America’s stop-and-go energy plan
Breaking America’s foreign-oil addiction was all the rage on Capitol Hill when gas cost $4 a gallon. Now that it’s under $2 and falling, history suggests that the enthusiasm for alternative fuels and more efficient cars will subside. It did that in the mid-1970s and again in the 1980s and 1990s.
But this time could be different.
A sense of urgency may still remain, according to congressional leaders and environmental groups, because of a confluence of factors including broad anxiety over global warming, enthusiasm for green elements in economic stimulus packages and President-elect Barack Obama’s repeated vows to act.
And in any case, few consumers are convinced that low gas prices will last.
“In the past, when the prices of oil and gas have dropped, it has caused us to lose our focus. I don’t think that’ll happen this time,” said Sen. Jeff Bingaman (D-N.M.), chairman of the Senate Energy and Natural Resources Committee.
Perhaps nothing illustrates the change in attitude better than a recent survey of 52 oil and gas executives.
Only about a dozen executives expected oil and gas to be America’s cheapest energy source in 25 years, and three-quarters considered it a good idea for the U.S. to phase out fossil fuels for transportation.
That’s a “sea shift” for the industry, said longtime oil and gas analyst Joseph A. Stanislaw, a senior advisor for the auditing and consulting firm Deloitte, which released the survey.
“People are saying, ‘Prices go up and prices go down but something’s broken here, and we’ve got to fix it.’ ”
When Obama announced his energy policy team, he noted how presidents for decades had promised and failed to curb the nation’s oil addiction. “This time has to be different,” he said. “This time we cannot fail. Nor can we be lulled into complacency just because, for now, the price of gas has fallen below $4 a gallon.”
Americans have worried about their dependence on foreign oil since the early 1970s, when Arab oil producers stunned the developed world by halting shipments. The result was soaring energy prices, long lines at gas stations and a shock to the economy that took years to recover from.
President Nixon offered an energy plan for freeing the nation from dependence on imports within a decade. But when the embargo was lifted after a year, prices fell and Nixon’s Project Independence faded with a whimper.
The cycle repeated for the next 30 years: When oil prices increased, lawmakers pushed measures to boost wind, solar and other alternative power sources; when prices fell, so did support for those alternatives.
America imports nearly two-thirds of its oil, a 50% increase from the Nixon years, though every president since has pledged to wean the nation from foreign energy.
The problem is partly economic, partly political and partly a matter of consumer preferences.
Personal automobiles offer convenience and freedom that mass transit often cannot. And many consumers seem to like bigger, more powerful cars.
Moreover, for a host of reasons, alternative energy sources cost more and are not financially competitive with oil except when petroleum prices are high. Politicians are reluctant to raise taxes on gasoline, home heating oil and other oil-based products to narrow the price gap.
Now the cycle has started again. Oil prices hit record highs in the summer, fueled by explosive demand in developing nations such as China and India. During the presidential campaign, Obama and his Republican opponent, John McCain, made ambitious pledges to reduce oil use, and statistics suggested Americans were driving less -- and demanding more efficient cars -- to cope with wallet-busting gas prices.
Then the global economy slipped rapidly into recession and energy demand ebbed. Again, prices sank.
Instead of backing off his alternative-energy push, the president-elect doubled down. Since election day, Obama has promised to make green projects a cornerstone of the economic stimulus plan that will anchor his early agenda.
And he has repeatedly pledged swift action to fight climate change, an issue heavily wrapped in the politics of oil.
“At the end of the day, gas prices go up and they go down,” said Sen. Barbara Boxer (D-Calif.), head of the Environment and Public Works Committee. “In the long run, we need to find an alternative clean-energy source to protect our nation from hikes in gas prices and from the ravages of global warming.”
Obama’s concern over global warming is increasingly shared by voters. That’s a big difference from the 1970s, said Colorado Gov. Bill Ritter Jr., a Democrat who has urged Obama to focus heavily on energy alternatives: “We weren’t paying attention to climate policy the way we are now.”
Climate change has become “part and parcel” of federal energy policy, said Andy Karsner, a former assistant Energy secretary in the Bush administration who is now at the nonprofit Council on Competitiveness. “You will see climate, as an issue, embedded in the ongoing energy debate.”
And once the economy speeds up, oil demand will almost certainly surge again. As the International Energy Agency said in a November report: “The era of cheap oil is over.”