Despite $120/barrel oil, an S&P500 that has returned 2.8% over the last 10 years, an annual inflation rate somewhere in the neighborhood of 8%, a financial system that is being nationalized by the so-call "conservative" Republican administration, an economy that could be described as anemic (at best) and a US currency that has dropped by 50% since Bush got elected, the US political leadership and media remain in "oil-denial". The Wall Street Journal, while publishing an article on the "Opinions" page critical of Boone Pickens' wind and natural gas energy strategy, refuses to print the following "opinion", which I have sent to the editors 3 times now. Why?
The US Must Adopt a Strategic, Long-Term Comprehensive Energy Policy
The debate is not about peak oil theory, or global warming, or the role of speculators in the price of oil. The debate should not be about windfall profits taxes on big oil or suing the oil producing nations. For a country that consumes 20% of worldwide oil production and imports 60% of it, has seen oil double in the past year and quadruple over the past 5 years, the question is a very simple one: what rational policies can the US adopt to prepare and protect US national security and its economy from an environment where worldwide oil supply cannot keep up with worldwide oil demand? It's a simple question. A common sense question.
The energy crisis of the 1970's was marked by soaring energy prices, runaway inflation, rising unemployment, and economic uncertainty. Yet the energy challenge facing the US and the world today will make the 1970's look like a walk in the park. Then, the energy crisis was a political crisis based on US Israeli policy and an Arab oil embargo. It ended when the embargo was lifted and Saudi turned on the "spigot". Today, there is no "spigot" and worldwide oil supply will not be able to keep up with demand. There will be no "end" to this energy crisis. Despite the skeptics, it truly IS different this time.
The only solution is a comprehensive long-term energy policy. This is extremely urgent, and we need to get it right the first time. The energy challenge confronting the US and the world is so daunting every economically viable source of non-oil based energy will be needed. Here are the basic features of such an energy policy:
· Acknowledge the problem. No difficult problem can be solved until it is first acknowledged. US government and media need to honestly inform and educate the American people and policy makers at every level about the threat worldwide oil supply/demand realties pose to the US. This is the root of the energy challenge. The energy crisis needs to be attacked with information and wise decisions.
· The nature of the energy challenge is so immense the US government will have to play an important and central role.
· Increase gas guzzler tax penalties and encourage gas sippers via increased tax rebates.
· Increase CAFE standards. "Open fuel standards" autos should be incentivized.
· Conservation guidelines should be issued by federal, state, and local governments.
· Impose a top speed limit of 60 mph nationwide
· Adopt four-day workweeks wherever and whenever it makes sense.
· Government encouragement and tax incentives for development of non-gasoline powered transportation.
· Huge investments are needed in wind, solar, geothermal, and nuclear energy to power non-gasoline powered automobile solutions.
· Wind and solar power generation of hydrogen via electrolysis as a storage mechanism for calm and cloudy days. Hydrogen power generation needs encouragement.
· In order to use the power generated from the above non-oil sources to power automobile solutions, the electric grid infrastructure must be updated and its capacity increased dramatically.
· Construction of a trans-Canadian natural gas pipeline from Alaska to the lower-48.
· Permit and construct LNG terminals on both coasts. Now.
· Open the continental shelf and Alaska to oil and gas drilling. Now.
· Research and development of clean coal-to-liquids and coal gasification.
· Increase the federal gasoline sales tax gradually over time.
· Develop electric mass transit for people and goods.
· Biofuels should be encouraged by not at the expense of runaway food inflation.
· Abolish Ethanol mandates. They cause major distortions in the food chain.
· Abolish import taxes on Brazilian ethanol.
· Food production and transportation methods in a non-oil based world should be investigated and results published.
· Encourage local sustainability in energy, food production, and transportation.
· Encourage population control through education.
· The US voting public should demand energy accountability by its political leadership. We need policy by engineers and scientists, not Rush Limbaugh and Larry Kudlow.
In conclusion, the economic and social implications of remaining on our present oil-based economy will be very unpleasant. We need to take action now. The US is capable of successfully confronting the energy challenges but can only do so by rationally acknowledging the problems and solutions. We can usher in a new age of economic prosperity based on non-oil based energy solutions but we must begin the transition now. We are running out of time and should begin a massive build out of a non-oil based energy sources, transportation solutions, and infrastructure today. The only way to achieve solutions to the economic challenges posed by the energy crisis is adoption of a well crafted, long-term, comprehensive energy policy as shown above. Failure to do so will mean continued US currency devaluation, equity investment destruction, reduction in the US standard of living, and eventually social unrest and huge economic and social dislocations.