The oil and gas industry has new evidence, this time from Europe, of how calibrating energy policy to import dependence can lead to political trouble.
Usually, it is in the US that energy politics leverages itself against oil imports. Produce more domestically, the standard argument goes, in defense against the import bogey.
For the US and any country blessed with oil and gas resources, the goal of increasing production is altogether proper. Domestically produced oil provides economic benefits unavailable from imports. Governments should encourage it.
But imported oil isn't the horror that it might once have been and is still portrayed to be. In the US, in fact, economic progress and security depend on imported oil. The objective for the US-and any consuming nation-should be to produce as much as nature and economics allow and welcome imports for the balance of needed supply.
To produce below potential, as the US does, is to forgo the benefits of resource-based wealth creation. That sacrifice, not the degree of import dependence, should be the issue.
Using less
Politicizing oil imports doesn't just steer attention away from important economic arguments, however. It also tends to backfire. Producing more domestically isn't the only way to lower oil imports. Using less oil-one of environmentalism's favorite crusades-accomplishes the same objective.
That's the peril that has surfaced anew in Europe. A European Commission "green paper" published at the end of November launches from the springboard of import dependency into a proposal for communal heavy-handedness to combat climate change.
Loyola de Palacio, European Commission vice-president of energy and transport, specifically linked the issues when she introduced the paper.
"Confronted with both increasing external dependence and the urgency of the fight against climate change, the European Union cannot be complacent," she said. A press statement about the paper itself offers this tidy observation: "The fight against global warming aims initially at the consumption of fossil energy."
The paper's case begins with the EU's 50% dependence on energy from external sources and a warning that dependence will grow to 70% in the next 20-30 years. "Dependence is seen in all sectors of the economy. Without deceleration of the growth in consumption in the principal expansion sectors, transport, electricity, and domestic, the energy dependence of the union will be increasingly alarming."
What to do? What do frenzied bureaucrats always do?
They call for, as the press statement describes it, "a genuine change in consumer behavior." They pursue this change with taxation aimed at "directing the demand [for energy] towards better-controlled consumption, more environmentally friendly." They pursue wondrous ideals such as "a truly alternative transport policy," which among other things seeks to "rationalize the use of conventional private cars." They subsidize renewable energy with profits from commercial energy. They even look for a place in environmentalist sensitivity for nuclear power. And they trumpet a common approach that insists on "a more coherent energy taxation to steer energy consumption towards more environmentally friendly sources."
Here is an intergovernmental entity discussing a consolidation of taxing authority for the purpose of changing the way people live in response to alarm of doubtful legitimacy. That it reflects the standard environmentalist line on climate change makes it no less troublesome. Governments shouldn't behave this way.
What should concern the oil and gas industry is the easy way concern over import dependence accommodates this unfounded assault on oil. And there should be no mistake: environmentalist concern about imports will never make room for compromise between using less oil and regionally producing more. Already in Europe-as it has in the US and Australia-the environmentalist group Greenpeace has resisted production activities because of the associated oil's alleged contribution to global warming.
Political resistance
Chances are low that anything will come of the green paper. Political resistance is evident in the protests that erupted throughout Europe this year against fuel taxes. And the hurry to act on climate change through the unworkable Kyoto Protocol stalled last month when implementation talks collapsed in The Hague.
The lesson, however, is clear. For the oil and gas industry, the politics of oil-import dependence too easily becomes a trap. The industry has better ways to argue for policies that support production.
