One of the most serious limitations of economics, as every teacher of the subject is aware, is that the study defaults to using money as its bottom-line measure and storehouse of value. We can’t easily factor-in quality-of-life, happiness, or the environment and other so-called subjective considerations. It’s not that we can’t. It’s just that we find it easier to stick with dollars, pesos, renminbi, euros and yen. For these we have exchange rates, and it is for these that investors clamber. But how many Chinese renminbi is the life of a single child worth having succumbed to arsenism, fluorosis, or any number of respiratory illnesses that result from the combustion of low-grade coal? Who will compen- sate the family for this loss?
These questions are almost like asking how many angels can dance on the head of a pin. We may not be able to know, but we must be able to decide if the world as we know it will long survive.
All Presidents since Richard Nixon and the oil crisis of the 1970s have included energy considerations in administration policies. Nixon gave us the National Maximum Speed Limitof 55 mph. Carter deregulated domestic oil production and gave us the Federal Department of Energy, then pushed Congress to increase Corporate Average Fuel Economy (CAFÉ) standards. In 1978, the United States Strategic Petroleum Reserve was created and the National Energy Act was introduced. Ronald Regan, in 1983, pushing for more nuclear energy, attempted to get government out of the energy business by merging the Department of Energy with the Commerce Department, which Congress refused to go along with. He was, however, able to get Congress to approve initial steps in building the Yucca Mountain Nuclear Waste Storage Facility on Federal lands in Nevada. George H. W. Bush put together an impressive international force to drive Saddam Hussein out of Kuwait in 1990 – 91 and his son, George W. Bush, took us back to Iraq in 2003. Now, while one will still get some argument over this, most Americans are convinced today, as are the Iraqis, that Operations Desert Storm and Iraqi Freedom had/have more to do with the oil found in Kuwait and Iraq than they did with the freedom of Kuwaitis or with Weapons of Mass Destruction (WMD). What did Bill Clinton do for us? Overruling Treasury Department Antitrust concerns, his administration approved the merger of Exxon and Mobile oil companies, making it the single largest private corporation in the world at that time.
Why has so much of our energy policy emphasis been on oil? It’s because the United States gets approximately 80% of its energy from fossil fuels, and 17% of this is from oil, two-thirds of which is imported. In coal and natural gas, we are self-sufficient, but it’s not economically feasible to fuel cars, trucks and airplanes with coal and natural gas. That’s why most of the oil we use is consumed by the transportation sector.
Americans, who constitute less than 5% of the world’s population, consume 26% of the world’s energy. We account for about 25% of the world’s petroleum consumption, while producing only 6% of the world’s annual supply. So… increase U.S. oil production, right? Wrong, we have only 3% of the world’s known reserves. Even with ANWR and other coastal areas opened to drilling, we would still be dependent on foreign sources to sustain our current life styles.
A new, comprehensive energy policy is needed, one that has two goals: 1) the reduction/elimination of dependency on foreign sources of oil, especially sources other than North American, and; 2) avoidance of environmental calamity owing to Global Warming, a calamity the vast preponderance of climate scientists in the world are predicting. You’ve heard enough about this already and you’re either convinced this threat is real or you’re not. But I am convinced, and I am very much afraid for the future of mankind. According to Dr. James Hansen, head of the NASAA Goddard Institute for Space Studies and the father of climate change research at that agency, we must reduce our atmospheric concen- tration of CO2 from its current 385 ppm (particles per million) to 350 ppm or less to avert disaster in our lifetimes. That means cutting way back on our consumption of fossil fuels, especially dirty coal and petroleum.
If we do not change our consumption habits, world demand for energy from all current sources will only increase as our populations grow and emerging economies become more affluent from free trade. Therefore, a comprehensive national policy will not be enough to address the second goal, that of avoiding a global warming catastrophe, which, in the long run, truly is the bigger problem. Accordingly, our new comprehensive energy policy must be coordinated with the rest of the world. This means returning to the negotiating table – revisiting the Kyoto Accords, which we could never satisfy now, or hammering out a more demanding protocol as part of a successor accord. For the U.S., this might mean committing to a 40% reduction in CO2 emissions by 2020 and an 80% reduction by 2050 as our “fair” share of the contri- bution. Can we afford to do this? Can we afford not to do this?
Pay me now or pay me later.
How do we get there? Well, I’m sorry folks – but policies aimed at bringing down the price of gasoline and other fuels so that we can continue on the same path we’ve been on since the end of WWII address neither goal of a “comprehensive” energy policy. They won’t make us any safer and they sure won’t make us any healthier. We must tighten our belts – we must evolve both socially and economically if we are going to survive.
Not indifference to Senator McCain’s thoughts on energy policy announced last week, here are my recommendation for the next administration to pursue with the American people through their representatives in Congress. First, convene a bipartisan panel for “long-term” energy policy that includes energy, environmental and economic experts who are not representatives of energy industries’ profit interests. Energy policy this time around should be motivated by the moral equivalency of survival rather than profit. Second, leave nothing off the table for consideration… nothing, not new nuclear power plants, not carbon cap ‘n trade regulations, not conservation or moratoriums on new coal-fired electric plants, not the drilling in ANWR and new coastal areas, and not even nationalization of energy production or considerations of eminent domain. Too much is at stake here: national survival — nay, even the survival of our civilization.
This new energy panel might consider the following:
1. new tax subsidies for urban area mass transit systems and the expansion of interstate, rapid rail transportation systems;
2. Federally-funded alternative energy research with a national goal such as that established by President Kennedy in 1961 to put a man on the moon (industry seems to be more interested in exploiting current geo-political circumstances and lobbying Congress so that they can produce more oil for profit than in seriously considering alternatives);
3. backing-off subsidies for bio-fuels until technologies are available at a sufficient scale to make the production of ethanol and other bio-fuels from non-food sources practical;
4. the regulation or nationalization of energy and transpor- tation industries seeking cost containment and efficiencies (I know, I know, this smacks of socialism, but these things are working for other, mostly-market economies like our European and industrialized Asian friends);
5. tax incentives to help people transition from gas-guzzlers to hybrid and electric cars as they become more widely available, and the acceleration/expansion of CAFÉ requirements for new vehicles to discourage both production and demand for energy- wasting vehicles (certainly, pickup trucks and SUVs should not be excused from the same mileage and environmental standards as sedans);
6. “New Deal” style government work programs and tax incentives to insulate older homes, replace outdated, energy-hog appliances, and install decentralized, renewable energy sources such as wind generators and solar panels.
It is my personal belief that nothing short of an “all-court” press is going to salvage the energy situation that we find ourselves in today. This means that we’re all going to have to get on the same team, because the opposition is not China or OPEC. The opposition isn’t even al Qaeda. The opposition is inertia (resistance to change) and greed.
I invite your comments, pro or con, and would be very much interested in hearing of any ideas to expand my list for the next administration to consider (I don’t have all the answers; nobody does).