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Forbes.com

 

The Efficacy Of Presidential Energy Policy

April 07, 2009

By Mark P. Mills

From FDR to Barack Obama, occupants of the White House have at least attempted to control how we use energy sources.

Keeping wheels rolling, jets flying, and factories and lights lit are great balancing acts of the modern world--balancing often incompatible and frequently subtle economic, environmental and strategic considerations.

As is the prerogative of every new administration, new policies are put forward. So here we are on the south side of the world’s third global oil price spike, in the middle of a financial crisis, with yet another energy policy debate. To the extent that historical context is useful, let’s step back to look at what history reveals in terms of the signature energy policies of presidents in days of yore.

We can reasonably argue that presidential energy policies began with Franklin Roosevelt, whose signature policy, as every sixth grader knows, was to set in motion the great build-out of hydro dams--staggeringly expensive in their day. The Grand Coulee completed in 1942, if it were priced in terms of its equivalent share of the gross domestic product today, would cost some $40 billion. Most of those dams are still producers today but now collectively slake less than 5%of this nation’s enormous energy appetite.

President Dwight Eisenhower launched the age of commercial nuclear energy with his Dec. 8, 1953, "Atoms for Peace" speech to the United Nations General Assembly. Today splitting atoms accounts for about 12% of America’s total energy. Despite the urban myth that nuclear engineers promised electricity from uranium "too cheap to meter," records show those sober engineers knew that nukes were more expensive than conventional power but offered many compelling strategic and environmental benefits.

In the pantheon of historical pivots in the energy arena, there is irony in Eisenhower’s iconic signing of the 1956 National Interstate Highway Act as an implicit, if unintentional, energy policy. The Interstate system spurred not just a great economic expansion, but facilitated the rise of the age of oil consumption; highways are where over 20% of American energy is consumed.

Energy policy skipped the administrations of John F. Kennedy and Lyndon B. Johnson, in part because Kennedy did not serve long enough to face that particular challenge, and he and his successor were both preoccupied with the Cold War and Vietnam. But it was, not surprisingly, a geopolitical event that ignited the first of the modern energy crises when, in 1973, King Faisal of Saudi Arabia embargoed oil export to the U.S. and kicked off the first massive oil price spike.

President Richard Nixon had the misfortune of being on duty for that first of the modern energy crises. One of Nixon’s signature energy policies was his authorization on Nov. 16, 1973, of the $10 billion Alaskan pipeline, which has since transported over 15 billion barrels of oil. Impressive, but that’s barely 10% of total U.S. oil consumption over that period. Nixon, who was Eisenhower’s vice president, had his own impact on the highways and their energy use in implementing the staggeringly unpopular directive to limit Interstate speeds to 55 mph, perhaps the most widely disobeyed law in U.S. history.

Nixon also began the now time-honored tradition of calling for reduced oil import dependence when he launched Project Independence to "make the U.S. energy independent by 1980." U.S. oil import dependence has more than doubled since then.

President Gerald Ford’s signature graced legislation on Dec. 22, 1975, creating the Strategic Petroleum Reserve, a vital insurance stockpile with a couple of months worth of total imports. Then President Jimmy Carter had the misfortune to be on watch for the second oil shock of the modern era, which lead to his signature Synfuels energy project, for which he originally sought total funding of $300 billion (in today’s dollars). Perhaps Carter’s most ignominious contribution was his now often maligned fireside sweater-wearing speech extolling energy conservation, lamenting the national "malaise" and calling for the "moral equivalent of war" on energy.

Then in 1980, as now, there was change at that time with the election of President Ronald Reagan, whose signature energy policy was focused first on ending national fuel price controls, and in general on deemphasizing energy as a special or unique issue preferring the "native American genius, not arbitrary federal policy, to be free to provide for our energy future." Perhaps his notably ignominious energy policy was his failed attempt to abolish the Department of Energy.

The Clinton administration’s signature policy was the Partnership for a New Generation of Vehicles, a government-industry partnership to develop an 80 mpg family car without sacrificing its size, comfort, range or speed--and spending a relatively paltry few billion dollars along the way. Clinton’s high-profile energy failure (aside from, it bears noting, failure even to submit to the Senate the Kyoto Treaty on global warming) was the attempt to impose a blanket energy tax, equivalent to a paltry $3 on the then $20 barrel of oil. The Democrat-controlled Congress slapped it down.

Finally, we reach near present-day where on President George W. Bush’s watch the world saw the third great oil price spike. While much media attention focused on the Bush administration’s attempt to lift the ban on offshore drilling, his signature energy policy will surely be seen by history in terms of scope and scale, the billions directed at corn-based ethanol. But that oh-so-recent $150-per-barrel peak oil price crisis now seems pale in comparison to the subsequent global economic crisis, which it is relevant to note, is the primary reason oil prices have collapsed yet again. Prices dropped not because the world produced more new energy, whether oil, corn-alcohol farms or wind farms; prices dropped from a recession-driven demand collapse.

It’s too soon to know what history will say is President Barack Obama’s yet-to-emerge signature policy--windmills, electric cars or perhaps carbon cap and capture. The record does make it clear, however, that none of the energy policies of the past have come close to solving the rats nest of problems in energy supply, delivery and consumption. Still, many of the policies have had long-lasting effect, for better or for worse. Some have been effective at advancing technology and fuel supply, and nearly all have been effective at spending substantial amounts of money. (This latter reality of course is the unintentional fuel for Washington’s corps of lobbyists.)

There is one instructive universal historic fact: No president has left office with the country using less energy than when he was first inaugurated, although Bush (43) came close due to the recession. Since the first energy price crisis in 1973, the world’s overall energy appetite has increased by an amount equal to adding another United States to the planet.

The sheer, staggering scale of the world’s energy demand places this issue as one of the central challenges of our era. Consider that today the world uses the energy equivalent of 2,500 barrels of oil every second. If those were real barrels stacked up, the pile would grow taller at 5,000 mph.

Consider, too, a related reality. The toolkit of energy options available to any president or nation is in point of fact rather limited. There are no new energy sources; nothing equivalent to the first oil well drilled in Pennsylvania in 1859, or the 1949 discovery of Saudi Arabia’s monster fields. The newest addition to the phenomenology of energy production, the solar-electric cell, dates to 1954 at Bell Labs; first fission for nuclear energy was 1942 at the University of Chicago; piston engines date back to 1900, steam engines the 1700s, wind and water mills predate the 1200s. There is, in short, nothing new under the sun in the physics of primary energy sources.

In the end, it doesn’t matter whether a president’s policy is motivated by trying to tame the atom, or tame the climate, the options are constrained and the requirements staggering. But presidents will try, as well they should. Sometimes the policies will be seen in the harsh glare of hindsight as ignominious, and sometimes they will make an impact. Plus que ca change, plus que c’est la meme chose.

Original Source: http://www.forbes.com/2009/04/07/roosevelt-reagan-bush-clayton-christensen-energy-policy.html

 

 
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