Our energy policy doesn't match our energy needs

Just after the election, the International Energy Agency released World Energy Outlook, 2012; it projects that by 2020, the U.S. could be the world’s largest oil producer, and a net oil exporter by 2030 – if: U.S. policies support investment and permit environmentally safe exploration and production onshore and offshore. That’s a big IF.   

The Outlook sees global energy demand up more than one-third by 2035, with fossil fuels the main source, including supply from huge new U.S. resources of shale oil and gas and unconventional coal. New technology opened those resources; it could make the U.S. a “new exporting country” by 2035, if policymakers let the market work and permit the Keystone XL Pipeline, Liquefied Natural Gas export terminals and other vital infrastructure facilities to meet burgeoning world demand and its huge economic opportunities. That’s another big IF.   

But between the election and the Outlook’s release, the Department of Interior banned development in 1.6 million acres of lands that overlay some of the nation’s richest shale oil and gas resources. They ignored major facts: the U.S. oil and gas industry provides 9.2 million American jobs and 11 percent of new jobs; it creates 7.7 percent of U.S. GDP; it fuels most American industry; and the economics of fuel switching (coal to natural gas) means the U.S. may be the only nation to meet its 2020 greenhouse gas reduction goal of 17 percent below 2005 levels. 

So the Obama energy policy, “all of the above,” continues banning and delaying. It targets fossil fuels for billions in new taxes and crushing new regulations, despite the impact of those policies on Americans. It continues to waste billions of dollars in subsidies, grants and “loans” to solar and wind companies, hoping those “fuels of the future” will drive the economy by tomorrow (30 years of subsidies have failed so far). And it continues to harm the American public with self-imposed cost increases and tax burdens as the economic “recovery” staggers on. 

How realistic is that policy?  First, here are some terms, then some arithmetic. The U.S. uses about 100 “Quads” of energy per year – 100 quadrillion British Thermal Units (100 followed by 15 zeroes; a BTU is the heat energy of a kitchen match). If all those BTUs were a pile of coal, it would cover all of Manhattan Island (8 miles x 23) and rise 161 feet in the air – the height of a 16 story building. World energy demand would require a pile 600 feet high – the height of a 60 story skyscraper.   

Let’s divide that Manhattan Island pile of U.S. BTUs into its component energy sources: Oil is the first 65 feet, natural gas 36, and coal, 36 (137 feet so far -- 85 percent fossil fuel of today’s U.S. energy mix). Nuclear adds 13 feet (but may not be allowed to increase) and hydroelectric is 4 feet (to make154). Biomass (cellulosic ethanol mandated in 2006) adds 5 feet; it has cost $385 million so far, which would provide 8700 gallons per day – 3 drops per car per day! The last 2 feet, comprises geothermal (7 inches), wind (14 inches), and solar -- the thickness of 10 sheets of paper! To hope that “all of the above” can displace the 85 percent fossil fuel share by expanding the 7 percent share in less than 3 decades is absurd. It will further damage our economy and any possibility of job growth; it will destroy U.S. competitiveness and our international standing as ally, trading partner, and 21st Century nation. 

It’s time for the President to stop hoping for the best and bowing to the Utopian wishes of those who view industry and trade as bad, and who want to return to mythical Good Old Days. America needs a strong energy policy that builds on today’s realities and uses current resources optimally as new ones are developed for future decades. Such a policy cannot be selective or punitive; it must be a comprehensive approach that works from reality. Energy is the foundation of the American economy. To treat it as anything less is a detriment to this nation.  

Rafuse, a former White House energy advisor in the Nixon Administration and former Unocal employee, is principal of the Rafuse Organization. Richard J. Stegemeier is former chairman of the Unocal Corporation.