Energy policy needs to be based in reality, not wishful thinking

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In the 1970s, estimated world oil reserves stood at 600 million barrels. Since then, more than that has been produced and yet reserves now stand at about 1.2 billion barrels.

President Nixon launched Project Independence to end dependency on foreign oil, yet imports continued to grow and independence based energy security remained an illusion.

Some argue that imported oil creates a national security risk, in spite of the fact that most imports are not from the Middle East. Our national security interests there predate import dependency, reflect our relationship with Israel, and are based on the role we have assumed to protect the Persian Gulf.

The third illusion is environmental. Proponents of replacing fossil energy claim the environmental risks are too great. Since 1989, this argument has shifted from air quality to climate change. While the environmental arguments of dread persist, the facts are that air quality continues to improve and U.S. carbon emissions have been declining.

The final illusion is that government is smart enough to legislate technology-forcing mandates. Hundreds of billions of dollars have been wasted over the past four decades without making politically favored technologies commercially viable.

Policy makers have not learned that energy, an essential input for robust economic growth, needs to be abundant and affordable. Making energy more expensive leads to less economic growth and is a regressive tax on those who can least afford to pay.

Our leaders refuse to accept that our transportation system will remain oil based for decades to come and efforts to turn away from oil do economic damage and hinder mobility. Nor have they learned that technology cannot be willed to meet political expectations and time tables. Industrial policy from Washington breeds crony capitalism.

In spite of almost 40 years of spending to replace fossil energy, oil, natural gas, and coal remain our dominant sources of energy. They will remain so for decades because of abundance, affordability, and energy density. That is not an opinion; it is the forecast of the Energy Information Administration.

Congress and the White House are guilty of dereliction of duty on major public policy issues facing our nation. Extreme polarization is taking us down the road of bankrupt European economies. Common ground on energy ought not be hard because of its importance to economic and job growth. But common ground requires a policy based on reality­ —- economic, energy, and technology.

There are six actions that the Obama Administration and Congress should take to make our energy and economic future brighter.

First, aggressively develop domestic reserves of oil and gas. That will lead to further reductions in imports and greater job-creating investments.

Second, assure that emission standards for power plants are tough but realistic. As the composition of our economy continues to shift, the importance of electricity increases. We need policy that makes sure that natural gas, coal, and nuclear power can meet a growing demand economically.

Third, come to grips with the nuclear waste disposal issue. There is no technical reason for not using the Yucca Mountain site.

Fourth, commit to a long-­‐term basic research program to produce the knowledge needed for advances in technology and innovation. That is the best way to meet long term energy needs in an efficient and effective manner. We have a comparative advantage in technology development and should enhance it. Government should swear off trying to pick winners; history proves it can’t.

Fifth, establish a more enlightened risk-­‐based approach to regulation. The Code of Federal Regulations has grown from 100,000 pages in 1980 to 163,000 pages today. Regulation gets layered upon regulation without re-­‐assessment and revision.  The regulatory burden on society just continues to grow in complexity and cost. What is needed is a new regulatory model that places more emphasis on high quality data, comparative risk and cost-benefit analysis, and Congressional oversight.

Finally, there should be a “look back” process--periodic re-­‐assessments of the effectiveness of our energy policy so that it can be modified as necessary. Think of this as a Lewis and Clark planning approach-­‐-­‐basing actions on incremental learning.

We cannot afford to continue the march of folly of the past.  Energy policy is too important to be a pawn in political chess. Politicians simply need the courage and conviction to do the right thing and let the chips fall where they may!

O’Keefe is CEO of the George C. Marshall Institute.