‘Self-sufficiency’ vs. economic reality

Assumptions are a wonderful way of avoiding facts and hard realities. Frank Gaffney’s Jan. 24 article, “Energizing America,” does just that by making it appear that the United States can easily achieve “energy security” — read oil independence — at a low cost and with no adverse economic consequences. Self-sufficiency has emotional appeal, but that is not how the world works.

We live in a global economy built on interdependence. Economic trade and specialization help to keep consumer prices lower than they otherwise would be and our innovation and productivity higher. But the price of these benefits is a higher level of risk and uncertainty. As a nation we accept this and have created a strategic petroleum reserve to offset the effects of a supply disruption.

Energy is a means to an end — economic growth — not an end in itself. We use petroleum products for agriculture, air travel, industrial production, the transportation of goods and personal mobility.

Mr. Gaffney does not address economic security or the implications of his proposal. Indeed, pursuing his energy policy would weaken our economic vitality, not strengthen it.

In the case of oil, Mr. Gaffney advocates a self-imposed embargo on an energy source that is abundant, versatile and more cost-effective than its alternatives. He neglects the fact that even if we did not import a drop of oil from the Persian Gulf, our economic well-being would be impacted by price spikes and interruptions which damaged our trading partners and the global economy. The reason is simple. The rest of the world is not going to abandon its reliance on oil. The International Energy Agency predicts that by 2025 the world will be using about 50 percent more energy than today and that oil’s role will remain dominant.

Mr. Gaffney would have us rapidly move to hybrid and flexible fuel vehicles. He ignores what is taking place in the marketplace today and casually assumes away the time and costs to reconfigure our automobile manufacturing base and to turn over the current stock of gasoline-powered vehicles. Hybrid vehicles are growing in popularity but cost about $4,000 more than their conventional counterparts. The plug-in hybrids that he champions are still experimental and very expensive. Some studies suggest that, at best, hybrids could account for perhaps 20 percent of the fleet in 2025. The remaining 80 percent would still run on gasoline and those hybrids will still use gasoline or diesel but only somewhat less than their conventional counterparts.

Flexible-fuel vehicles have been available for years, but consumers who are willing to pay a premium to buy them still rely primarily on gasoline because it is more abundant and less costly. He advocates methanol and ethanol as substitutes but ignores the fact that congressional action has chilled the use of methanol for environmental reasons and ethanol requires a large subsidy to be competitive. The United States will produce about 11 million gallons of ethanol daily this year. But we consume over 400 million gallons of gasoline daily. Ramping up ethanol production to replace and be cost-competitive with gasoline would require faster advances in technology and major investments in plants and infrastructure. The time to accomplish all of that is measured in decades, not a few years.

These realities are not an argument against alternative fuels or for being unconcerned about the risks associated with reliance on oil from the most unstable region of the world, which is a global problem; not just a U.S. one. In coming decades, we will need all the energy that can be developed economically. We will need new technologies for alternative fuels and for continued gains in energy efficiency. All of that takes time.

In the meantime, we should be producing all of the domestic oil and gas that can be produced safely and economically. Every barrel produced here is a barrel we do not import.

In planning for a future where alternatives play a much larger role, actions that will do more harm than good or offer false hope must be avoided. Government mandates and meddling in fuel markets failed in the 1970s and there is no reason to believe that they would be successful today.

A freer and wealthier world offers the best hope for a world that is more stable. And that world will be one built on global trade.

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