Despite the importance of energy in our daily lives and the media attention that energy and environmental issues generate, the survey results show that Americans are often misinformed about basic energy issues. We are not running out of energy. Our “dependence” on foreign energy is not the Achilles’ heel that many would have us believe. The oft-criticized “waste” of power involved in energy production is inherent in the physics of energy systems. Nuclear power does not have a deadly history in this country.

Why don’t we know more about energy? Perhaps because, for the most part, we’ve rarely had to worry about it. As United States secretary of energy Samuel Bodman remarked in a 2005 speech to the Electric Power Association, “The energy we use is so constant, so dependable, so reliable, and—in relative terms—so affordable that consumers not only don’t give it a second thought, they hardly give it a first one either.”

Energy topics are not easy to contemplate. They can be highly technical and seem overly complicated. Moreover, energy and environmental issues treat a wide spectrum of somewhat unrelated topics, ranging from thermodynamics and agriculture to species protection and underground mining to foreign affairs and religion. Add to this the fact that in our advanced economy, the vast majority of consumption is hidden from view, and it’s no wonder that the average consumer is ignorant of the details of energy production. Consumers have long assumed that flipping the switch means that the light goes on, but few stop to think about the energy economy beyond the wall socket that makes it all possible. Given the constancy and reliability alluded to by Secretary Bodman, there’s little reason that they should.

Yet, whatever the reason for our ignorance, it is dangerous. The wide disconnect between what the public believes about energy issues and what is actually true has already moved our policies in unwise directions:

  • We have failed to take needed steps to open energy-rich lands for exploration. For instance, we believe that oil exploration threatens Alaskan wildlife, and so we oppose efforts to find untapped reserves there.

  • We think that our cities are more polluted than ever and that logging and development are shrinking our forests, and so we desire more onerous pollution controls and limits to what we term “sprawl.”

  • Our belief that America’s oil use is inherently harmful has led us to adopt a number of failed policies. In 1980, the Carter administration set up the Synthetic Fuels Corporation to devise alternatives to crude oil. The program lost tens of billions of dollars with no success. Policymakers have also promoted ethanol as a substitute for gasoline, going so far in the 2005 Energy Policy Act as to mandate the use of 7.5 billion gallons of ethanol in the U.S. energy supply by 2012. This mandate comes on top of the several billion dollars in subsidies that the federal and state governments provide to ethanol R&D and production each year, subsidies that have done virtually nothing to increase ethanol’s share in our energy mix.

  • The belief that we are running out of oil, like the belief that we are addicted to oil, has pushed federal R&D efforts into a number of areas that have cost taxpayers vast sums of money but failed (as of yet) to yield any tangible results. The federal government has long invested in creating vehicles to run on fuels other than gasoline and vehicles far more efficient than current models. The Clinton administration started the Partnership for a New Generation of Vehicles (PNGV) to develop vehicles capable of getting 80 miles to the gallon. That program was replaced by the Bush administration’s similar FreedomCAR program. President Bush also introduced a multibillion-dollar federal program to work with automakers and energy companies in developing hydrogen fuel cell technologies, with the idea of displacing the internal combustion engine. Meanwhile, the federal government has long mandated Corporate Average Fuel Economy standards for automotive vehicle fleets. Critics have noted that these standards have led automakers to produce lighter, less-crashworthy cars.

  • Because our policy debate has failed to recognize that the vast majority of the oil that we consume comes from North America, we have overestimated the ability of nations such as Iran or Venezuela to use energy as an economic weapon against us.

  • Because we are confident that renewable energy sources are the safest to produce and use, as well as the friendliest to the environment, many of us support further research and investment in those sources, while we shy away from increasing our investment in nuclear energy. Not a single new nuclear power plant has been ordered and licensed since the Three Mile Island accident in 1979, largely because of misplaced fears about “unsafe” nuclear power.

  • The current bias that many Americans have against coal and the suspicions that many harbor about the expansion of nuclear energy threaten to keep millions of people in Third World nations impoverished as well as to prevent taking significant steps to deal with greenhouse gas emissions in the developing world.

  • The belief that the twentieth century’s uptick in temperatures is exclusively the product of mankind’s use of fossil fuels has led us to take steps that would retard U.S. economic growth while doing little or nothing to deal with rising greenhouse gas emissions around the globe. The most prominent example, of course, was the Clinton administration’s signing the Kyoto Protocol (which the Senate has never ratified; thus, the United States is not bound by the treaty’s requirements). Many of us agree that the U.S. should sign the Kyoto Protocol on global climate change because we think that it would require all countries to cut their greenhouse gas emissions (which, as we have seen, is not true). Analyses of the treaty have concluded that it is unlikely to do anything significant to lower global temperatures. The cost, however, could be quite substantial. A 1998 assessment by the U.S. Energy Information Administration estimated that meeting Kyoto’s targets “would cost the U.S. economy between $13 billion and $397 billion in 2010 (1992 dollars), or between 0.1 percent and 4.2 percent of average gross domestic product (GDP).”[42]

  • Despite a consensus about skyrocketing future energy demand, we cling to the delusion that we can fully meet that demand through conservation and efficiency measures. The federal and state governments offer a host of conservation and efficiency programs and tax credits. The Energy Policy Act of 2005, in particular, contained a number of efficiency and conservation measures, including a provision lengthening daylight saving time. In addition, the law established tax breaks for purchase of hybrid vehicles and for the purchase and installation of energy-efficient appliances. The federal government for years has also promulgated efficiency-standard mandates for items such as dishwashers, clothes washers and driers, air conditioners, and even toilets. (A provision in the Energy Policy Act of 1992 mandated that toilets in new home construction must use 1.6 gallons of water per flush—or less than half the 3.5 gallons per flush of typical models.) Despite policymakers’ emphasis on conservation and efficiency (in some cases, perhaps, because of it), Americans’ total energy consumption is rising.

A clear understanding of how energy markets work is a prerequisite to enacting policies that will ensure continued economic growth and a healthy environment. With that in mind, our energy and environmental priorities should:

  • Recognize that, in the future, we will need more energy supplies, not fewer. We should seek to maximize production of domestic sources of energy by removing the moratoriums on energy exploration in Alaska’s Arctic National Wildlife Refuge (estimated more than 10 billion barrels of recoverable oil) and on the Outer Continental Shelf (estimated 76 billion barrels of technically recoverable oil).

  • Encourage the renaissance for nuclear power in this country. Specifically, Congress must pass the legislative fixes to remove the roadblocks to completion of the Yucca Mountain nuclear waste depository. (The Department of Energy, for its part, must submit the license application for opening Yucca Mountain that it has promised since Congress approved moving forward with Yucca Mountain in 2002.) Moreover, Congress should ensure that the Nuclear Regulatory Commission has the funding, staff, and resources to process applications to build new nuclear plants in a reasonable and timely manner. Finally, the federal government should fully fund the Global Nuclear Energy Partnership and lift the ban on spent fuel reprocessing instituted by President Carter in 1977.

  • Remove the special treatment that the federal government presently showers on ethanol. In particular, Congress should repeal the mandate to raise to 7.5 billion gallons the share of ethanol and other biofuels in our fuel mix by 2012. It should eliminate the 51-cent-per-gallon tax credit for domestic ethanol production and should eliminate the 54-cent-per-gallon tariff on ethanol that can be produced much more cheaply abroad.

  • Continue to pursue research into cleaner coal-based power generation and gasification technologies, including the $1 billion FutureGEN coal-fueled prototype plant that will coproduce electricity and hydrogen while preventing air pollutants and greenhouse gas emissions. Furthermore, policymakers should instruct the national laboratories to fully investigate the promise of carbon sequestration.

  • Continue research into long-shot but potentially revolutionary energy technologies such as nuclear fusion (through the international ITER consortium) and hydrogen fuel cells for automotive systems (through the International Partnership for a Hydrogen Economy).

  • Continue basic federal research and development into hybrid vehicles, particularly in the areas of advanced battery technologies. Improved batteries will be the lynchpins for plug-in hybrids, bridging the gap between the automotive sector and electric power plants.

  • Pursue advancements in renewable energy technologies such as wind and solar power. However, policymakers must keep in mind that these technologies will continue to produce just a small fraction of the energy that a growing economy requires. They can help meet our growing demand for energy around the margins but are unlikely to be able to replace more economical fuel sources and technologies such as coal, natural gas, oil, and nuclear power. Consequently, policymakers at the federal and state levels should resist calls to implement renewable portfolio standards that would only serve to drive up prices for consumers and provide less reliable supplies of energy.

  • Eliminate regulations that hinder boosting refinery capacity. A morass of Clean Air Act and New Source Review regulations makes refinery expansion costly and effectively prohibits construction of new refineries. No new refineries have been built in decades, and the nation’s inadequate refining capacity has contributed to driving up the price of gasoline. Federal policymakers must expedite existing refinery regulatory processes and approvals to ensure that consumers have adequate supplies of gasoline.

  • Seek to permit the importation of liquefied natural gas (LNG) by authorizing construction of receiving terminals. Congress took steps in the right direction by including provisions in the 2005 Energy Policy Act that gave the federal government ultimate siting authority for new terminals. The Federal Energy Regulatory Commission must ensure that it exercises a leadership role that allows for the permitting and construction of onshore LNG terminals in a manner consistent with public safety.

  • Be wary of taking extreme steps to deal with global warming based on an incomplete understanding of the role of humans in affecting climate change. Specifically, legislators and regulators should closely study the hard science contained in the reports issued by the Intergovernmental Panel on Climate Change (IPCC), while eschewing the “Summaries for Policymakers” issued months in advance of the full IPCC reports. The summaries for IPCC reports are written by a small group of political representatives from a number of member countries, and in the past they have been known to exaggerate or fabricate claims and to contradict the data provided by more than 2,000 scientists involved in the full IPCC process.

Finally, our energy and environmental policies must center on the best proven mechanism for finding solutions to our future challenges. The process of moving beyond a petroleum-based economy is happening not because of government targets or imperial dictates but because that is the direction that free markets appear to be leading us. Market forces are spurring the electrification of the economy. Whereas several generations ago, we relied on petroleum for much of our electricity, today we depend on nuclear power and natural gas for that share, an evolution shaped by economic realities. Whereas today our transportation sector relies almost exclusively on oil, tomorrow we can expect to depend to a much larger degree on electricity and, by extension, coal, uranium, natural gas, and renewable energy.

For those interested in further and more detailed research, Mark Mills and Peter Huber’s book The Bottomless Well explains many of the ideas put forth here. Other ideas are explored in greater depth in articles by Manhattan Institute scholars and can be accessed at



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Clarice Smith
Deputy Director,
Manhattan Institute
(212) 599-7000



Copyright The Manhattan Institute 2007