January 22, 2008

The Real Campaign Issues I: Oil

All the candidates are talking about change. One area that screams out for change is US oil policy. The United States is the world's largest oil consumer and polluter per capita, and yet it has resisted the Kyoto Accords. Rather than offering leadership, the US has been a stumbling block. This is not in its own national interest, and it is economically wrong-headed, as well as contributing to environmental degradation. 

The US spends billions of dollars a year on imported oil, and yet its cars are far less efficient than they might be. Indeed, while some mild requirements for miles per gallon have been imposed on automobiles, the gas-guzzling SUVs and small trucks driven by millions of Americans are exempt from controls. I even know one 80 year-old woman who drives a Humvee to the supermarket, getting about 4 miles to the gallon. This is in rural Connecticut, where the need for an armored car is minimal. Gas mileage for cars in the US is roughly the same now as it was thirty years ago, and it was better in 1988 than in 2008!  Could there be any connection between this policy fiasco and the fact that former oil executives, i.e. members of the Bush family, have been running the country for 12 of those 20 years? I am not suggesting a conspiracy, just inability to see that the world has changed. Only as his presidency has drifted toward its end has George W. Bush admitted that, in his words, the nation is "addicted to oil." But after making that admission in a State of the Union message, little has changed. Except the price of oil. It has kept going up. 

The US today could drive just as much and use less than half the oil it does today, if only it made a real effort. American cars today average less than 25 mpg. The Toyota Prius gets 55 mpg. The Honda Insight got 70 mpg. Detroit did not build these cars, and has consistently fought for lower standards, and that means more imported oil, primarily from the Middle East. Detroit has not shown any leadership, and it has backed candidates with a similar (lack of) ideas, notably George Bush and another former oil executive, Dick Cheney.

This is the old story. Do any of the candidates in this election want to champion a new story? The Democratic candidates seem to want a new policy for gas mileage, but the American public has generally resisted any forced changes in the automotive lifestyle. Obama has proposed to help Detroit make the transition to hybrid cars by having the Federal Government pick up some of the health-care costs the car industry has. As he points out, health care now adds $1500 to the cost of every car, which is more than the cost of the steel. In short, Obama has moved beyond mere rhetoric to look for a solution and a partnership. He argues that Ford, GM, and Chrysler really have no choice. If they want to stop losing market share, then they will have to begin making more fuel efficient cars.  Obama also champions substituting home-grown biofuels for oil, reducing the costly dependence on foreign oils. Obama has also said that he would appoint a Secretary of Energy Security, in order to keep focused on the problem.

Hillary Clinton has some of the same ideas. More efficient cars, bio-fuel, more solar and wind power. She introduced legislation in 2006 for a "strategic energy fund" that would put $9 billion over a five year period into energy research, and and she suggested taxing the oil companies to help pay for it. Clinton has noted that ExxonMobil made the highest corporate profits in history, and together with the five other large oil companies had profits of $113 billion in 2005. A tax of less than 10% on their profits from one year would be enough to pay for the research into alternative energies. 

In short, both Obama and Clinton see the importance of new energy policies. Both see the dangers of relying on foreign oil, the dangers of global warming, and the need to rescue Detroit from its own backward looking executives. Either, if elected, would push the US in the right direction. But how hard would they push? Jimmy Carter was educated as an engineer, and he understands thermodynamics. Unfortunately, he did not find a way to get the public to accept his energy plans. Instead, Ronald Reagan told the electorate what they wanted to hear, that the shortages were artificial results of red-tape and environmentalists tampering with the free market. Never overestimate the American voter when it comes to oil. Convenience and the cost at the pump may matter more than global warming or national security or preserving what is left of the automobile industry. But at least if either Clinton or Obama are elected, there is a chance that the US will have an intelligent policy.

Anyone interested in the story of how the US became the world's largest consumer of energy might want to go to the library and borrow my Consuming Power: A Social History of American Energies (MIT Press).

A blog on Electricity will follow next month.