Let’s talk about something silly.
There appears to be a persistent subset of people who are convinced that the science on global warming is not conclusive, and that consequently, the sacrifices demanded by higher fuel-efficiency standards and renewable energy mandates are not proportional to the benefits.
This tickles me, because this just in: changing our nation’s energy policy isn’t about the environment.
I mean, it is a little bit. But environmental implications are only a small consideration in the energy policy picture. Without even considering global warming, we still need a better way of meeting this century’s energy needs. Don’t believe me? Come back after your next fill-up.
The big question today is whether or not America should increase domestic oil production. While I think it can be healthy to reevaluate policy positions based on the current state of affairs, the problem is that drilling for more oil is neither a quick fix nor a long-term solution. Getting at oil isn’t like rummaging through the sofa cushions for spare change; it’s building a skyscraper. Even the best case scenario has it taking a few years before American oil makes it to American consumers, with a negligible impact on price (this prediction by the DOE on the effects of opening ANWR has the price per barrel decreasing by less than $1.50 in 2027).
Ignoring global warming implications and the environmental damage that might be done by drilling for more oil, some people might still think that drilling is a good idea. I (mostly) respect that, but let’s be clear about what we’re talking about. If we started drilling yesterday, it will still cost you a hundred bucks to fill up your gas tank into the foreseeable future. In fact, my boy Robert J. Samuelson over at the Washington Post cites economist Jeffrey Rubin’s prediction that $7 gallons of gas and $225 barrels of oil are coming soon to a theater near you. This is not meant to frighten (well, Samuelson is trying to scare you into drilling, but that’s not my point at all). Rather, it illustrates the serious economic effects of our dependence on oil.
Building better cars and developing renewable energy sources, on the other hand, is quite simply sound economic policy. Once in place, they will be much less susceptible to price fluctuations. The word I remember hearing fifth most-often in my introductory econ classes (after “the,” “supply,” “and” “demand”) was EFFICIENCY. In theory, or so I was told, markets will tend toward more efficient uses of labor, raw materials, capital, and other things that go into making markets.
The chorus that industry and others have been repeating for years is that renewable technology isn’t ready, is in fact decades away, and so isn’t part of a realistic energy plan. Well, ignoring the fact that limited investment in these technologies (relative, say, to oil subsidies) hasn’t helped, we’re now faced with a situation in which carbon solutions are years away. I’m willing to hear you out if you think that we should look at pursuing multiple options to alleviate today’s high fuel prices. But don’t try to defeat renewables as part of the solution by claiming that they’re not ready. Firstly, some renewables are ready. Secondly, domestic oil and gas isn’t ready either, and saying otherwise is not just dumb, it’s deceitful.
A new energy policy isn’t so much about spending more government money, it’s about spending government money differently. The energy industry today is subsidized. There are a number of reasons for this, and I choose to ignore the conspiracy theories. (Okay, I don’t ignore them. I love a good conspiracy theory. The Illuminati faked the moon landing at Area 51!) But if we accept at face value arguments that these subsidies are intended to protect consumers and stimulate our economy, then I think that the subsidies aren’t really getting the job done these days. There’s no way of ensuring that these benefits get passed on to consumers, even in part.
So, here’s a radical proposal: let’s take the money that currently is going to oil subsidies and spend it on something else. Perhaps, and this is crazy, I know, but perhaps we could spend it on things that will help energy consumers and stimulate the economy. Like… green investment. By subsidizing fuel efficient cars and clean energy development, we can both create jobs and give individuals the power to lower their own energy bills. For example, the Union of Concerned Scientists asserts that we can reduce our fuel consumption by more oil than exists in ANWR just by implementing better mile-per-gallon standards, using technology we already have. Put that in your pipe and subsidize it. At the very least, renewable energy isn’t going to be competitive with carbon-based energy if it’s not a fair fight. And seriously, if we’re giving one side an advantage, why would we favor the technology that has the effect of causing climate problems, contributing to international instability and making exorbitant profits for a few at the expense of American consumers?
You can get back to me on that.
June 19, 2008 at 9:04 am
I agree. Carbon polluting industries should not be favoured with tax breaks and government incentives. Personally, I think it should be a level playing field with no tax breaks or incentives for any industry.
What this also means is that the hundreds of billions being spent to ‘defend’ oil interests in Iraq and elsewhere should be fully-priced into gas at the pumps! Then we will see consumers going en masse to conservation and renewables!
Incidentally, I’ve got a site that might interest you and some readers. it covers the latest global green and socially responsible investing news and research. It’s at http://investingforthesoul.com/
Best wishes, Ron Robins
June 19, 2008 at 3:32 pm
Dear Diana,
I really enjoy reading your blogs. They are written in quick, fresh language on issues that I care about but don’t necessarily care to investigate via policy reports and esoteric publications. Also, the “Put that in your pipe and subsidize it” bit absolutely tickled me.
Back to this particular post–it would be awesome if we could just redirect the money we’re wasting on subsizing the current energy industry. However, how feasible is that considering the unwillingness of Americans to reduce our energy consumption despite skyrocketing costs and the power of energy lobbies to maintain the status quo? What needs to be done to change that? Does the tide of public opinion need to change? Will Barack Obama and a Democratic congress fix things or at least move things in the right direction?
I’d like to hope so, but I feel like a lot of problems that can potentially be solved by Washington are ironclad by lobbyists representing big bullies in the economy. I know, it’s stupid.
June 20, 2008 at 12:51 pm
Thanks a lot for you comments!
@Hee-Sun: You’re definitely right about the challenges that will accompany any efforts to change the status quo. However, it is my sincere hope that the more people who understand these issues, the more likely it is that positive changes will be made. Even the harmful impact of lobbyists could be ameliorated by increased transparency. But you make a good point, and I am thankful for it because it has inspired a topic that I will likely address some time in the next few weeks.
@Ron: While I understand your point, I think it’s important to consider ways to address the true cost of oil without punishing consumers outright. Moving to a more responsible energy policy is probably not going to be painless, but hopefully the burdens will not fall predominantly on the wrong people. For this and other reasons, I think that it’s unlikely that subsidies to the energy industry will end in the near future. But subsidizing smarter can be politically feasible if presented in the right way.