Iran Is Key to Deciding America’s Energy Future
12:00 AM, Jun 18, 2011 • By IRWIN M. STELZER
In America, President Obama is so devoted to preventing the development of domestic fossil fuel resources that he is willing to risk high unemployment rates to keep a lid on drilling for oil and gas, and allow his environmental regulators to propose regulations that paralyze potential investors in coal-based energy facilities. Meanwhile, the leader of his majority in the Senate, Harry Reid of Nevada, is enabling the president to keep his campaign promise to prevent the opening of the Yucca Mountain storage facility for nuclear waste (located in Nevada), without which key utility executives say they will not build the new nuclear power plants that will be needed if there is a massive switch to electric vehicles. On the off chance that Reid cannot hold off use of the storage facility, the president can count on his chairman of the Nuclear Regulatory Commission, Gregory Jaczko, to prevent the opening of the storage facility. Jaczko has been accused by Hubert Bell, inspector general of the NRC, of “strategically” withholding information from colleagues that might persuade them to vote to activate Yucca Mountain. And if you think there is some hope for a policy that would efficiently constrain oil consumption, think again: no politician with a long lease on a Washington apartment or house will consider raising taxes on gasoline or carbon emissions, either of which would induce consumers to use less oil.
So a situation that was dangerous for America and energy importing countries is now more dangerous. A denuclearized Japan will have to increase energy imports. So will China and other Asian nations as their increasingly affluent consumers move from pedal power to reliance on automobiles. At some point, Germany’s reliance on France’s nuclear plants for electricity and on its own renewables industry will prove inadequate to meet its needs, leaving natural gas from Russia its principal option. If Saudi Arabia is indeed unable to increase output as much as it claims, the world will have to look to its largest producer for increased supplies—that’s Russia.
So much for the minor problems. The most important problem is that there is no substitute fuel available in the foreseeable future to replace reliance on oil for transportation purposes. That means dependence on regimes in countries that are unstable or hostile, or both. How long that will last will be determined by politicians in countries responsive to democratic pressures from consumers demanding low prices, and regimes that see oil as a weapon rather than an ordinary commodity, and to green lobbyists.
But for now, things are looking up. Or may be. Goldman Sachs is advising its clients that oil prices are headed down. This “substantial correction” will take prices all the way down to a bit above $100 per barrel for Brent crude. That warrants a muted cheer at best from consumers.
And you thought the fiscal deficit is our only problem!
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