Running on Empty in 2020

The rhetoric of the anti-war movement has been replete with epic references to blood and oil, clashes of civilization. Debates concerning the war in Iraq have been deeply concerned with issues of morals—as it well should—but few have questioned the pragmatic premise that in terms of energy security, we are getting a sure boon in this war. And yet this presumption is flawed and will do nothing to secure the United States’ energy security in the long-term. Meanwhile, the energy sector is now developing an equivalent to the perverse subsidies in the agricultural sector which funnel tax dollars away from the general public and into the pockets of corporations which need serious restructuring far more than short-term handouts.

U.S. foreign policy and security expenditures in the Middle East are not exclusively due to a desire for a continuous stream of oil, as some leftists would like to believe. But it would be extremely difficult to rationalize that it has no effect. There are other dictators around the world who are as callous as Saddam Hussein, and by whose demise an American president would gain more. Fidel Castro, for instance, has one of the most extensive hate clubs of any person in the United States—particularly among the easily swayed voters of South Florida, a crucial state in presidential elections. Steam rolling his regime would be altogether too easy, and under new rulers his country could become as economically integrated with the U.S. as Puerto Rico. However, Comrade Castro lacks oil—and so he has not been a major focus for any U.S. government since the 60s. It is no coincidence that the repressive regime the U.S. chose to topple happened to have vast oil reserves.

But the fundamental problem is that efforts to expand the supply of oil are not going to be sustainable. Oil demand is going to start outrunning supply sometime between 2015 and 2025, according a range of estimates from the Organization for Economic Cooperation and Development and the U.S. Department of Transportation, meaning that prices are likely to skyrocket as third world development puts demand pressure on production capacity. The likelihood of finding more oil is extremely low at this point. In the 70s fuel reserves were underestimated due because they did not take into account the technological progress that would make untapped, although previously known, oil reserves financially viable.

But the new estimates presume technological growth and come after three more decades of oil exploration. We now know there is little left, and any improvement in mining technology is going to be swamped by demand from the rest of the world. It is all too likely that an economy like America’s, which is structured around cheap energy—and, more specifically, cheap oil—will react with a major reduction in economic growth as the real cost of producing almost anything increases. The only escape would be a complete reengineering of the U.S. economy, which would take decades. Dire predictions? The Department of Transportation has no interest in scaring the public, but this is what it has come to. A recession brought on by “stagflation”—increasing interest rates and prices—would be similar though probably much worse than the recession of the 70s when the Organization of the Petroleum Exporting Countries started to seriously restrict supply.

There are alternatives to having an extremely oil-dependent economy. Hydrogen looks promising, and wind power is now price-competitive with coal. With aggressive policy measures, including investment subsidies for renewable energy and stronger standards for vehicle efficiency, the U.S. could be independent of foreign oil by 2015—and not a moment too soon. However, there is no indication that the federal government is taking these alternatives seriously. The Federal Budget for 2004 allocates a meager $1 billion towards hydrogen fuel cell research, yet vehicle fuel efficiency standards have hardly moved—from 20.7 miles per gallon for an average sedan to 22 miles per gallon. This pork barreling in advanced science is not going to effect the major changes needed.

Changing the driving and car purchasing patterns would be critical in reducing our dependency on foreign oil. Having a fuel efficiency tax or subsidy scheme would be desirable, as well as making efficiency standards increase annually, rather than letting them stay contingent on the wills and wiles of Congress. Most importantly, the U.S. would have to ensure that older, less efficient cars get off the road sooner. To do this with some measure of public support, the government would have to provide incentives for consumers to buy cleaner cars and retire older ones. To stimulate renewable energy, a carbon tax of as little as $4 a ton would be enough to turn the tide of energy investment. Other measures—including investment in public transportation, research into alternative fuels and the like—also deserve attention, but are either much longer term or have uncertain results. Immediate changes in the vehicle fleet and power generation should be the top priority.

We can be sure that there will be serious upward pressure on oil prices. This is much less an “issue” and more an economic fact. If the U.S. is to ensure its energy supply and make the transition to a more mixed portfolio of energy sources, then it must act now and invest where it can expect a return—in serious, aggressive measures to change the outdated paradigm ruling our energy use—and stop subsidizing Big Oil. America has no time to waste and a lot to lose.

Alex B.H. Turnbull ’05 is an environmental studies and public policy concentrator in Quincy House.