethering the United States from Middle East petro tyrants.
This perennial promise points to the energy security debate’s sustaining raison d’etre – a U.S. transportation system built on the expectation of ready access to cheap oil. According to the U.S. Energy Information Administration, the transportation sector accounts for some two-thirds of the oil used in the United States. And around half of that oil comes from foreign sources. This, the energy security establishment argues, puts us at risk, and in a number of ways.
First, like all commodities, oil has its up and downs, and price shocks can be debilitating to the economy, at least in the short term. Even parties profiting from the recent run-up in prices, brought on by “Arab Spring” instability in the Middle East, worry about oil becoming too expensive. Saudi Arabia’s Prince Alwaleed bin Talal said recently that his country would prefer a crude oil price in the range of $70 to $80 a barrel, rather than the triple-digit levels that have prevailed. The reason? They want to keep us hooked on the stuff.
“We don’t want the West to go and find alternatives,” the nephew of Saudi King Abdullah said on CNN. “The higher the price of oil goes, the more they have incentives to go and find alternatives.”
There’s widespread agreement, as well, that heavy reliance on foreign oil skews U.S. foreign policy from the country’s stated values of promoting democracy and human rights. As Pulitzer Prize-winning New York Times columnist Thomas Friedman recently opined, the longstanding U.S. message to Middle East regimes has been to “keep your pumps open, your oil prices low, don’t bother the Israelis too much and, as far as we’re concerned, you can do whatever you want out back.”
Then there’s the matter of “blood for oil.” Contrary to Bush administration claims, Alan Greenspan, chairman of the Federal Reserve when the United States invaded in 2003, wrote in his memoir that “the Iraq War is largely about oil.” Explaining the remark, Greenspan said in the run-up to the war he saw “clear evidence the Iraqi leader was moving towards controlling the Straits of Hormuz, where there are 17, 18, 19 million barrels a day passing through.” Greenspan said he told the administration that Saddam Hussein’s removal was “essential.”
The real divide in the energy security discussion comes in how to deal with the pernicious effects of relying on foreign oil. This fuels fights on domestic oil production and government subsidies for green technologies and nuclear energy; on how to mitigate climate change and other environmental impacts; and on the wisdom of gasoline taxes and market-correcting mechanisms like a carbon tax or cap-and-trade. In many ways the arguments cleave on the age-old question of the role of government – in this case, on how far government should go in shaping energy markets.
After the president’s March speech, in which he set a goal of decreasing oil imports by one-third, Kenneth P. Green of the American Enterprise Institute more or less summed up the conservative reaction: “affordable and abundant energy is vital for America’s future; fossil fuels are cheaper and vastly more abundant than alternatives; energy transitions take decades and are best driven by markets; and government cannot pick winning and losing technologies – all it does when it tries is waste taxpayer dollars, weaken the economy and kill jobs.”
The problem with that, some say, is that it ignores market realities.
“The embedded infrastructure of our fossil fuel networks are too great to overcome simply by letting the market take care of everything,” Tyson Slocum, director of the Energy Program for the left-leaning policy watchdog Public Citizen, said in an interview. Slocum was referring to the physical infrastructure of pipelines and transportation systems – and the political infrastructure. “The fossil fuel and nuclear industries have entrenched, powerful lobbies, and they receive massive subsidies, totaling billions of dollars annually.”
The very tactics that conservatives dismiss as “picking winners and losers” – investments in renewables as well as incentives for their adoption – are in fact measures that level the playing field, Slocum and other liberals say. For instance, they love the president’s support for electric vehicles, even if EVs figure to represent a small fraction of the transportation sector for years to come. The centrist Brookings Institution noted that “achieving the president’s target of 1 million electric vehicles by 2015 will be remarkable, but insignificant next to the 260 million vehicles already on the road,” but still called it “a laudable, realistic first step in curbing oil consumption while helping to achieve his goal of reducing oil imports by one-third by 2025.” Similarly, though its preference would be for a higher gasoline tax, Brookings backs the president’s “politically palatable” push to hike automobile fuel-efficiency standards to perhaps as high as 62 mpg by 2025, a move conservatives see as meddlesome, ineffective and potentially deadly.
“You’ve got to have the incentives for renewables and alternatives to overcome the advantages fossil fuels have in an economy that’s been based on fossil fuels for more than a century,” Slocum said.
That’s one way to approach the issue – but Jerry Taylor has another idea. “How about getting rid of all the energy subsidies?” the CATO Institute senior fellow suggested in an interview. “Oil, gas, coal, nuclear, renewables – right down the line.”
Taylor’s libertarian critique offers a provocative counterpoint to the familiar left-right energy security debate. He begins by rejecting the narrative that gave rise to the whole “energy security” concept, arguing that price controls imposed by President Nixon in August 1971, which prevented oil companies from passing on the full cost of imported crude oil to consumers at the pump, were the chief cause of the gasoline shortages of 1973.
“The embargo story is a very useful myth, for people on both the left and the right,” Taylor said. “It justifies all sorts of interventions. On the left it’s used to justify subsidies for solar and wind, which aren’t competitive on their own…. From the Republicans, you hear arguments for more drilling, but also for subsidies for nukes and ethanol and on and on. They talk about an ‘all of the above’ strategy, which really seems to be a way to get the taxpayers to support the entire energy industry.”
While Taylor backs opening more public lands to drilling, he thinks Republicans overstate the benefits of doing so, and points to the work of economist Robert Hahn to support his argument. Hahn found there would a net economic gain from drilling in the outer continental shelf and Arctic National Wildlife Refuge – he put the value at $1.7 trillion – but noted that doing so would “lower the price of crude by just 1.3 percent, which few consumers would even detect against the background noise of the weekly ups and downs of fuel prices.”
Slocum says this is all the more reason to invest massively in renewables. He argues this case in frequent appearances on television and radio programs – often times opposite Taylor. Still, he sounds less than optimistic. Even as he chides the president for not going far enough in support of renewables in his March address, Slocum allows that, in some ways, the point might be moot.
“We’re very stuck in the status quo,” he said. “There’s a structural problem with Congress. There’s no institutional leadership. Industry lobbyists have far too much power. The rules of the Senate require compromise. As important as everyone seems to agree energy security is, it’s very difficult to do anything that addresses the long-term challenges. ”
But when there is a fight over energy policy, you can be sure that energy security will be invoked. Consider a measure now before the House of Representatives, HR 1380, dubbed the New Alternative Transportation to Give Americans Solutions Act, or NAT-GAS. The bill would offer tax credits for the purchase of long-haul trucks powered by natural gas, the plentiful and increasingly accessible cleaner-burning fossil fuel. Under the legislation, companies such as UPS would get an $80,000 tax credit on the purchase of a $195,000 natural-gas truck, the Wall Street Journal reported. A similar diesel-powered truck costs about $95,000.
Guess what the bill’s champions, led by T. Boone Pickens, cite as a leading rationale for passing the bill? “Their argument is about energy security,” the Journal said. “Recent discoveries of massive natural-gas troves from Texas to Pennsylvania mean the country is newly awash in the fuel.”
When Pickens first began promoting natural gas a few years ago he had many environmentalists on his side, but since then serious questions have been raised about the climate benefits of natural gas vs. diesel, as well as about the environmental impact of the drilling process, known as fracking, that is used to release it from shale formations. That’s why Slocum supports the tax-credits-for-trucks program only if it comes with strict drilling regulation.
Slocum sees environmental issues, including global warming, as key aspects of the energy security discussion. This puts him in the same camp as the U.S. military, which is embracing conservation and renewable energy in order to maintain combat readiness, but also recognizes climate change itself as a threat to national security. Many on the right disagree. Some deny the science; others simply ignore the issue. Most common, perhaps, is the approach outlined by Green, the American Enterprise Institute scholar. “Rather than remain largely focused on the quixotic effort to reduce (greenhouse gas) emissions or to stand athwart the stream of climate and shout ‘stop, enough!’ we should shift the majority of our policymaking attention to an agenda of resilience building and adaptation,” he advised in a paper entitled, “Climate Change: The Resilience Option.”
As hapless as this might sound, those on the left are no less discombobulated when it comes to the question of nuclear energy. Obama, in his speech, registered continued if measured support for nukes, earning plaudits from the Brookings wonks. Not that Brookings believes nuclear power is likely to grow significantly in the United States. They think it’s too expensive for that to happen. But they do hope that optimistic words from the president might help keep other countries – the Chinese in particular – from ditching their plans for more atom-splitting and increasing their already significant reliance on coal.
All of which is a reminder that while, yes, the United States is the world’s biggest economy (at least for now), energy questions play out on a very large scale. “These are world markets and global forces we’re talking about,” said Taylor, the libertarian, suggesting that the quest for energy security might remain elusive.