President Obama's Flawed Energy Blueprint

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Ever since Richard Nixon's call for "energy independence," U.S. Presidents have talked about energy policy, mostly incoherently. Continuing that tradition, President Obama is now crisscrossing the country and giving speeches touting his administration's energy plan, the "Blueprint for Energy Security."

While pitched as something new, exciting and comprehensive, the Blueprint is a dog's breakfast of stale ideas grounded in sloppy thinking about energy policy. What does the President call for in the Blueprint?

First, to be fair, the Blueprint calls for additional domestic energy production, but it's a half-hearted call at best, heavily hedged in by calls for extreme safety requirements, hyper-regulation, and it is clearly understood that increased production is a lesser priority than driving down consumption.

Second, the Blueprint calls for decreasing oil imports by one-third in about ten years. This follows a Presidential tradition of magical thinking, as if one can pick large, round numbers out of a hat, and actually make them happen. As energy expert Vaclav Smil points out, virtually every prediction made about energy transitions has been wrong. Such transitions take many decades, and are sometimes abortive.

Third, the Blueprint follows the old tradition of "when in doubt, beat up on oil companies." The Blueprint wants to bring pressure to bear on oil and gas companies to develop the areas they have already leased, rather than leasing additional areas for exploration. But the idea that oil and gas companies are sitting idle on leased lands has been thoroughly debunked.

In reality, those lands are being explored, and some are held despite having only low-grade energy potential because the companies fear that the government won't give them access to anything better. Leaseholders already pay to hold the land, their tenure is time-limited, and with oil prices high, it is absurd to believe they're paying out royalties while sitting on potential profit.

Fourth, the Blueprint wants to double down on a horribly failed biofuels policy that has polluted the air and water, contaminated fish with pesticides and herbicides, diverted food to fuel, driven up food prices, contributed to deforestation, and aggravated starvation abroad. The Blueprint calls for "second generation" biofuels such as cellulosic ethanol, and would "break ground" on four next-generation bio-refineries in the next two years.

But the fact is cellulosic ethanol has been promised as ten years away for forty years now, and many experts believe that it will be ten years away from scalable, cost-competitive production ten years from now. Even if a breakthrough happens, energy experts have observed that the amount of land that would be consumed to produce mass quantities of cellulosic ethanol would be an environmental disaster.

Fifth, the Blueprint calls for still higher fuel efficiencies for vehicles, while vehicle manufacturers are having trouble meeting standards already in effect. More fuel efficient vehicles are more expensive vehicles. That, in turn, suppresses demand and slows fleet turnover. And, due to the rebound effect, higher fuel efficiencies lead people to drive more, which in some cases, leads to increased pollution.

Sixth, the Blueprint requires government agencies to purchase more expensive hybrid and plug-in hybrid cars, with a goal of having the federal government purchase 100 percent alternative fuel, hybrid, or electric vehicles by 2015. Apparently the President thinks government transportation is insufficiently expensive. One wonders if this applies to the chronically money-losing Postal Service?

There's more to dislike in the President's energy plan, including nonsensical high-speed rail and more mass transit, ideas rejected by virtually every transportation analyst other than those who view trains in a mostly religious context; more subsidized building insulation and retrofits with more expensive windows, lighting, HVAC systems, etc.; More wind and solar power, proven failures all across Europe; and a "renewable energy standard," which is simply cap-and-trade for electrical utilities, and should be dead-on-arrival in a Republican House.

The Obama Blueprint is almost 100% the reverse of what Congressman Paul Ryan (R-WI) recently released as part of his plan to fix our broken government, "The Path to Prosperity," which also deals with U.S. energy policy. While there are a few areas of agreement between the Blueprint and the Path (more domestic energy being the main one), the Ryan plan focuses on getting the government out of the business of picking winning and losing technologies. Energy policy as expressed in the Path is intended to "Restore competition and exploration as the key to a vibrant energy sector, and gets the government out of the business of picking winners and losers."

Kenneth P. Green is a resident scholar at the American Enterprise Institute.

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