Obama's Fantasy Energy Plan

Energy Secretary Steven Chu published an article in em>Newsweek< the other day outlining the Obama administration’s approach to energy, and I think it is safe to say that that approach can be summed up as ABC: Anything But Carbon.

Which means Al Gore will be happy. James Hansen will be happy. The Global Warming Player-to-Be-Named-Later will be happy. Unfortunately for America, the chairman of Saudi Aramco is also likely to be very, very happy. If I were him, I’d be setting aside space on my order books in the out years for big new demand from the U.S.

Why? Because, as outlined by Chu and in its recently released budget, the Obama energy policy is certain to be a costly flop, which will ultimately leave Americans more dependent on foreign oil than we have ever been.

How can I be so sure? Because we’ve been here before. The Obama policy is little more (actually a great deal more) than the Carter energy policy on steroids.

It’s hard to disagree with Chu’s criticisms of our dependence on oil generally and on imported oil in particular. I certainly don’t agree with his claim that AGW is “clear and compelling.” (So was Newtonian physics, until a Swiss patent clerk named Einstein came along.) But he is certainly right that our dependence on foreign oil empowers some very unsavory actors around the world.

For this reason, as well as the fact that oil is becoming harder and harder to find and more and more expensive to extract, it wouldn’t hurt to start moving our economy away from oil. As former Saudi oil minister Zaki Yamani once said, “The stone age didn’t come to an end because man ran out of stone, and the oil age will end long before we run out of oil.”

But if dependence on foreign oil is such a bad thing, why did the selfsame Steven Chu, just two weeks before his Newsweek piece ran, declare that the United States desired that OPEC not cut its production levels, and why did he thank them when they declined to do so?

After all, OPEC production cuts would mean higher oil prices, which would mean less consumption, which is good for the environment and for our national security. Right, Mr. Secretary? Mr. Secretary? Mr. Secretary, are you there?

Of course, record oil prices were one of the factors that helped push the world into recession late last year. (The U.S. has had six recessions since the early 1970s and every one has been preceded by an oil shock.) Obviously, Chu doesn’t want OPEC doing anything that might abort any nascent recovery for which his boss can take credit. So for now, dependence on foreign oil is not such a bad thing, from Chu’s perspective.

The problem, of course, is that the entire energy policy outlined by Chu in his article has at its core higher energy prices. What do they think those are likely to mean for economic growth?

Don’t get me wrong. I think paying some more for energy would not be a bad thing and that such a policy will inevitably have costs in terms of lower economic growth. But that’s not the package that Chu and Obama are selling. All the talk from the White House about “hard choices” is just that, talk. Chu’s article is a Never-Never Land where no difficult choices need be made and where technology stands ready to ride to our rescue.

In the very first paragraph, Chu applies his scientist’s eye to the issue of oil use. “Strictly from a physicist's perspective,” he writes, “burning oil for fuel can be understood.” It sure can be. Carbon-based fuels (oil, gas, coal) are the cheapest readily available fuels to be had in nature. So what does Nobel Prize-winning physicist Steven Chu propose to put in their place?

A hodgepodge of wishful thinking and self-contradiction, from the looks of it. He urges us to take public transit and join a carpool, because such moves “will save families money and will help keep oil more affordable by reducing demand.” (But when gas becomes more affordable, Mr. Secretary, don’t people drive more?) No doubt he avoided mentioning turning down the thermostat and wearing a sweater in order to avoid summoning up inconvenient comparisons. (And by the way, would some enterprising reporter ask the president if he has turned down his own thermostat yet?)

But Chu is just getting warmed up. (So to speak.) He beats the tired old horse of increased energy efficiency, in spite of the fact that experience has repeatedly shown that using energy more efficiently does not mean using less of it. Indeed, it often means using more in absolute terms. The U.S. economy is roughly 50 percent more energy efficient today than it was in 1970, when we imported less than 30 percent of our oil. Now we import 65 percent. American energy efficiency has been OPEC’s best friend.

Chu is a big fan of biofuels. (He founded the Energy Biosciences Institute.) So, not surprisingly, he puts a lot of stock in them for overcoming the oil problem. Problems? Scientists are on the verge of a breakthrough in this realm, he assures us. (They always are; “Cold fusion,” anyone?) The ethanol boondoggle is already destroying forests to make way for new cropland and pushing up food prices, according to a just-out Congressional Budget Office study. Vast new subsidies will only accelerate the process.

And, of course, there’s always good old wind and solar, the two sources of eternal potential. Once again, the scientists are hard at work. (“The Department of Energy is also researching potentially revolutionary advances in battery technology…”) So were the Big Three back in 1991. Chu informs us that President Obama wants to spend billions on electric car research. Well, so did Richard Nixon. ("I am inaugurating a program to marshal both government and private research with the goal of producing an unconventionally powered virtually pollution free automobile within five years.") And, by the way, so did W.

It’s all pie in the sky, needless to say. (And I didn’t even talk about synfuels.) And don’t get me started on “green jobs.” BP just laid off a bunch of people at its Frederick, Maryland solar plant because labor is so much cheaper in China. That’s not going to change anytime soon.

Needless to say, the most promising alternative of all, nuclear, gets nary a mention from Chu. Domestic offshore drilling to reduce dependence on foreign oil? Ditto. In short, forget both.

The bottom line? The Obama energy policy will not produce any serious new energy, and any it does produce will come at the expense of enormous subsidies. With no new domestic sources of oil forthcoming, the U.S. will have no choice but to import more and more of its oil from abroad. And that is why the chairman of Saudi Aramco is smiling.