President Obama unveiled an energy policy yesterday, and the reviews have been unkind. Ezra Klein lamented that the president’s plan “says less about how we’ll solve our energy problems than how we’ve resigned ourselves to not solving them.” David Roberts called it “weak-ass,” consisting of “a shapeless blob of supply and demand, old and new, trivial and meaningful, sure to satisfy none of his opponents and activate none of his supporters.”
The centerpiece of the plan involves a one-third cut in oil imports by 2025. This Obama labels as “energy security,” which Klein says is shorthand for “‘oil we drill here’ as opposed to ‘oil that gets shipped here.’” Indeed, expanding domestic production is the first item listed.
I am a dilettante on energy policy, but the fetishization of “energy independence” and “freedom from foreign oil” always struck me as odd. We import about nine million barrels of crude oil a day, which is about half of our total oil consumption. Here’s where we get that imported crude from:
U.S. Crude Oil Imports (top 15 countries)(thousand barrels per day)
As Daniel Griswald notes at Cato, there is absolutely nothing wrong with imported oil. We have money, other countries have extra oil, the swap works out great. Saying we need “independence from foreign oil” makes about as much sense as saying we need independence from foreign clothing or foreign electronics.
As you can see on the chart, over a third of our oil imports comes from our close allies and NAFTA partners Canada and Mexico, with Canada by far the largest source. Almost all of Canada’s oil goes to the U.S. In fact, 75% of all Canadian exports go to the U.S. Not only are we addicted to Canadian oil, but also Canadian forestry and agricultural products, and motor vehicle spare parts. But of course no one is talking about forestry security. If we happened to find a way to make cheaper abundant forestry products in America, well presumably we wouldn’t import them from Canada anymore. But there’s no major strategic imperative or benefit to doing this. We just buy the stuff. Likewise, being “dependent” on Canadian or Mexican oil is not a problem.
But of course people don’t worry about the third of our oil imports that comes from Canada or Mexico. They worry about the third that comes from unfriendly places in the Arab Middle East and Venezuela. (Though a democratizing Algeria and Iraq are perhaps more amenable trade partners than they used to be.) The argument is familiar: shipping money to these countries helps prop up dictators, and our reliance on their wares keeps us ever-vulnerable to price and supply instability. But as David Roberts forced a senior White House official to concede, replacing these problematic barrels with newly-drilled U.S. barrels does essentially nothing to lower gasoline prices or make us less vulnerable to price volatility. And it does nothing to stave off climate change or environmental degredation. All we would be doing is forcing Hugo Chavez to take his 950,000 barrels elsewhere every day, and with exploding demand in China and the developing world that shouldn’t be too hard.
So Obama messed up twice in the first two lines of his energy security fact sheet. Decreasing U.S. oil imports for its own sake makes no sense as a policy objective. And doing so by ramping up domestic production doesn’t solve any of the problems we imagine it might: petro-dictators will still be strong and gas prices will still be high and volatile, and the environment would still be screwed.
I find myself far more interested in a clean energy future than an independent energy future. In this framing, reducing oil consumption is a very necessary and worthy goal. On this score the president offers several ideas, most of them rehashed from previous speeches and previous administrations: Investments and subsidies for renewables, higher auto efficiency standards, weatherizing homes and buildings.
It’s important to note that 72% of our oil consumption is for transportation (don’t forget airplanes). So things like home weatherization and the Clean Energy Standard are great for efficiency but don’t do much to lower oil consumption. We need a transportation-centric oil policy. Though the president supports several necessary components to this, as David Roberts notes, his new energy plan remains virtually silent on a whole range of highly impactful items: public transit, smart growth, congestion pricing, a gas tax, carbon tax. Even from the slim menu the president is working from, there is one deep, fatal flaw. E.M. at DiA explains:
[T]hose parts of the president’s plan that need congressional approval—the clean energy standard, more subsidies, extra funding for research on whizz-bang energy technology—will never receive it. The Republicans who control the House are dead-set against anything that smacks of greenery, not to mention anything that would add to spending at a time when they’re trying to take an axe to it.
Remember also that Congress has already killed cap-and-trade, and Republican enmity toward the EPA will circumscribe its ability to add forceful regulations. So we’re stuck with things that already have funding, including some very problematic high-speed rail projects, in addition to some tepid moves that comport with current Republican theology, like more drilling. The President is surely disappointed by this—during the 2008 campaign he said energy was his top legislative priority—but the political infeasibility does not excuse him from publically getting behind some of these more dynamic ideas. Though clearly Republicans are the impediment here, the president will be partly to blame if by 2012 both he and Sarah Palin have “drill baby drill” as the centerpiece of their energy policies.