TCS Daily


Energetic Ignorance

By James K. Glassman - April 20, 2005 12:00 AM

There's no public-policy topic more prone to intellectual abuse than energy.

Take conservation. Refrigerators, automobiles, houses, factories... They're more than twice as efficient in using energy than they were 50 years ago.

Fine. But, despite the conventional political wisdom, conservation has not cut our energy use. To the contrary. "The more efficient our technology, the more energy we consume," write Peter Huber and Mark Mills in their brilliant new book, "The Bottomless Well." Energy becomes more desirable if it works faster and better. "To curb energy consumption, you have to lower efficiency, not raise it."

Anyway, why on earth would we want to curb energy consumption? Energy abounds, and the leverage is incredible. It's a tiny proportion of the economy, yet without it, we'd grind to a halt.

Or consider the supply side. How many Americans know that the U.S. is the world's largest energy producer? We rank number 11 in oil reserves, sixth in natural gas and first in coal. In 1979, we were told that the U.S. had only 30 billion barrels of natural gas left in the ground and that we'd run out by the 1990s. Instead, over the past 25 years, we have pumped out 67 billion barrels, and strong reserves remain.

The oil is there. The obstacles to putting it to use are strictly political: restrictions on drilling, on building refineries (the number has dropped by more than half since 1980), and on making the distribution system more efficient. Remove the barriers, and prices will fall.

Yes, the ignorance on energy matters is profound, and the latest evidence is a letter sent to President Bush last month by the Energy Future Coalition -- a group that includes religious conservatives like Gary L. Bauer and hard-line defense advocates like Frank Gaffney and Daniel Pipes, along with a potpourri of political operatives.

The writers argue that, since the U.S. holds so little of the world's oil reserves, we are dependent on foreigners, often in unstable parts of the world. "This dependency," the letter-writers say, "is a matter of national security."

As far as it goes -- which isn't very far -- this statement is correct. Of course, it would be wonderful if we owned all the oil in the world, along with all the coal and uranium -- and gold and silver and coffee, for that matter.

Because we don't own it all, we trade, and we use our military power to ensure that goods and services flow freely. For national security purposes, we also maintain a strategic reserve of 700 million barrels of oil, which seems adequate for a country that imports 12 million barrels a day.

Of those 12 million, by the way, 3.2 million come from Canada and Mexico and just 1.5 million from Saudi Arabia.

Not only does the group of religio-defense doomsayers exaggerate the problem, they propose a laughable solution.

They want aggressive government-mandated conservation and sharply increased subsidies for alternative-fuels industries. We've already tried this approach under Jimmy Carter. Top-down federal dictates on energy don't work. Remember Synfuels?

The worst idea from the group is to boost the already massive subsidies for ethanol, a fuel made from corn. We have lots of corn in America, goes the thinking, so we can stuff it in our gas tanks and save on oil. In fact, the ethanol project is simply a pork-barrel jamboree for a few Midwest states, plus producers like Archer Daniels Midland, which, despite a serious price-fixing scandal, remains politically well connected.

Legislation proposed in the House calls for expanding use of ethanol from 3 billion gallons in 2004 to 8 billion in 2012. One result of this extreme measure, according to the Department of Energy, would be to increase the price of gasoline. Meanwhile, less than 1 percent of imported oil would be displaced, and overall fuel consumption would actually rise. A study by David Pimentel of Cornell in 2003 found that -- due to tractor fuel, irrigation pumps and other inputs -- ethanol uses 29 percent more energy than it creates. Also, of course, grain prices will rise as cropland is diverted to growing corn for fuel.

Ethanol already gets a federal tax exemption, worth 53 cents per gallon (for the pure stuff), but it hasn't caught on. If ethanol made economic sense as a fuel, it wouldn't need help from the government.

Besides, for national defense, corn stalks are pretty thin reeds to lean on.

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