J. Robinson West, chairman of the oil and gas consulting firm PFC Energy, is a former U.S. assistant secretary of the interior.
The world economy is in the throes of an oil crunch. Surging Asian demand and a slow supply response drive high prices. U.S. politicians facing an election offer half-baked ideas to create the illusion that they have serious answers to problems they helped create.
Many politicians and commentators offer long-term visions for a problem that needs immediate practical solutions requiring difficult choices and compromises. Breezy generalities about the future that ignore harsh economics and science are useless. Avoiding problems now worsens them later.
"Energy independence" is a favored placebo—a rarely defined goal trotted out for energy crises but not achieved. A sensible definition: a condition in which foreign powers can neither interrupt our energy supplies nor affect prices. Such "independence" will be unattainable under John McCain or Barack Obama.
We cannot decouple U.S. petroleum prices from world markets. Oil is easily transported, and barrels are interchangeable. Rising prices in Houston mean the same in Riyadh, Rotterdam, and Tokyo. Even if we exported oil—we have not for nearly 60 years—foreign forces would still drive domestic prices.
The other element is supply. Many politicians want to substitute other domestically produced liquid fuels for oil and assure the public that they are around the corner. They are not.
There is now no liquid fuel that can largely replace oil for transportation. We are stuck because of the scale of the industry and—despite criticism—oil's efficiency. A gallon of gas, refined from African oil, is cheaper than a gallon of Maine sparkling water. Political alternatives like corn-based ethanol have required huge subsidies and convulsed food markets but produced only 430,000 barrels per day in 2007— 2 percent of U.S. oil consumption.
Brazil shifted to ethanol. But its ethanol is derived from sugar, the economics of which are dramatically different from those of corn, which has less energy content. And it explored for oil offshore, using Brazilian petrol to cut back oil imports. Commentators also omit that Brazil is a small gasoline market—4 percent the size of the United States—an ignored issue of scale.
Politicians pose with gimmicks like hydrogen cars, but they will have little near-term impact. Breakthrough technologies, such as cellulosic ethanol, are theoretically attractive—but don't exist.
Wasted time. For the past 25 years, the U.S. government has painlessly and shortsightedly encouraged consumption and discouraged production. Politicians indulged consumers driving big gas guzzlers deeper into the suburbs. Efficiency technologies were ignored and higher mileage standards deemed a nuisance. Speed limits were flouted. New roads stretched across the country while railroads and mass transit moldered. Domestic oil and gas production was secondary to policies promoting real estate and tourism. These policies have now come home to roost.
The new painless, political solution is research. But those who trumpet it have abetted the disastrous mismanagement of energy research. The U.S. government has spent over $150 billion on energy research over the past 25 years with little return. Congress, at lobbyists' urging, treated energy research as political pork for its districts. Wasting dollars is unfortunate, but squandering time is tragic.
Energy research is critical but must be depoliticized and prioritized by experts. Let science and the markets choose the winning technologies. Only then will we reduce our oil dependence.
Solving the energy crisis is going to require political will and consumer pain: We must immediately start reducing our dependence on foreign oil by cutting consumption and encouraging environmentally careful production. Like it or not, we need all the domestic oil we can produce, while using markets, conservation, and efficiency to diversify our energy supply with new fuels and technologies from well-managed research. This requires political skill and will—not sound bites like "energy independence," which are based simply on hot air.
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