Meaningless assertions yield poor policy.
“America is addicted to oil,” asserted US President George W. Bush in his state of the union address Jan. 31. The silly fusion of psychology and economics has meant nothing in all the years environmental extremists have bandied it in their propaganda. That Bush dredged it up in service to the nationalization of energy choice betokens an administration devoid of ideas, estranged from central beliefs of its supporters, and in need-as they might say in the president’s home state-of a hard jerk on its reins.
Economic preferences are not addictions. The US uses oil in large amounts for sound reasons. Oil is generally cheaper and more convenient to use than its competitors, especially as a transportation fuel. Favoring it over costlier and otherwise inferior alternatives makes perfect sense. In a populous country with great transportation needs, this judicious preference translates by simple arithmetic into large consumption numbers. The process involves the economic choice that is the innate privilege of a free people, not the compulsive behavior that ruins lives. The analogy is offensive and, on several levels, wrong.
Import reliance
What is more, large consumption numbers mean reliance on foreign supply if domestic oil production can’t meet demand. If that’s a national problem, the first move should be to remove whatever political limits apply to domestic production. Yet Bush said nothing about approving oil and gas leasing of the Arctic National Wildlife Refuge Coastal Plain or about repealing leasing bans on vast regions of the Outer Continental Shelf. To a president as dedicated to global trade as Bush sounded in other parts of his speech, imported oil in fact shouldn’t cause such anxiety. And to a president as dedicated to spending control as Bush tried to sound, imported oil should be no reason to divert growing streams of public money to the fuel choices bureaucrats think consumers should make. Yet contradictions like these glared through everything Bush said about energy.
The president announced a 22% increase in “clean-energy” research, on which his administration, he proudly reported, already has spent $10 billion since 2001. His budget proposal will include increased spending on clean coal and solar and wind energy. It will fund an effort to make cellulosic ethanol competitive as a vehicle fuel within 6 years. It will increase spending on research of hybrid vehicles and of hydrogen as a vehicle fuel. And it will make alternative energy sources part of a range of targets in a $137 billion budget for federal research and development-$50 billion higher than in 2001.
“Keeping America competitive requires affordable energy,” Bush said before parroting the Greenpeace line about oil addiction and listing the categories of unaffordable energy on which he wants to spend Americans’ money. “By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy, and make our dependence on Middle Eastern oil a thing of the past.”
This is bluster. It’s the same chest-thumping energy ambition on which the US has wasted billions of dollars in the past. If the US is addicted to anything on energy, it’s the vapid political assurance that cheap, pollution-free fuels lie just over the technical and economic horizon, awaiting only more spending by the government. Americans in great numbers fall for the empty promise every time. And they pay, in taxes and energy costs higher than they need to be, for their refusal to learn.
Government vs. markets
Governments won’t determine when the US or any country should “move beyond a petroleum-based economy.” Markets will. If reliance on Middle Eastern oil represents an excessive burden, markets-not governments-will send the appropriate signals. If ethanol from switch grass powers vehicles better than gasoline, markets can and should make the determination. Governments, subject as they are to political influence if not outright corruption, never get fuel decisions right.
On energy, smart governments limit themselves to making sure markets work. Smart governments don’t tout fuels. History is clear about this. Bush seems to have forgotten the lesson.
