Because of the continuing consternation with Keystone as well as our failed energy policy, I decided to dust off an article I did a few years ago, and update. Most of what is in this article is still very germane for today's environment.
As we all know, the price of energy is once again starting to increase. We have heard all the reasons (China growing, India growing, Iran, hurricanes and so on), but no solutions have been rendered. The only thing that we can do well is blame each other for what we have done or not done to get us into this mess.
First, a bit of history to set the stage. On October 6, 1973, the Jewish holy day of Yom Kippur, Egyptian forces attacked Israel from across the Suez Canal, while at the same time Syrian troops were flooding the Golan Heights in a surprise offensive. After early losses, Israeli counterattacks quickly pushed into Syrian territory in the north, as troops outflanked the Egyptian army in the south. Israel, with help from the U.S., succeeded in reversing the Arab gains and a cease-fire was concluded in November. But on October 17, OPEC struck back against the West by imposing an oil embargo on the U.S., while increasing prices by 70% to America's Western European allies. Overnight, the price of a barrel of oil to these nations rose from $3 to $5.11. [In January 1974, they raised it further to $11.65.] Even though the U.S. and the Netherlands, in particular, were singled out for their support of Israel in the war, the embargo affected most of the western world as the price of oil went up for everybody.
This is now a tale of how two different growing economies dealt with this history changing event – the United States and Brazil. At the start of the embargo, the United States, which was far more dependant on foreign oil for our economy than Brazil was, took one approach. Brazil took quite another.
On August 4, 1977, President Jimmy Carter signed the U.S. Department of Energy (DOE) Organization Act (Public Law 95-91), centralizing the responsibilities of the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power Commission and other energy-related government programs into a single presidential cabinet-level department. Everyone thought this might be the panacea to our energy woes. After all, we are the nation that sent people to the moon in 1969. The innovations that would come out of this newly created cabinet department could be enormous!
Fast forward to today. Since the time of the inception of the DOE to the present, we (the American people) have spent over ¼ of a trillion dollars ($250,000,000,000) on this newly created cabinet post. In 2012, we are over the same barrel (of oil) that we were over in 1973. Most of our imported oil still comes from unstable, unfriendly countries that would like to see our wealth and power transferred to them.
Brazil on the other hand, did not create a new multi billion dollar cabinet post to take up space and tell the population bad news about how they were driving. Instead they decided to create a synthetic fuel out of sugar cane waste that could be used to augment the oil they could get domestically or from friendly, stable countries. In 2007, they announced that after three decades of research and focused retooling, Brazil would be 100% free of OPEC oil. In short, they have been able to tell OPEC to stick their oil back in the sand.
When Ronald Reagan was president, he caused a huge fire storm by suggesting that three of the cabinet posts could be eliminated due to redundancy or not serving an end item purpose to the American People. One of those cabinet posts was the DOE. Think of the billions of dollars we could have saved if we had taken President Reagan’s advice.
In 2006 during the State of the Union, President Bush (43) stated that we need to develop better synthetic fuels like corn and switch grass to take the stress off of our oil imports. Our government has finally admitted for the first time in three decades that we are addicted to oil. Now that is news! Of course, as we have found out, burning our food as gasoline has proven to be a really dumb idea. This year, with the historic drought we are having in the Midwest, we need every kernel of corn to go into food for us or international relief.
What do we really do now will make a difference to our children and grandchildren. First, admit our mistake. The last 30 plus years have been a disaster from an energy standpoint. We have wasted hundreds of billions and have very little, if anything to show for it. We can’t change the past, we can only learn from it.
If we are going to keep DOE, retool it immediately. Have the main focus developing and implementing a COMPREHENSIVE energy policy. We have not had an energy policy for years, for decades. Time to start - now. Nothing is off the table. Is wind and solar going to be viable some day? Probably, but not now. "Go to market fuel cells" should be considered, natural gas powered cars, more nuclear plants, pipelines from Canada and Alaska, more domestic drilling - everything is on the table. And for the sake of Pete, can we please get off our duffs and t let Canada build the Keystone Pipeline? They think we are idiots for dragging our feet on this most critical issue.
Our country sits of billions, maybe trillions cubic feet of natural gas, two hundred years of coal, two hundred years of oil shale, plenty of tar sand, and our course oil which our proven reserves keep increasing. This is our stuff - ours for the taking. I heard an energy expert on one of the business channels say we have so much natural gas as the proven reserves increase, we could not only satisfy our domestic needs, but we could be an energy exporter. Think how just that alone could help our trade deficit.
We need to do as Brazil did and establish ENERGY INDEPENDENCE as a national priority. Just as we did in World War II with the Manhattan Project or in the 1960’s with going to the Moon, we need to set energy independence up as a priority, get our best minds on it, offer tax incentives for new energy developments, AND THINK OUTSIDE THE BOX. We need to set a date certain and drive towards that date. We are only one hurricane, terrorist attack or embargo away from a real mess where price will not be the issue – supply will. We came within a whisker of rationing in 1973 - it can happen again.
This is a crisis that is real and will not go away. As China and India continue to grow their populations and economies, worldwide finite sources of fossil fuels will become scarcer and thereby more expensive. We need to stop looking like a herd of “deer in the headlights”, come out of our stupor and do something! We are Americans! We know how to solve big problems, win big battles, and work together for victory and success. We need to stop blaming each other, admit the blame belongs to all of us, and then move on. We owe this not only to ourselves, but to the generations that will follow us.
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