On September 23 in New York, the president will have an opportunity to score a political victory and advance an important part of his agenda. No, not at some Park Avenue fundraiser, although he might squeeze one in, but at Climate Summit 2014, a meeting of heads of state convened by U.N. secretary general Ban Ki-moon “to galvanize momentum toward a new global agreement on climate change,” to be finalized at a 2015 summit meeting in Paris. This is an opportunity for President Obama to lead from the front, and in the process lay out a program that might, just might, break the partisan deadlock in Washington.
The president likes to refer to the arc of history, to criticize those who are on the wrong side of history. Well, when it comes to energy and environmental policy it is the president who is on the wrong side of history, in two respects: He wants to end the use of fossil fuels, and use command-and-control regulatory techniques to do so. All of this just when fossil fuels are becoming cheaper and more abundant domestically, their use less threatening to the environment, the need for their contribution to economic growth more compelling, and when evidence is mounting that central direction produces unnecessary costs in lost growth and higher levels of unemployment.
Start with fossil fuels. It was once considered good policy to reduce the consumption of oil, for three reasons. First, it was believed we are running out of oil. Along came fracking and with it the ability to tap reserves that had been economically unreachable. Domestic oil production has risen by 65 percent in the past six years. Second, we feared excessive dependence on unstable and unfriendly foreign suppliers. No longer. We are now the world’s largest oil producer, and if policy permits will become a major exporter of petroleum products. Not that we are “energy independent,” as promised by Richard Nixon and every president since. We are not and probably never can be independent of developments in a key, globally traded commodity market. But any need to curtail oil use merely to insure against cutoffs of foreign supplies is not one that should any longer dominate energy policy.
Nor is the third reason we once had for seeking to wean ourselves off oil any longer sufficiently worrisome to drive policy: the fear of price spikes induced by some upset in the flow of oil from volatile regions. In recent months we have seen interruptions in the smooth flow of crude to market in Iraq, Libya, Nigeria, and threats from Venezuela. Yet the price of crude has not spiked; indeed, at this writing the price of benchmark Brent crude is lower than it was at the beginning of the year.
Compare that with pre-fracking 2008, when disturbances in Nigeria and Venezuela drove prices up to almost $150 per barrel, and gasoline prices in some markets above $5 per gallon. Because supplies are more ample, Americans saved $700 million per week this past August compared with last year, estimates oil analyst Tom Kloza at GasBuddy.com—despite upheavals in major oil producing regions around the world.
It is not only domestic oil that is more readily at hand. No longer is there a reason to ration natural gas, as was the case years ago when regulators tried to force an end to its use for decorative outdoor lighting and boiler fuel. Natural gas is available in such abundance that the important policy question has become how to ease restrictions on its export without damaging domestic industries that consume it in great quantities. Its abundance results in prices so low that natural gas is displacing coal in power generation. And if the EPA is right that clean coal technology is economically attractive, at least for any new coal-burning plants that might be built (and would be built if the fear of draconian restrictions were replaced by an energy market dominated by price), the usable supply of coal has increased.
In sum, we are sitting on one of the world’s largest supplies of fossil fuel, and need only figure out how to use it without causing some of the nasty climate effects that so worry environmentalists—environmentalists to whose views partial deference should be paid even by climate-change skeptics, if for no other reason than the weight given their views in policy-making circles. Meanwhile, environmentalists would be well advised to tackle the difficult question of how to balance environmental considerations and the need for growth, in the knowledge that the age of fossil fuels is not coming to an end, and that it is highly unlikely that the political facts of life will allow them to set targets that involve leaving three-fourths of existing world reserves of fossil fuels in the ground, untapped.