The American Government seems all but dysfunctional in the face of the current energy crisis. Part of the problem is that there isn't really a crisis, just yet. Gas prices in the U.S. seem frighteningly high, but in constant dollars, they are about where they were in the early eighties. But unlike earlier energy bottlenecks, this one seems unlikely to go away. The reason is that China and India are unlikely to go away. If energy pressures are likely to increase in the near future, and I think they are, we ought to be doing what we can before the real crisis happens.
The problem is simple: demand is increasing faster than supply. For that, there are only two solutions, and both would better than either or none: increase supply and lower demand. Almost every pious politician on either side of the room likes to talk about alternative energy and energy independence. But the one is vain and the other is utter nonsense. Neither biofuels nor wind power are yet contributing anything to our energy supply. Rather, both cost more than they produce. But even if cost effective technologies come on line, neither wind nor corn will ever produce more than a marginal bounty in energy. There just isn't enough energy in a years sunshine or a year of blustery days to matter. In the foreseeable future, the world economy will run on oil.
So what is left. Reducing demand by increasing energy efficiency offers real dividends. A lot of this will be taken care of by the market. Americans are already shifting to smaller cars as the numbers go up over gas stations. But if you like big government solutions, it's probably a good time to increase fuel efficiency standards for vehicles across the board. Mortimer Zuckerman has a piece, "Stop the Energy Insanity," in U.S. News.
The first fuel economy standard law, known as Corporate Average Fuel Economy, or cafe, was passed in 1975—a mandate that doubled the fuel efficiency of the typical car sold in the United States between 1974 and 1985 from 13.8 mpg to 27.5 mpg (even though these measurements took place in favorable controlled conditions rather than on actual highways). It has flattened out since then, in contrast to Europe, which now demands 44 mpg. An effort here in 1990 to lift the fuel standard to 40 mpg for cars aroused furious opposition led by Democrats from automaking states, like Michigan's Sen. Carl Levin and Rep. John Dingell. Had that bill been passed, we would be using 3 million fewer barrels a day.
There are probably millions of barrels of energy fat to be cut out of the American economy in all sectors. One real solution to energy prices is get going on reducing demand per person.
The other thing is to increase the supply of energy. Zuckerman again:
We can get past the lame repetition of the decades-old argument over the virtues of offshore drilling. Simply put: To refuse to exploit our vast oil reserves is insane. The United States is one of the few countries in the world that choose to lock up their natural resources by dramatically restricting production and exploration... In the Arctic National Wildlife Refuge, we're talking about a tiny corner of 2,200 acres (an area the size of a small airport) out of 19 million acres. The proposed drilling promises to yield an estimated 10.4 billion barrels, representing well over 20 years of imports from Saudi Arabia. Drilling in ANWR would take place on the coastal plain, a mosquito-plagued tundra and bog in the summer, not in the snowcapped mountains of ANWR that television pictures would have you believe are at stake. In the winter, the area would also be traversed on ice roads that melt in the spring. This would do no permanent damage to an environment in one of the bleakest, most remote places on this continent—except to inconvenience some caribou that might have to find a different place to mate. We cannot lose over $40 billion a year to serve the caribou.
Yes. It's crazy not to exploit domestic sources of oil, and the Democrats will sooner or later be forced to recognize this. I would add that we probably need to increase our refinery capacity, so that the next Katrina can't shut it down so easily.
I would also point out that the only really significant alternative to oil and coal is nuclear power. In a fit of Steven King paranoia, we largely shut down growth in nuclear power decades ago. We can no longer afford that. Fast breeder reactors can supply a lot of the power we need if only we get around to building them. It's time to push aside the whiners and find real solutions to problems like waste storage.
I am quite confident that these problems will be solved. The sooner we get down to business, the less pain will be involved.
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