Hot Air on Energy
by Paul J. Saunders
01.24.2007
The energy initiatives in President Bush’s State of the Union address are fundamentally unsatisfying. Cutting America’s gasoline consumption by 20 percent over ten years—by tightening fuel economy standards and promoting the use of alternative fuels—is desirable in principle. But the idea that this would make the United States less “vulnerable to hostile regimes, and to terrorists—who could cause huge disruptions of oil shipments, and raise the price of oil, and do great harm to our economy”, as the president put it, is simplistic. Even after a 20 percent reduction in gas consumption, American oil imports will remain very considerable—and U.S. gas prices will remain dependent on the global oil market. Greater domestic production will not make a significant difference in this because prices will still be market-driven.
Doubling the capacity of the Strategic Petroleum Reserve may have a psychological impact—reassuring market actors in times of crisis—but would be enormously expensive at current prices. China has been delaying oil purchases for its new strategic reserves for precisely this reason.
The changing tone of comments by the president and other senior administration officials since the November election have led to considerable speculation about possible major changes in energy policy, including as it relates to the environment and climate change. Hopefully, the president was not yet ready to announce more meaningful initiatives that may still be under development. The alternative—that this is all the Bush Administration has to offer on an issue of such importance, which the Democrats clearly plan to make a priority in the Congress—would be very disappointing.
Paul J. Saunders is executive director of The Nixon Center and associate publisher of The National Interest.
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