Sunday, January 21, 2007
Good argument on relative importance of global heating vs. "energy independence"
The wrong target for policymakers
Sunday, January 21, 2007; B06
BOTH CONGRESS and the Bush administration seem certain to return to energy policy this year. The subject is likely to be featured in President Bush's State of the Union address; a variety of energy bills have been proposed in Congress; and this year's reauthorization of the farm program may repackage agricultural handouts as ethanol-promoting energy policy. But there is a danger in the way political leaders are framing this issue. "Energy independence" is more elusive and less rewarding than is commonly perceived. It should not be allowed to take precedence over attempts to curb global warming.
The United States imports 60 percent of the petroleum it consumes, about double the share two decades ago. Those imports come mostly from countries whose governments are unstable, unsavory or overtly hostile to the United States: 60 percent of the world's oil reserves are in the Middle East, 10 percent in Africa, 6 percent in Venezuela and 5 percent in Russia. It sounds reasonable to argue that if the United States relied less on these regions for its fuel, it would be better off.
But consider this thought experiment: If the United States replaced all oil imports with domestically produced fuel, how much more secure would it be? Well, a Venezuelan or Iranian oil embargo could still hurt U.S. motorists and oil-consuming industries. An embargo would create a global scarcity of oil, and fuel prices would jump -- including the price of fuel in the United States. Admittedly, Americans would be paying those high prices to producers in their own country rather than to producers abroad, but the importance of this distinction is debatable. Some producers in the United States are foreign-owned, and many production operations abroad are U.S.-owned.
Some military planners say that, even so, energy independence would boost national security. The nation must be able to count on access to sufficient fuel to power its military machine and key industries. But two-fifths of the oil consumed in the United States is domestically produced, and the nation maintains a strategic petroleum reserve. Besides, it would take a truly formidable enemy to prevent the United States from buying oil simultaneously from the Middle East, West Africa and Latin America. True energy security comes not so much from energy independence as from diverse sources of supply.
Another security argument for energy independence is that by importing oil from radical Islamic regimes the United States is financing both sides in the struggle against terrorism. But it doesn't matter to Islamic radicals who buys their oil; the United States has banned Iranian oil imports since 1979, but Iran's crude still fetches the world price in the international market. It's true that, in pursuing energy independence, the United States would either restrict its consumption or boost its output; this would slightly alter the global balance of supply and demand, perhaps reducing the oil price and diminishing Iran's revenue. But even this effect is not certain: Saudi Arabia might respond by pumping less so that prices remained stable.
This is not to say that curing the American addiction to oil would bring no security benefits whatever. Over the long term it would probably exert a moderating influence on oil prices; this would reduce the influence of authoritarian petro-states such as Russia or Venezuela. But this distant and uncertain benefit should not be the prime driver of energy policy. Mr. Bush and Congress should focus their energy policy on mitigating climate change and accept security gains that may flow from that as a welcome byproduct.