Policy advice

Patrick Crow
Washington, D.C.
[email protected]

The Energy Department is being flooded with advice regarding its new energy strategy (OGJ, Feb. 23, 1998, p. 34).

At a recent Washington, D.C., hearing, energy association officials predictably argued the policy should not disadvantage their particular fuels.

Leonard Bower, the American Petroleum Institute's policy analysis and strategic planning director, observed that portions of the draft strategy seem to confuse the concepts of energy efficiency and economic efficiency.

"The most energy efficient technology is not necessarily the most economically efficient. This is a matter for markets to sort out, not government. DOE's objective should be to promote energy efficiency when it enhances economic efficiency."

He suggested the policy relies too much on the hope of scientific advances.

"It is tempting to think that the future costs and environmental performance of various energy sources can be known or predicted. But experience teaches us that this is not the case."

Bower said, because DOE proposes expanding U.S. energy supplies, "We are greatly disappointed that the strategy is silent on improved access to federal lands, especially offshore and in Alaska. It is well documented that these areas contain vast oil and natural gas supplies."

Import levels

John Lichtblau, chairman of the Petroleum Industry Research Foundation Inc., New York, noted that the U.S. imports nearly half of its oil supplies, or just over 9 million b/d, and the level is predicted to rise to 14 million b/d in 2010, when it will equal about 60% of supply.

Lichtblau argued, "High levels of imports should not be viewed as against the national interest. Access to low cost energy supplies from abroad benefits American consumers and commercial users of energy.

"The costs of efforts to curb the growth in imports could be very high, requiring a combination of curtailments in demand and investments in very high cost energy. The former would reduce living standards, while the latter would be wasteful and potentially much more damaging to our own and the global environment than low cost oil imports."

And Lichtblau said the U.S. should remember that its exposure to oil market disruptions is not tied simply to import levels. "In a global market, the U.S. would share any international price shocks, even with much lower levels of imports."

Next steps

Energy Sec. Federico Peña's drive to draft a new energy strategy has been simmering on the back burner at DOE for nearly a year.

Now it has been moved to the microwave. The policy was unveiled, and three public hearings were held within a few weeks.

Peña plans to send a final version to Congress by early April but said it will "only be the first round."

He said, "In Round Two, we will propose very specific actions that will implement the strategy-actions like promoting fuel cells, advanced turbines, and highly efficient appliances and dozens of other steps."

Peña said DOE also would hold hearings on those proposals.

He again promised the proposals would contain "milestones" so the nation can measure its success at achieving the energy goals.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.