Energy Policy: It's The Politics, Stupid

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It's been more than three years since Barack Obama was elected on a pledge to "transform" America. Two of the industries in his sights were health care and energy. Whether he will get to realize his vision of a government-managed health care system depends now on the Supreme Court, which will decide, probably in June, whether Obamacare is constitutional.

That leaves energy on the president's to-do list. It is no easy thing to pin down his position on energy matters, since he gathers disparate policies under the banner of "all of the above""”not exactly a slogan that reflects a willingness to make tough choices. Add to that his confession (to Russia's current president) that he will have more "flexibility" after the election, and one must be careful in accepting his election year policy statements.

So this past week we have the president declaring that he would like to leave office with America on the road to sharply reducing its use of fossil fuels"”oil, coal, natural gas"”and relying more heavily on wind, solar, and other renewable sources of energy, including most recently algae. This brings roars of approval from his environmental constituency, and from companies producing"”or trying to produce"”green energy, companies in which Obama campaign contributors often feature and are heavily dependent on taxpayer subsidies.

But "all of the above" has something, too, for motorists upset with the rising price of petrol. The president claims that he has continued "our predecessor administration's" policy of expanding domestic oil and gas exploration, as a result of which exploration is booming and production has risen. "And whoever succeeds me is going to have to keep it up." So in addition to a rousing call for transferring oil company subsidies"”which Republicans foolishly seek to preserve"”to green technologies, the administration on the same day as the president spoke announced steps to expand drilling off the Alaska and Atlantic coasts. Or at least to begin taking the necessary steps, leaving the president the option of exercising his post-election "flexibility" to reverse course in 2013, when new seismic drilling is slated to begin.

Start with the basics. Oil is in terrible places. Under the sands and scorching sun of Arabia. In the freezing Arctic. Deep under the waters of the turbulent North Sea. More often than not, under control of despots with unlovely policies toward women, Jews, and Christians (think Saudi Arabia and Iran), or with no concept of the rule of law (think Mikhail Khodorkovsky and Yukos), or of unstable regimes (think Nigeria), many hostile to the United States (think Hugo ChΓ‘vez in Venezuela).

There is one exceptional place, however, on which God smiled, depositing billions of barrels of crude oil in a nation with a relatively benign climate, a stable and democratic government, and respect for the rule of law: America. And if huge deposits of oil were not enough, He endowed us with virtually limitless supplies of coal, and natural gas so plentiful that producers are scrambling to find export markets for the gas that exceeds domestic demand, even though prices are at a 10-year low.

At that point, He rested, leaving it to the electorate and its chosen governments to decide how to"”or more recently, whether to"”develop the nation's patrimony. And there's the rub. For generations America's politicians have been struggling to develop an energy policy that would assure the nation's motorists, factories, and truckers a secure and affordable source of energy. Unfortunately, with energy as with other goods, there is no free lunch, only trade-offs. Fossil fuels produce pollutants, and developing them disturbs the natural environment. That's enough to make some greens see their president as a traitor to their cause, especially when he opens new areas for development. For them, there are no trade-offs: preventing any pollution and any disturbance to the environment takes precedence over all other goals.

For the crowd in America that would "drill, baby, drill" there are also no trade-offs, no willingness, for example, to tax carbon emissions, only an overwhelming need to develop America's resources, continuing to subsidize oil companies if necessary to speed development.

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