Wednesday, April 30, 2008

‘Energy independence’ and the ‘free lunch’ mindset


U.S. presidents and other politicians as far back as the 1930s, maybe even longer, have promised "energy independence." Among recent presidents, Jimmy Carter made good on some of his promises after the 1973-74 Arab oil embargo, which created panic among consumers.

Carter created the Strategic Petroleum Reserve, only one of the few proposals that materialized.

So, if the past is prelude to new cries of "energy independence," this is more election-year hype.

How can Washington devise any workable energy independence program that changes consumer habits if the same politicians—presidents and members of Congress alike—can't even control unspeakable cost overruns in Pentagon weapons systems they approve? In the past seven years, 95 weapons have exceeded their approved costs by $295 billion (billion!), according to the Government Accountability Office.

The math and the American belief in a "free lunch," which one 1970s sociologist called "the galloping psychology of entitlement," work against energy independence.

Americans are the world's largest petroleum consumer—using an estimated 873,600,000 gallons per day, converted from barrels according to the CIA World Factbook, whose data is a few years old. We have the 12th largest world reserve of oil.

U.S. oil fields produce the equivalent of 348,600,000 gallons per day. Foreign imports account for 550,200,000 gallons per day—making the United States the world's third largest importer.

Therefore, the combined domestic and imported gallonage of 898,800,000 is barely in excess of demand and would not cover a national emergency.

As President Bush himself recognized in a speech Tuesday, demand outstrips supply.

Rather than trying to curtail demand, politicians are offering nostrums that'll merely accelerate demand and shrink supply dramatically. This is where the "free lunch" syndrome kicks in.

Hillary Clinton and John McCain would suspend the 18-cent federal fuel tax this summer to ease consumer costs, but which would encourage drivers to gas up and increase demand. As for reclaiming revenues lost to the highway trust fund, Clinton would impose excess profit taxes on Big Oil—an idea with zero chance in Congress. And with some $10 billion lost to state highway programs, would states make up their federal allotments to work on highways by increasing state fuel taxes?

Some daydreamers would tap the strategic reserve of 29.4 billion gallons—less than two months supply at present guzzling rates.

Solutions require pain and sacrifice and a crash program of new fuel technologies. Not the least of these requires the president and Congress to force greater fuel efficiency on autos now, and end the political pandering to Detroit.

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