TCS Daily

Setting America Free or Shackling Us with Mandates?

By Marlo Lewis - November 10, 2005 12:00 AM

In a recent speech at Georgetown University, Sen. Joseph Lieberman (D-Conn.) outlined forthcoming legislation to "set America free" from "dependence" on imported oil. He wants to end both our pain at the pump and America's reliance on oil sheiks. But there's a catch. The bill would empower politicians to determine how much gasoline we may use and which types of cars we may buy. This is freedom?

Sen. Lieberman cites the devastation wrought by recent hurricanes and the consequent surge in gasoline prices as proof not only of "how vulnerable our [energy] supplies have become," but also of why we must end dependence on foreign oil.

That is silly. Disasters happen, and when they do, they disrupt everything, not just motor fuel supplies. The hurricanes left millions of people without food, water, homes, medicines, and electricity. Does that mean we are overly reliant on those essentials, or that government should try to "set us free" from such "dependence"?

As it happens, imported petroleum products helped lighten the hurricanes' economic impacts. Had foreign suppliers not increased their shipments to the United States, our fuel supplies would have been scarcer and gasoline prices even higher.

Ironically, Sen. Lieberman bears some responsibility for the vulnerability he decries. One reason so many oil platforms, refineries, and pipelines are concentrated in hurricane-prone Texas and Louisiana is that politicians like Sen. Lieberman have banned exploration and production in other energy-rich areas -- the Atlantic and Pacific coasts, the eastern Gulf of Mexico, offshore Alaska, and the Arctic National Wildlife Refuge. In effect, they have legislated as if it were smart to put all our eggs in one basket.

To this criticism, Sen. Lieberman would reply that we cannot drill our way to energy independence. America accounts for 25 percent of world petroleum consumption but has only 3 percent of the world's proven reserves. Therefore, he concludes, more drilling is futile.

This popular talking point confuses energy independence with energy security, and ignores the fact that three percent of a very big number is still a big number. The Interior Department estimates that the U.S. Outer Continental Shelves contain 76 billion barrels of technically recoverable oil. If only 5 percent of that oil is profitable to produce, it could replace for seven years the 1.5 million barrels a day of Gulf Coast production temporarily shut down by hurricanes Katrina and Rita.

What is futile is Sen. Lieberman's plan to make us safer in a dangerous world. He would mandate cuts in U.S. petroleum consumption by 10 million barrels a day within 20 years. According to my back-of-the-envelope calculation, this would reduce U.S. petroleum imports as a share of total supply from 58 percent in 2004 to 51 percent in 2025. Does anyone believe that if we had just trimmed oil imports to 51 percent a few years ago, America would have been spared the horrors of 9/11, or never come to blows with Saddam Hussein?

The notion that U.S. military or economic security depends on reducing oil imports by some arbitrarily chosen amount is vacuous. In 1973, the United States imported only 28 percent of its oil. Was 1973 a banner year for peace in the Middle East? Was it a halcyon age which knew not terror? Was it a time when OPEC was weak? No, no, and no.

To reduce oil imports, Sen. Lieberman would mandate the sale of hybrids, "plug-ins" (hybrids with rechargeable batteries enabling motorists to make short trips without using gasoline), and flex-fuel vehicles able to run on crop-based fuels like ethanol. Ten percent of the nation's new car fleet would have to be some combination of those vehicles within two years and 50 percent within seven years. A flex-fuel plug-in hybrid, Sen. Lieberman predicts, will enable the average motorist to get 500 miles per gallon of gasoline.

Producing plug-ins will be all the more necessary, he contends, if, as some analysts believe, global oil production will soon "peak" and decline, resulting in "ever higher prices" at the pump.

But if plug-ins will save us bundles of money, why do we need a law to make us buy them? If GM, Ford, or DaimlerChrysler were the first to offer an affordable, family-sized vehicle achieving even 100 miles per gallon, it would blow away the competition. The Lieberman plan bizarrely assumes that capitalists don't want to get rich.

The California Air Resources Board once tried to mandate that 10 percent of all new cars sold in the state be electric vehicles. Sen. Lieberman's bill will look equally foolish if petroleum prices return to historic levels, plug-ins turn out to be very expensive, or some other technology (clean diesel, for example) takes off.

If Sen. Lieberman's economic and technology prognostications prove correct, his bill will not be necessary. If his forecasts are wrong, the bill could set the stage for the biggest automotive disaster since the Edsel.

Marlo Lewis is a senior fellow at the Competitive Enterprise Institute.


TCS Daily Archives