The Energy Emergency
Political purposes. Then there are the implications of state-owned companies in countries like Russia and Venezuela that are not just responding to market forces but are using their pricing and power for political purposes. The income generated by oil exports has supported their authoritarian regimes, which means that political reform and liberalization may suffer as the oil wealth is used by leaders in producer states to buy off their opposition. The oil revenues have clearly helped Vladimir Putin in Russia, ChÃÂÃÂÃÂávez in Venezuela, and Mahmoud Ahmadinejad in Iran. Indeed, they deliberately seek control of the energy sectors to make sure that they themselves are the source of opportunity and wealth for their people. So how is our policy of promoting democracy going to work when this oil wealth tends to empower authoritarian elites?
The big winners will be countries like Russia and the Middle East oil producers, including Iran. The big losers will be the poorer countries. The wealthier countries can absorb higher prices because of the continuing declines in the energy intensity of their growth. But poorer countries will be disadvantaged even more. Look at a poor country like Pakistan, which doesn't have oil and may lose as much as 10 percent of its gross domestic product over the next 25 years to higher oil prices. Pakistan's economy doesn't work well even today, and its demographic curve shows a continuing rise in population.
In America, the energy crunch will intensify a lot of old political issues and bring in some new ones. We have witnessed the bipartisan failure to institute a vigorous program of conservation. We have not even been able to enact an adequate, graduated program of targets for automobile and truck gas mileage. Despite their public advocacy and political promises, the Democrats in Congress have failed to take steps to deal with these issues. In fact, we live in a political culture where neither the Republicans nor the Democrats wish to ask Americans to make sacrifices, including taxes to reduce our consumption of gasoline. Just think: If our cars had the same energy efficiencies as Europe's today, we could save 4 million barrels a day-the equivalent of Iran's total production.
This whole question of energy should be a central issue in the presidential campaign. But which of the candidates has the nerve and ingenuity to devise a way of meeting environmental concerns while seeking reliable domestic production of energy at home? We certainly cannot assume that alternative energy sources will have a major impact on an acceptable cost basis. We can build as many wind farms as we like, or as many ethanol plants, but it is not going to be possible to make much of a dent at an acceptable cost, because of the enormous volume of our daily imports of oil.
We are facing a world of higher prices and increasingly tighter supplies, creating a growing gap between worldwide demand and worldwide production, at a time when non-OPEC energy production is peaking within a few years. Eventually, this will make us even more dependent on OPEC?with all of what that means. We also can't seem to develop an appropriate energy policy that by definition will take years to implement, so that delays are only postponing the higher costs to the next generation.
It is we who are placing our own country over a barrel now.
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