Thundering silence on energy in the US presidential campaigns just ended will serve newly reelected George W. Bush well. He won't be locked into frivolous campaign promises. He'll face energy challenges, though, the same ones Sen. John Kerry would have faced had the election's outcome been different. A bipartisan truth is that further inattention to energy is not an option.
Problems of supply beset the US and its world. In the oil market, comfortable surpluses have dissipated in a storm of consumption. Political unrest threatens exports from Venezuela, Nigeria, Iraq, and possibly other important producing nations. Prices have reached heights that not long ago were unimaginable.
Gas market strains
In the US, limits to natural gas supply amplify heretofore-moderate distress caused by the oil price surge. Production can't grow fast enough to meet traditional demand plus the requirements of new electric power plants. Gas prices have reached levels fatal to parts of the industrial and commercial markets. Combined with the costs of elevated oil prices, the gas-market strains can't be good for the economy.
Inevitably, economic pressures become political compulsions. Unless oil and gas markets reverse course in ways nobody now predicts, Bush will face demands to act on energy. In fact, he should do several things, among them avoiding the usual mistakes.
The president should, for example, act quickly to stimulate domestic production of natural gas. Preliminary efforts are under way to tap gas supplies in the Alaskan and Canadian Arctic. But the necessary pipeline projects are costly, complex, and uncertain. The same must be said of most of the several dozen LNG import terminals in various stages of proposal. Whatever the fate of major projects to import gas, whether by pipeline or LNG vessel, supply from these sources is years if not decades in the future. Prices at current levels mean the market needs new supply now.
A faster route to increased gas supply is domestic production from new areas—especially those offshore and in the West now unavailable for lease or subject to egregious restrictions. If new domestic production is to be available when most needed, which is between now and when arctic pipelines and LNG terminals come on stream, the work must begin soon. So policy changes must begin immediately, which can't happen under current predispositions about energy.
Another action the president should take, therefore, is to improve the national conversation about energy. That conversation tends to disparage consumption and ignore supply. It begins by assuming that cutting oil and gas use in absolute terms represents value, regardless of the comparative cost of substitutes or the pain of doing without energy. Most policy mistakes, such as foreclosing gas exploration even as a gas shortage develops, flow from this formulation. It's unreasonable. While alternative energy and restrained consumption can help, they can't, in a huge market certain to grow, displace meaningful amounts of hydrocarbon energy except at intolerable cost. Wishes to the contrary seduce policymakers into wasteful decisions. The national conversation about energy needs to recognize the market's dimensions and respond, better than it has so far, to the imperatives of supply.
It also needs to acknowledge that environmental values can and usually should, like all other values, be subject to compromise. Energy and other economic values now yield to an environmental ideal hostile to evidence of human presence in nature. So the national conversation ignores technical advances that steadily diminish the environmental effects of energy-industry operations and even of oil and gas use.
Energy and environment
The conversation needs to acknowledge that people are part of the environment and that human activity and its environmental effects are, therefore, natural. The effects don't have to be ruinous; in economically healthy countries, in fact, they're increasingly benign. It happens that the economically healthy countries best able to manage environmental values also consume oil and gas at relatively high rates. The national conversation about energy too frequently ignores the relationship.
Quick action on gas production, realism about energy supply, and environmental policy tolerant of human influences would do much for US energy health. The essential context is a national energy conversation more sophisticated than occurs now. Improving that conversation is a leadership challenge of presidential proportions. Bush shouldn't wait for a cold winter to start the effort.