Bush Off by a Few Decades, Experts Say

These are not the 1970s. Try as President Bush might Thursday to portray America’s energy troubles as a reprise of that decade’s problems, there are striking differences.

Where once the country suffered a sudden cutoff of oil--the result of the Arab oil embargo and the Iranian revolution--now it has plenty. Where once it was a sloppy hog for power, now it’s a comparatively trim consumer. And where once it seemed utterly helpless to end its troubles, now it has a relatively simple, if painful, solution to most problems: higher prices.

“What we’re experiencing is a series of shocks that may be warnings of things to come,” said Joseph A. Stanislaw, president of Cambridge Energy Research Associates, a widely respected consulting firm. “But we’re not being embargoed. We have all the oil we want--for $25 or so a barrel.”

In essence, independent analysts said, the administration lashed together two disparate problems--California’s electrical crisis and a jump in gasoline prices--to make the case for doing something about a largely unrelated set of issues, such as boosting domestic oil production, reviving nuclear power and encouraging more use of coal.

In doing so, these analysts said, administration officials relied heavily on a faulty comparison with the 1970s.

“America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970s,” the administration warned in a 163-page report issued Thursday. “A fundamental imbalance between supply and demand defines our nation’s energy crisis.”

In fact, said analysts, with the exception of California’s electrical crisis, there is no generalized mismatch of supply and demand. And even the California crisis is largely the product of regulatory foul-ups, not a fundamental shortage.

“California is a horrible situation, but it’s not going to get solved by anything in this report,” said Harvard energy economist William W. Hogan, who as a Nixon administration official helped design Project Independence, one of Washington’s early responses to the 1970s crisis.

Although environmentalists disagree, analysts said that where Bush appears to be at his strongest is in claiming that new technology makes it dramatically safer to extract oil and gas even in such sensitive areas as Alaska’s Arctic National Wildlife Refuge.

“Did you ever see the James Bond movie about Caspian Sea oil with all the high-tech computer screens? Well, it’s really like that,” said Stanislaw. “The chip has made a big difference to everything, including drilling and pipelines.”

But if Bush, a former oil executive, is on strong ground when it comes to drilling technology, his case for sweeping federal action rests at least in part on antiquated arguments last heard in the 1970s.

For example, the administration argued in its report that if U.S. oil production is allowed to continue rising at the same slow rate it did during the last decade, “our projected energy needs will far outstrip expected levels of production.”

But, analysts said, America’s appetite for energy has outstripped its ability to produce fuel for most of the last century. And although the fraction of its needs that are met by imports has risen from 35% to 52% over the last three decades, the increase appears to have caused the country little economic or political trouble.

“It’s surprising how the administration goes back to the ‘gap-ology’ of the ‘70s: that if we don’t immediately do x, y, and z, there’s going to be a gigantic shortage,” said MIT energy economist Paul Joskow. “Its own report shows the economy has responded pretty well to the ups and downs of supply and demand.”

“It’s internally inconsistent,” Joskow said of the report. And that is not the only inconsistency that analysts spotted.

To Grid or Not to Grid

For example, on an issue closely related to the California crisis--speeding the implementation of new transmission lines and development of a national power grid to ensure electricity can get where it’s most needed--the administration appeared to be of two minds.

In one section, after criticizing California for bungling electrical deregulation, it praises two other states--Pennsylvania and Bush’s own Texas--for providing enough home-grown power to meet their own needs.

“Pennsylvania and Texas took steps to ensure that procedures for adding new power plants were efficient. . . . For these reasons, Pennsylvania and Texas have ample electricity supply to meet demand, while California is confronting a serious supply shortage,” the report said.

But a few pages later, the report calls on the Energy secretary to examine establishing a national power grid, a move that analysts said makes sense only if states buy and sell power across their borders rather than rely solely on home-grown supplies.

“It’s not clear which way they want to go,” Joskow said. “Do they want states to be self-sufficient or be parts of regional markets that trade in power?”

The report seems equally inconsistent on the issue of generating more electricity. At one point, it argues that government action is needed to ensure the nation gets the 400,000 megawatts of extra generating capacity, or up to 1,900 power plants, that will be needed in 2020. But at others, it acknowledges the private sector is already churning out plants without any new steps by government.

One respected consultant, Energy Ventures Analysis of Arlington, Va., said recently that more than half that extra capacity could be up and running in the next four years alone. “The main course is being served--and we may be headed for a glut,” said EVA analyst A. Michael Schaal.

Warnings Over Using Security Argument

In a speech Thursday in St. Paul, Minn., Bush said the nation needed to move swiftly. “If we fail to act,” he warned, “our country will become more reliant on foreign crude oil, putting our national energy security into the hands of foreign nations.”

But energy veterans cautioned that Bush should be careful with the security argument. Hogan recalled that after the 1973 OPEC oil embargo, President Nixon declared the nation’s goal was “energy independence” by 1980.

A year later, an administration task force concluded there was essentially no way to make good on the goal. In its place, Hogan said, task force members set themselves a new goal. “We decided our task was to redefine two words,” he said. “One was ‘independence.’ The other was ‘1980.’ ”