As I explain in U.S. Energy Policy and the Pursuit of Failure, bipartisan compromise is possible and has led to policy change in the past. However, that change has almost always been bad for the country. Bipartisanship has given us ill-conceived and wasteful programs for synthetic fuels, breeder reactors, “super cars,” windmills, and ethanol. The problem runs much deeper than the current President or the balance of parties in Congress. For the past forty years, U.S. energy policy has been premised on false concepts of markets, government, technology, and history.
The basis for this policy paradigm goes something like this: The 1973-4 oil embargo proved that America was “dangerously” dependent on a world oil market. It was dangerous because we were rapidly running out of oil and natural gas ourselves, and many of the countries that still had oil and gas—namely members of the Organization of Petroleum Exporters (OPEC)—wished us ill. Thus, hostile oil-exporting countries could (and 1973 proved they would) use an oil embargo as a weapon to force us to bend to their wishes. To avoid either a loss of sovereignty or an end to economic prosperity (or both), we had to seek energy independence.
Almost everything about this story is wrong, as markets are clearly better suited to address these challenges than government programs. Fracking has only confirmed that we aren’t running out of domestic supply after all. The gas lines of the 1970s were the result of U.S. policies not the oil embargo. And, however dependent we have been on acquiring foreign oil, OPEC oil producers have been much more dependent on selling it to us. Though there were predictions in 1974 that every oil exporter would make use of the embargo against us, there have been no embargoes because it was a fiasco for the Arab countries who tried it.
Is our desire for energy independence misguided? How might the 114th Congress address energy issues without compounding previous mistakes?
****This discussion is being hosted in conjunction with a panel event to be held on Friday, December 5th at the Hudson Institute. You can find more information on the event and register here.