Alternative Energy Now
The recent mini-crisis in the Gulf underscored American overreliance on oil from that volatile region
Among the few benefits from the recent ill-considered Gulf fiasco was Defense Secretary William Perry's reminder - two decades after the Organization of Petroleum Exporting Countries' price shocks of the '70s - that we remain critically dependent on Gulf oil. Reagan Energy Secretary Donald Hodel warned 10 years ago that "We are sleep walking into a disaster."
Yet despite the certain knowledge that this massive strategic liability will again take a toll in American blood and treasure, partisan squabbling in Congress and the administration's election focus have brought cuts in alternative energy programs that should, instead, be sharply increased.
Two-thirds of the world's known oil reserves are in the Middle East and subject to the Byzantine politics of that region. The federal Energy Information Administration projects that within 10 years the US will be spending $100 billion to import nearly 60 percent of the oil we need - a number that will not only fuel the area's tensions but play havoc with our trade deficit.
Los Alamos National Labs reports that total annual oil revenues to the Gulf nations will triple to $250 billion in 2010, delivering overall $1.5 trillion to the region (between now and then) with accompanying shifts in purchasing power for weapons and technology - and leaving Saudi Arabia particularly vulnerable to internal and regional pressures.
Moreover, the dollar cost of dependence is steep. Former Navy Secretary John Lehman points out that when one adds the $40 billion annual cost of our regional military presence to today's $20-23 per barrel cost of crude, the cost skyrockets to about $100 a barrel. And finally, consider Sen. Sam Nunn's summation of the policy conundrum at recent Senate Armed Services hearings: "Our security policy is basically to prevent the flow of oil from certain regimes (Iraq and Iran) and the energy policy is to let the oil flow... The paradox is that to secure the free flow of oil from the Mideast, we have taken steps to limit the flow of oil from that region."
For the moment, suppliers - in a loose Faustian bargain - have made oil available at less cost than the alternatives. This has required decisionmakers to venture into the treacherous realm of supporting costly research and development efforts while oil seems (though isn't) cheap - and while the lietmotif of the day's politics is spending reduction.
Yet like the Strategic Defense Initiative, the Apollo program, and the interstate highway system, this challenge can only be met by an exception to the market-based solutions we prefer. Strong federal support for the development of renewable energy resources is critical because research and development costs are high and payoff is often further down the road than makes commercial sense. We understood that in 1973, increasing funding in this area from virtually nothing to $700 million in 1981, and we benefited from a decade of important but low-profile progress. Clean-coal technologies and solar programs have made dramatic advances.
In the transportation sector, hydrogen-based fuel cells, first developed by NASA in the '60s, have improved to the point where they will soon be commercially viable. A joint government-industry effort will produce a "clean car" by 2004 that will be three times more fuel efficient than today's, while maintaining size, performance, and safety.
But these advances are not possible without a strong federal financial commitment, and they are unlikely if proposed congressional cuts go forward and the administration remains unwilling or unable to provide a strategic rational for the expenditures.
In that case, technologies developed in the US could well stimulate hundreds of thousands of jobs in alternative energy areas abroad, while we import products conceived and developed by US scientists.
More broadly, the problem is anchored by two powerful trends.
First, by 2020 the world's population is expected to increase by 50 percent with well over half of these new inhabitants born in Latin America and Asia. Migration to the cities and the mechanics of urbanization - commuting, construction, and powering new buildings - will all demand huge amounts of energy. A doubling of China's and India's urban populations alone could increase per capita energy consumption in those countries by 45 percent
Second, the Persian Gulf, with 65 percent of the world's oil reserves, is expected to supply up to 80 percent of the oil for the increased demand. This leaves us at risk to sudden oil price increases which have, since 1970, always been followed by recession.
What to do? Move to expand sources of oil outside the region in Mexico, Norway, England, and Russia. But, more immediately, accelerate the development of energy alternatives using the full force of the federal government. This is not to suggest throwing billions at the problem. But it does require a serious bipartisan commitment in Congress and a decision by President Clinton, who has virtually ignored the problem, to reduce this national liability by promoting promising new technologies - from solar to coal to hydrogen - that can cut our reliance on Gulf oil.
*Stefan Halper is host of NET Television's "World Wise" and a former White House and State Department official.