No Hope for a Sensible Energy Policy
The presidential candidates' implausible plans to end our dependence on oil.
12:00 AM, Sep 5, 2008 • By IRWIN M. STELZER
THERE IS A REASON I chose "Abandon Hope All Ye Who Enter Here" as the subtitle of the study of energy policy I just completed under the auspices of the Washington-based Hudson Institute. That reason: decades of listening to politician leaders of both of our parties promising "energy independence," and an end to America's "oil addiction." Such promises must be music to the ears of domestic environmental groups and our foreign friends who feel that our cars are too big, our houses either over-heated or over-air-conditioned, and our consumption of fossil fuels the source of the global warming and its cataclysmic consequences predicted by failed presidential candidate and successful pursuer of a Nobel Prize, Al Gore.
I have bad news for all those who think that the retirement of George W. Bush will somehow initiate a golden--or green--age in America. It won't. Just take a close look at the promises being made by the two men who have now been formally nominated as their parties' standard bearers in the fight to control the White House.
Barack Obama promises that he will lead us to independence from imported oil in ten years by spending $150 billion of taxpayer money. Never mind that such independence has been the nation's goal ever since Richard Nixon set it for us in his 1974 State of the Union address. Since then, imports have doubled as a portion of our oil consumption. There is an old saying among economic forecasters: give 'em a date, or give 'em a number, but never give 'em a number and a date. Obama violated that rule--$150 billion over ten years--which would be laudable in a candidate famous for his lack of specificity were it not that the forecast is utter nonsense given the other planks in his energy policy platform.
Obama supports continued subsidization of corn-based ethanol production, despite the inflation in food prices that the switch to growing fuel instead of food is causing. But his enthusiasm for this substitute for petroleum-based fuel does not extend to ethanol-from-sugar-cane made in Brazil. Consistent with his increasingly protectionist stance, Obama supports the prohibitively high tariff that keeps the much cheaper Brazilian product out of the U.S.
The Democratic candidate also opposes opening up the Yucca Mountain nuclear waste repository, which makes his support for nuclear power--conditional on the availability of safe waste disposal facilities--derisory. The same goes for his apparent belated support for offshore drilling. It's okay so long as it is "environmentally sensitive," a standard he knows potential drillers will never meet to the satisfaction of litigious green groups, who can keep applications to drill tied up in administrative hearings and law suits for years.
Which leaves wind and solar. Neither is the favorite of many environmental groups. Wind machines spoil their views, as the Kennedys argue from their Hyannisport waterfront compound as they oppose offshore wind machines that they would, ugh, see from their windows and lawns. Besides, really windy places are usually far from urban centers, and therefore require construction of transmission lines that environmentalists find unsightly and dangerous--and are opposing in Boone Pickens' Texas. And solar installations take up huge swathes of land--almost 20 square miles in the case of one being built to service a tiny portion of the electricity consumed in House Speaker Nancy Pelosi's San Francisco area. Look for battles to restrict what will be depicted as a land grab by utilities.
Besides, $15 billion per year cannot buy independence from foreign oil, which even Obama admits will require a transformation of the entire economy, not least the transportation sector on which almost every other part of the economy depends. That might be why he has recently quietly changed his promise: it now seems he would make us independent only of Middle East oil, which feeds 16 percent of what has come to be called our "oil addiction." But even if we shift our purchases to less efficient producers, that will not reduce the impact on us of a supply interruption in the Middle East, or stop the flow of wealth to the regions' despotic and terrorist-supporting regimes. The oil market is an international market; oil is fungible; if we divert purchases to some other source--if there were one--Middle Eastern oil would move to whatever country we had bid supplies away from.
But Obama is not alone in his inconsistencies. John McCain wants to see 45 new nuclear plants operating by 2030. But not a word about where he expects the capital to come from to fund such a massive program. Nuclear plants are dauntingly expensive--estimates of their cost seems to double every six months--and new nuclear plants cannot compete with existing coal- and gas-fired generation. So they would have to be subsidized, either directly or by guaranteeing that consumers will be forced to bear the costs.
Besides, for electricity from nuclear plants to make even a dent in our imports of oil, someone would have to develop the so-far elusive efficient car and truck batteries for which McCain would offer a taxpayer-funded prize of $300 million, and the infrastructure to service them. But the Arizona senator has given no indication of the government subsidies he has in mind to fund the replacement of your once-friendly gas stations with battery-charging substitutes. Some have proposed that drivers can stop along the way and trade in run-down batteries for charged ones, so that they need not wait while their existing batteries are re-charged. Rather like the old Pony Express riders traded in tired ponies. Skeptics abound.
Then there is cap-and-trade, the program many feel will make it too expensive for companies to continue to burn fossil fuels at current levels. Both candidates favor cap-and-trade, the major difference being that McCain would issue the first round of pollution permits without fee, and Obama (more sensibly) would charge companies for the privilege of emitting CO2. Neither concedes that consumers will end up paying the bill, or that the system has been a fiasco when tried in Europe, or that the battle for permits will keep the supposedly despised K Street crowd in fees for a decade as their clients vie for these valuable permits.
There's more, but space limitations forbid a fuller telling--now available from the Hudson Institute, no charge. But read further only if you are prepared to abandon hope that our political leaders will ever fashion a rational energy policy.
Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).