Check out the debate over Energy Independence at Next America!

Is Energy Independence A Myth or the Right Goal for America to Pursue?

YPFP members should definitely contribute to this fascinating discussion. Here's my response to the commentary from their website:

While energy independence is a powerful rhetorical concept, and energy security is an important strategic objective, neither phrase has very much to do with reality. It is essential for the health of our economy, the welfare of our citizens, the safety of our environment and the independence of our foreign policy that we recognize we are indeed in on the brink of an energy crisis and take appropriate correctives, but most of the solutions being discussed suffer from two flaws:

First, the impact of all solutions are usually exaggerated.

Second, the unintended consequences of progress are rarely considered.

Here are just two examples:

Example #1: "We need a Manhattan Project style investment in R&D to produce a breakthrough technology."

Exaggeration: Assuming a "miracle solution" was possible, it would take years and trillions of dollars to implement that technology and phase out the existing coal plants, many of which have been operating for decades. So even if we were to invent a "wonder generator" tomorrow, it wouldn't solve the imminent challenges we face. It might make a dent.

Unintended Consequence: This discovery, if it were truly transformative, would have the potential to throw the entire planet into a massive, shock-induced recession since most of the world's economy relies on fossil fuels, and many of the world's largest and most important corporations are oil companies. If the price of oil precipitously plummets, 1929 will look like a picnic.

Example #2: "America's dependence on Middle Eastern oil is holding our policy hostage, and tying our hands on important issues such as terrorism, the Iraq War, freedom and human rights... We need to stop importing oil from countries like Saudi Arabia."

Exaggeration: Many people have already pointed out that it is pure fantasy to think we could meet the demand for energy without importing from countries with differing values and interests, but supposing we could stop importing from Saudi Arabia, how much would U.S. foreign policy change? America has national security objectives (terrorism, Iraq, Iran's nuclear aspirations), treaty obligations (Israel, Egypt, Jordan), and numerous other reasons why we are heavily engaged in the Middle East. We aren’t going to just leave. Sadly, America is committed to defending unpopular policies and regimes that have nothing to do with oil.

Unintended Consequence: America is not the only energy consumer in the market; in fact, we’re joined by increasing energy-avaricious China, India, EU and others. If America stopped consuming Saudi oil, they’d just sell more of it to China. Taking ourselves out of the global energy market will weaken one of our few important sources of influence over countries like Saudi Arabia. And other countries will step up to fill the void, benefiting their economies, while ours suffers. America might be better off consuming as much energy as possible rather than allow the energy market and the associated political dynamics to be dictated by Beijing, Moscow and Caracas.

Moreover, unless we’d like to see Saudi Arabia turn into a Wahabi theme park, we’re stuck propping up the Saudi royal family at $100 per barrel, as unappealing as that may be. The natural resource wealth of much of the Middle East has afforded dictators carte blanche to misrule their peoples, but it has offered stability. I am not sure Americans would prefer the look of the region if the oil faucet suddenly turned off and the Gulf states were thrust into chaos as each ruthless regime fell one by one, and abject poverty seized countries accustomed to building indoor ski slopes in the desert.

So if the concepts of Energy Independence and Security for America have lost some of their luster, what should U.S. policy be?

First, we need to stop pretending America can act alone to affect energy markets. On the development of alternatives, moderation of consumption, protection of the environment and climate change, and price reduction, the U.S. needs to act in concert with leading producers and consumers. This is not a matter of principle. If America acts alone, we will pay a higher price and reap fewer rewards. In the long run, leadership will pay off.

Second, we need to gradually but steadily phase in energy alternatives. Aiming for quick fixes or radical changes will produce as much harm as good to our economy, geopolitical position and ordinary Americans. Ironically, it takes courage to acknowledge the need for gradualism in the face of manifest urgency, but slow change is better than no change.

Third, we need to manage the effects of the transition. Export states must be weaned off their free-ride mentality and forced to build post-fossil fuel economies. The titans of industry, U.S. oil companies, need the right incentives to adapt so that improvements in energy production do not cost jobs and wealth. Other technologies for transportation, manufacturing, and households need to keep pace with changes in the energy market so the transition to safer, efficient, reliable, cheaper energy does not place a severe burden on citizens and businesses to replace infrastructure, vehicles and appliances.

Managing U.S. energy policy will remain one of the central challenges of our lifetime; so let’s take the time to adopt a realistic approach.