Bush, Kerry Chasing Oil Impossible Dream?
U.S. Dependence on Imports Likely to Continue, Some Energy Experts Say
By Jonathan Weisman
Washington Post Staff Writer
Friday, June 4, 2004; Page A09
Before they ascended to the national stage, President Bush and Democratic challenger John F. Kerry shared a single policy passion: energy. Now, although they have chosen different paths, both men hope to drive the country toward the same goal that critics say is as chimerical as it is politically attractive: freeing the nation from dependence on Middle Eastern oil.
With oil and gasoline prices near record highs, energy policy is back on the political agenda. Both Bush and Sen. Kerry (Mass.), the presumptive Democratic nominee, have proposed comprehensive energy plans that have more in common than their allies like to acknowledge: tax credits to stimulate oil, natural gas and alternative energy production; tax incentives for the purchase of high-mileage vehicles and electricity conservation; federally funded hydrogen research; tax incentives to construct a natural gas pipeline from the north slope of Alaska to the lower 48 states; and a major push to boost "clean coal" technologies.
There are also significant differences. Bush would open the Arctic National Wildlife Refuge to oil exploration, a proposal Kerry ardently opposes, and the president has moved to loosen environmental regulations on oil refineries and older power plants. Kerry is promoting far more dramatic energy conservation initiatives: raising automotive fuel economy standards to as high as 36 miles per gallon, offering $10 billion in tax incentives for automakers to convert plants to advanced vehicle production, and requiring that 20 percent of electricity generation come from renewable energy sources by 2020.
"As long as we are dependent on oil from other nations, we are not masters of our own destiny," Kerry declared last week in Washington state. "We are not independent."
That was not far different from Bush's message in an October speech pushing his energy policy. "We need more energy production close to home," Bush said. "We need to produce in our own country, and we need to encourage exploration in our own hemisphere so we're less dependent on other parts of the world."
Laudable as it sounds to wean the United States from the 2.3 million barrels of oil that the country imports from the Persian Gulf every day, many energy policy experts say the goal may be pointless. Oil prices are set on the world market, and even if the United States is no longer importing a drop of petroleum from the Middle East, it would be just as prone to price shocks as it is today.
"If we don't buy from the Mideast, Japan does, and if that supply is cut off, Japan will be trying to buy oil from Canada and Mexico and Venezuela, just like we will be," said Mark A. Baxter, director of the Maguire Energy Institute at Southern Methodist University. "There is no advantage to weaning ourselves."
Indeed, what is surprising about the Bush and Kerry energy policies is their shared faith that the government, not the marketplace, should be directing how energy is produced and consumed, said Jerry Taylor, director of natural resource studies at the libertarian Cato Institute, who dismissed both plans as "goofiness."
"Both believe that at the end of the policy rainbow is energy independence, and they are willing to move heaven and earth to get there. Both are convinced we need government intervention in energy markets," he said. "The difference is emphasis, not policy."
Kerry and Bush aides respond similarly, saying energy is one area that does need federal direction. As long as the United States is importing nearly 12 million barrels of oil a day, it will remain vulnerable, they say. But by advancing research into hydrogen, ethanol and other gasoline alternatives, the government can move the nation toward a petroleum-free economy in the long run.
"The country needs a long-term comprehensive energy plan," said White House spokesman Trent Duffy. "We're going to have to deal with fossil fuels becoming more and more scarce, and government has a role."
Dan Reicher, a Kerry adviser who headed renewable energy and efficiency programs at the Clinton administration's Energy Department, pointed to the statistics. In 1972, the Department of the Interior predicted U.S. energy consumption would nearly triple by 2000, with average annual growth rates of 3.6 percent. In fact, by 2000, energy demand had risen only 38 percent above 1970 levels, with annual growth of 1.2 percent, Reicher said.
Between 1975 and 2000, the U.S. economy grew 128 percent, but energy use -- once thought to rise in lock step with the economy -- grew 36 percent, Reicher said.
Some of that energy savings is a result of the shift from a manufacturing economy to a more service-oriented one, he conceded, but two-thirds of the savings came from federal policies: fuel efficiency standards for cars that have not risen since 1985, and energy efficiency standards for pumps, industrial motors, refrigerators, water heaters, dishwashers and other appliances.
In the early 1970s, a refrigerator consumed more than four times the energy of the least efficient refrigerator now on the market.
But for all those successes, critics point to what they see as glaring failures: the glacial spread of solar and wind power despite a stream of federal investment, the failed synthetic fuels initiative of the 1970s, and the quiet death of the Clinton administration's effort to build an 80-mile-per-gallon family sedan that would run on electricity and gasoline.
Nearly $1 billion in taxpayer money went into the supercar partnership with the Big Three U.S. automakers, but after eight years Detroit could come up with only three gleaming concept cars. The companies have shown no interest in actually producing the cars. Instead, U.S. automakers turned away from the family sedan in favor of the sport-utility vehicle, while Honda and Toyota, two automakers locked out of the venture, actually did bring gas-electric hybrids to market.
"It's the obvious cautionary tale against politicians trying to second-guess the market," Taylor said.
Undaunted, both Bush and Kerry have turned their sights to hydrogen-powered cars, as well as tax credits and other incentives to shape the future of energy. But success in this may be just as elusive. In February, the Energy Department's independent Energy Information Administration examined the potential impact of a major energy bill pending in Congress and strongly backed by the president. Many of the provisions are also backed by Kerry.
The EIA's conclusions are sobering. Loan guarantees and tax credits to build a natural gas pipeline from Alaska would advance its creation by a single year, to 2017. Tax credits to build advanced nuclear power plants would do nothing to make such projects any more economically feasible. Tax incentives for renewable electricity generation would boost production significantly in the short run, but by 2025 they would have done little more than the market would have accomplished on its own. And a tax credit for the purchase of alternate fueled cars would boost sales of electric vehicles by a total of 460 cars through 2012, while hybrid vehicle sales would be virtually unaffected.
Overall, the report concluded, legislation that would cost $19.4 billion over the next 10 years would lower energy consumption by at most 0.3 percent in any one year. "From 2004 through 2020, primary energy consumption is virtually identical to" the level it would reach with no policy changes at all, the EIA said, and "changes to production, consumption, imports and prices [would be] negligible."
© 2004 The Washington Post Company
Why Gas Prices Are Too Low The reason the oil squeeze will only get worse can be stated in two words: China and India.