It is certain that the United States is in for an energy price and supply shock the likes of which we have never experienced or imagined. While high prices, to a reasonable extent can be tolerated, hell will break loose if massive supply disruptions emerge. We are much closer to them than people think. Those who think that we can conserve ourselves to energy independence need not read any further. They are vastly wrong and it is pointless to argue with them.
The first proof of trouble to come is that none of the three US presidential candidates, Senators John McCain, Barack Obama and Hillary Clinton, have paid much attention to the fact that oil, gas and coal — the sources that provide 87% of US energy – can, through better use of the latter two can be taken advantage of to help free us from the “tyranny of oil.” Their lack of interest is breathtaking considering that whoever gets elected will probably be confronted with $120 per barrel oil.
The candidates have mentioned energy occasionally but their preciously rare pronouncements contain only the trite mantras of conservation (something that has never played any major role in US total energy demand), the most unrealistic “alternatives” such as solar and wind and the negative-energy-balance biofuels. They have talked about technology and used allegories of sending a man to the moon, but no one showed how technology, admirable as it may be, can break the basic laws of thermodynamics: energy cannot be generated from nothing.
Second proof — even more daunting — is that all candidates have been Gored, accepting the most outlandish and easily discountable environmental gobbledygook and alarmism as facts and all have promised “solutions” to global climate change, carbon dioxide emissions reduction and the clearly whimsical carbon trading. The most radical and preposterous environmentalist ideologies of yesteryear have been mainstreamed, endowed with neckties and pantsuits.
Even if for the moment one accepts the most ridiculous environmentalist slogans, any substantial transition away from fossil fuels will take at least four to five decades. And this would only be in a “steady state” world, not one we live in which is characterized by the burgeoning energy demands of China, India and other developing countries.
The next four decades are good for a dozen recessions, if things were business as usual or a constant downturn if American politicos actually apply what they have been saying. especially what they seem not to worry about during this election season. I once had a secret hope that in a Hillary Clinton administration some pragmatism would be provided by her husband until he kicked sanity away by actually saying recently, “We just have to slow down our economy and cut back our greenhouse gas emissions.” Really and really? Is this the guy of “it’s the economy stupid?”
The US — the world’s reigning superpower — has come under the control of a situation generated by energy militant countries such as Venezuela, Iran and Russia. Importing more than 60% of its oil consumption while the national debate is dominated by upper middle class ideologues who are fanatically averse to exploiting America’s own resources, we have become dangerously vulnerable to oil prices that cannot be rationalized by any economic model. Except of course the irrational geopolitical components fomented by countries that have the United States exactly where they want it to be. Those same countries also can cause the far more devastating to our economy supply disruptions.
Oil supply and demand is a margin business where 0.5% of over or under supply can generate havoc on the market. There is ample historical evidence that such small discrepancy has caused huge fluctuations in the oil price, perhaps 30% or more. Imagine if ANWAR were already on line, producing as much as 10% of US oil imports. It would have a huge impact on the price of oil, regulating and dampening foreign influences and, in my reckoning, causing at least a $25 reduction in the current oil price.
The blame for the US predicament surely must also fall on the current administration. George W. Bush and Dick Cheney, to both friends and foes, were supposed to be an energy-oriented administration. They were the ones who could explain to the American people the importance that energy plays on our economy and our life style. Instead, mired in Iraq and other misadventures, they failed in exactly the area they were supposed to shine. Instead they allowed themselves to be painted as stooges of big oil. I only wish that big oil had the sway it is accused of. The truth is that they have been rendered largely impotent, shut out of reserves by militant nations and non-supported by a weak government that has lost focus.
The most visible act was a Frankenstein of an “energy bill” that showcased biofuels, including the mandating of non-existent cellulosic ethanol. As of late, biofuels received the notice they deserve, most likely to be relegated to the trash heap of similar experiments.
The energy industry and the energy world are inundated with alarmisms such as peak oil and global warming, things that are in many ways philosophical, perhaps even proxies for religion. The real alarm should be whether in the very near future we can have our lights on and our transportation in place. Every indication shows that our next president will prove to be the Chauncey Gardener of energy.
Sign up to the Human Events newsletter