What Energy Policy?

The confusion over American energy policy continues. As recently as a few months ago Congress passed all sorts of give away goodies for the oil industry designed to create “incentives” to encourage drilling and development of better refining and distribution infrastructure. The Republicans especially have a track record of cozying up to the big energy companies: remember those top secret meetings between Cheney and who knows whom?

Now however, with gasoline prices soaring everyone wants to be seen doing something to help the poor oppressed consumer. Those consumers vote you know. The New York Times has a story about the confusion here: Second Thoughts in Congress on Oil Tax Breaks

The problem is, of course, that a sensible energy policy has been a major requirement of the United States for decades, but no one has done anything about it. Instead politicians of both parties have ignored all the warning signs and blithely stood to one side as the US drifted from self sufficiency to becoming a major importer of oil. No one wanted to appear “unAmerican” by suggesting that America’s oil habit was wasteful and not sustainable. No one wanted to tell the public that the “all American” lifestyle with its dependence on wasteful energy consumption was going to fall fould of worldwide trends. In particular the Republicans have constantly watered down anything that smacks of fuel efficiency or conservation, and have put all their eggs in the search for more sources of domestic production.

They have, in other words, completely ignored the simple fact that oil is a diminishing resource compared with booming worldwide demand. Any dolt could have figured out that whenever the Chinese and Indian economies picked up steam worldwide demand would grow rapidly and put permanent upward pressure on oil prices.

The result? America is still hooked on its energy habit even though the days of cheap energy are rapidly fading. The American economy is one of the least efficient in its use of energy, its industries and its consumers have consumption habits based around cheap energy, so they are especially vulnerable to rising prices. Their profligacy is coming home to roost.

And all the politicians can do is run around and berate the oil companies for making “excess profits”. Frankly that’s nuts. Those profits are earned fair and square. There is nothing obscene in making a buck. It’s the American way. The issue is that those profits stand as an indictment of the lack of leadership and vision in Washington, and to the wasteful lifetsyle of the average American. There is an extraordinary lack of commitment in the public toward conservation: SUV sales are stable, households continue to add energy consuming gadgets of all sorts, public transportation is a joke, and road building continues apace. Most of all the American public throws a tantrum whenever the gasoline price starts to rise, even though America has the cheapest gasoline prices in the industrial world.

No one can predict the price of oil accurately: it may well fall quite a bit when the turmoil in Iraq, Iran, and Nigeria simmers down. But the long term prognosis is that prices will rise steadily as worldwide demand grows. So we all have to get used to those high gas prices.

Here’s an idea: maybe we should have an energy policy. I am not going to hold my breath however. George Bush made the weakest possible bumbling statements yesterday about our need to develop alternative sources of energy, and he announced a reduction in the flow into the strategic oil reserve. For those of you who can count the impact of this latter policy is to provide the equivalent of about three hours of gasoline consumption. As Bush said “every little bit helps”. The problem is we need a leader who can come up with something more than a little bit. I seriously doubt that Bush is the guy to do that. After all his family is in the oil business and is making a killing right now, conservation is probably a swear word at their dinner table. And his comments about corn based ethanol weren’t too encouraging: he said we had to be careful not to use all the corn for fuel becasue we had to save some to eat. Now that’s big thinking for you.

Meanwhile Congress is running around lashing out at the oil companies instead of taking a sober look at getting an energy policy put together.

What a mess.