The Future of Energy
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The Seven Myths of Energy Independence

Why forging a sustainable energy future is dependent on foreign oil

Myth #6
Cut Demand and the Rest Will Follow

Given America's tectonic pace toward energy security, the time has come for tough love. Most credible proposals call for some kind of energy or carbon tax. Such a tax would have two critical effects. It would keep the cost of oil high and thus discourage demand, as it has in Europe, and it would generate substantial revenues that could be used to fund research into alternatives, for example, or tax credits and other incentives to invest in the new energy technologies.

To be sure, higher fuel taxes, never popular with voters, would be even less so with gasoline prices already so high. Indeed, many energy wonks are still bitter that President Bush didn't advocate for a fuel tax or other demand-reduction measures in the aftermath of 9/11, when oil prices were relatively low and Americans were in the mood for sacrifice. Bush "could have gotten any set of energy measures passed after 9/11 if he had had an open and honest dialogue with America about how bad things were," says Edward Morse, an energy market analyst and former State Department energy official.

Instead, Bush urged Americans to...go shopping. Seven years later, with oil prices soaring and the economy hurting, swaying the electorate will take a politician who is politically courageous, extraordinarily articulate—and willing to dispense with the sweet nothings of energy independence.

And higher energy taxes are just the first dose of bitter medicine America needs to swallow if it wants real energy security. For no matter how aggressively the United States cuts oil demand both at home and abroad, it will be years and perhaps decades before any meaningful decline. The 12-year fleet-replacement scenario outlined above, for example, assumes that efficient new cars are being mass-produced worldwide and that adequate new volumes of electricity can be brought online as the fleet expands—assumptions that at present are wildly invalid. A more reasonable timetable is probably on the order of 20 years.

During this transition away from oil, we will still need lots and lots (and lots) of oil to fuel what remains of the oil-burning fleet. If over those 20 years global oil demand were to fall from the current 86 million barrels a day to, say, 40 million barrels a day, we'd still need an average of 63 million barrels a day, for a total of 459 billion barrels, or almost half as much oil as we've used since the dawn of humankind.

And here we come to two key points. First, because the transition will require so much old energy, we may get only one chance: If we find ourselves in 2028 having backed the wrong clusters of technologies or policies, and are still too dependent on oil, there may not be enough crude left in the ground to fuel a second try. Second, even if we do back the right technologies, the United States and the world's other big importers will still need far too much oil to avoid dealing with countries like Iran, Saudi Arabia, and Russia—no matter how abhorrent we find their politics.

In one of the many paradoxes of the new energy order, more energy security means less energy independence.

Myth #7
Once Bush Is Gone, Change Will Come

No presidential candidate has indi­cated he or she will raise energy taxes or sit down in oil talks with Tehran. All have ties to a self-interested energy sector, be it coal, ethanol, or nukes. And even after the election, energy security is so complex and requires such hard choices that any president, and most members of Congress, will be sorely tempted to skirt the issue in the tried and true manner, by pushing for a far more palatable "energy independence." As Senator Lugar so choicely put it, "The president will have advisers who will be whispering cautions about the risks of committing the prestige of any administration to aggressive energy goals. Those advisers will say with some credibility that a president can appear forward-looking on energy with a few carefully chosen initiatives and occasional optimistic rhetoric promoting alternative sources. They will say that the voting public's overwhelming energy concern is high prices for gasoline and home heating, and that as long as the president appears attentive to those concerns they can cover their political bases without asking for sacrifices or risking the possible failure of a more controversial energy policy."

Lugar, a veteran pol, is no doubt correct about the pressures the next president will face. What we can only hope is that by the time he or she is chosen, the signals from an overheating energy economy will have reached a point where platitudes no longer suffice—where it is possible to embark on a "controversial energy policy," to ask voters to make sacrifices, and above all, to push America, the champion of globalization, out of a posture of self-absorption and into a stance that is genuinely and sustainably global—at which point the Saudi ambassador really would have something to worry about.

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