Forget energy independence. Here's a plan for energy security.
The US can bring energy prices down by boosting domestic supply.
Newport, R.I. — After gaining control of Congress in 2006, Democratic leaders laid out goals: Achieve energy independence, strengthen national security, grow the economy and create jobs, lower energy prices, and begin to address global warming.
The energy legislation now pending in Congress – which raises taxes on the oil industry, repeals incentives designed to increase domestic oil and natural-gas production,and mandates increased use of "renewable" energy sources (e.g., wind, solar, and biofuels) – will almost certainly achieve none of these objectives. Indeed, it will make things worse, especially with regard to energy security.
Energy security should not be confused with "energy independence." The latter is a chimera, especially in this age of global interdependence. It is the mantra of those who stress "renewable" sources of energy.
But for technological and economic reasons, such alternatives are far too expensive and unreliable to compete on the market with oil and gas. That's why they must be subsidized.
Advocates of energy independence would repeat the mistakes of the 1970s and early '80s, when the government tried to micromanage the energy market and pick winners and losers. The results were dismal then, and the outcome would probably be no different today. Apparently, Congress has not learned a basic lesson of economics: If something needs a subsidy to compete, it's not ready.
While energy independence is a pipe dream, energy security, which focuses on increasing the supply of energy by exploiting all available sources, is achievable. For instance, rather than discouraging the production of domestic oil and natural gas, proponents of energy security suggest expanding access to nonpark federal lands in the West and Alaska and under coastal waters. These areas hold enough natural gas to meet the needs of the 60 million American homes fueled by natural gas for more than a century – and enough oil to produce gasoline for 60 million cars and fuel oil for 25 million homes for 60 years.
To achieve energy security, America must reverse its rejection of nuclear power. This source of energy is both efficient and safe. Key indicators of nuclear-plant performance – such as unplanned reactor shutdowns and radiation exposure – have shown high levels of safety at US nuclear power plants in the past decade.
During the 1990s, the efficiency of nuclear power improved by 36 percent, the equivalent of adding more than 23 1,000-megawatt power plants. Nuclear power ought to be embraced by environmentalists: It accounts for 75 percent of the nation's clean power generation, and it is the only source of large amounts of continuously delivered energy that can make a decisive contribution toward reducing greenhouse-gas emissions.
Other options for tapping domestic sources of energy include recovering oil from shale, converting coal into liquid fuels, and exploiting the vast deposits of unconventional natural gas available domestically.
What proof is there that increasing the energy supply will enhance energy security? The best example of how the market, not government pursuit of energy independence, adds to energy security is President Reagan's decision to lift price controls on oil in 1981.
The world price of oil plummeted, helping to fuel the extraordinary economic growth of the 1980s. One reason for this outcome should be clear. As long as the Organization of the Petroleum Exporting Countries (OPEC) cartel faced little competition in the production of crude oil, its members benefitted from keeping the commodity in the ground, confident that increasing demand would make it more valuable in the future.
Mr. Reagan's deregulation of crude oil prices created incentives for domestic producers to invest in exploration and to increase production. The threat of increased output by non-OPEC producers destroyed the discipline among OPEC members necessary to restrict production to maintain high prices. Facing the likelihood that an increase in supply would lead to lower future prices, OPEC producers increased output in the hopes of maximizing profits before prices fell. The cascading effect caused oil prices to tumble.
As in the 1970s, today's energy policies have essentially restricted the exploitation of domestic sources of energy. Curtailed supplies have combined with a rapid increase in worldwide energy demand to spike the price of oil and other sources of energy. This provides leverage to foreign producers and threatens US energy security. Freeing up domestic energy resources will do today what Reagan's deregulation of oil prices in 1981 did then: cause oil prices to fall, thereby enhancing US energy security.
• Mackubin Thomas Owens is professor of national security affairs at the US Naval War College and editor-designate of Orbis, the quarterly journal of the Foreign Policy Research Institute.