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Dems Feeling Unintended Consequences of Foreign Oil Rhetoric
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Here's a challenge: find a poltician who currently campaigns on energy issues and doesn't promise to end U.S. dependence on foreign oil. I doubt it's possible. The rhetorical drumbeat for and promises to achieve "energy independence" have gotten louder and more frequent. Yet it has become more and more clear that such a goal is unachievable and also complicates efforts to minimize dependence on oil altogether, which is where our policy ought to be taking us.
I've written on this before (here, here and here), but here's a quick recap. Eliminating dependence on foreign oil is unachievable because the energy market is global and its prices will be chiefly influenced by major oil producers so long as demand for oil drives the market. That means importing less oil would do little to dilute the influence of OPEC and other oil-producing countries, so long as the global demand for oil continues to grow. What we ought to be doing is breaking our addiction to oil (and other fossil fuels) and helping other countries do the same.
But the truth remains that demonizing oil producers and pitching Americans on cutting out their legs has been a political winner for years.
According to a poll released last year by Geoff Garin and Bill McInturff, ending dependence on the world's "bad guys," however impossible or irrelevant it might be, is now one of the public's top international priorities. And they specify that it's foreign oil, not climate change or oil in general, that the public sees as the problem (I made sure to ask this question of the pollsters when the poll was released).
Unfortunately, the folks promoting smart energy policy have exacerbated the problem by continuing to promise an end to U.S. dependence on foreign oil. Speaker Pelosi has led the charge here. Sen. Obama, among others, has gone along too (and it's in the final Democratic Party platform). Not even the most enlightened officials on energy -- I'd include Sens. Lugar and Biden and Gov. Richardson in this group -- have not resisted the temptation of "foreign oil dependence" rhetoric when they speak publicly, their sound policies notwithstanding.
At the end of the day, it's Obama who is paying for this. While it makes little sense policy-wise, Sen. McCain's "all hands" approach, which includes drilling offshore and in the Alaska National Wildlife Refuge, is the more direct and intuitive response to the challenge of weaning ourselves off foreign oil. Obama and my allies in the climate movement typically respond that we can't drill our way to energy independence. While it's a nice soundbite and a sound foundation for policy, I'm afraid it will fall on deaf ears with a public that has been told year after year that anything we can do to weaken the influence of those bad oil producers is a step in the right direction.
I should mention, by the way, that there actually is polling to support this -- this isn't just my guesswork. I saw the polls while I was abroad but didn't save the link, so you'll have to take my word for it. Sorry, readers!
In the end, energy will probably be a split decision this year from a political perspective. McCain will win points for his "use every tool" approach and his longstanding commitment to action on climate change, but his party affiliation will tie him to seven years of bad policy, rising gas prices and coziness with industry. If there were any justice, he would also take a hit for his flip-flop on the Law of the Sea Convention, but that's clearly not going to register.
It's probably too late to reframe this debate for the '08 election, but we should hope that we hear more about the importance of breaking our addiction to oil and gas altogether and less about the threat of those nasty foreign oil producers in the future.
-- Scott Paul
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Reader Comments (8) - post a comment
The other (non-intuitive) way to get energy independence is to tie DOD revenues to prices at the pump. This is totally justified because the US military's primary function these days is to serve as an oil protection service. Such a policy would add at least $3/gallon. Once implemented, you would see 1) a dramatic drop in gasoline consumption, much more than the yield of any of the proposed programs, and 2) a dramatic drop in the funds available to support military adventurism and in the willingness of the public to tolerate bloated defense budgets.
I've been thinking essentially the same thing, Scott. We either redirect how we produce our energy, or the game currently afoot will continue unabated, CO2 levels in the atmosphere will continue to climb above what are already dangerous levels, and nobody will win in the long run.
Oil is a worldwide commodity, oil companies are worldwide enterprises, and drilling off the Florida coastline will simply eventually add some crude to the world inventory, unless we are planning to nationalize those reserves for exclusive use in the United States - oh, yeah, that's gonna happen.
And JohnH has correctly characterized the current function of the DOD.
Reducing dependence on foreign oil is a false assertion.
We've placed import caps on oil to drive the price up on the world market.
If we removed those import caps the market price would stabilize. If the market decided to narrow what they put out we would have to start pursuing collusion matters and revive the SEC and other facets of oversight to the level that would make Elliot Ness look like Patrick Fitzgerald.
Let more foreign oil to the market, it would reduce the cost. The integrated market would then see more of their interests match ours as dollars changed hands with more people.
Keeping the market narrow raises prices and elevates a few suppliers(the seven sisters, OPEC monarchy) to uneven playing fields.
Level the playing field, expand the Strategic Petroleum Reserve, remove import caps. Diversify the market and create an umbrella of independent producers through incentive programs as we approach peak.
If they try to buck us threaten to remove the leasing rights giveaways here. If they still try to buck us do that, and remove the subsidization we supply oil producers. If they try to buck us still, impose profiteering and gains taxes pegged on what oil affects most, the dollar's value. There's always the threats of liability, global warming is about to force new costs on many items already, let those most at fault pay the piper. Certain survivors of acts in America and abroad also have liability concerns. The same issue could drive peace in the Caspian, Putin wouldn't order a single strike if it affected his profits and the grasp he has on Gazprom.
Suddenly they stop lobbying us into robbing Peter to pay Saul. Maybe other Mideastern items find more fluid channels of trade and engagement if we curb inflexible market portions and have less rigid and exchange structure.
See you at the next millennium, you "ending dependence on foreign oil" types are stuck in the 70's.
Energy Independence is an economic war-frighting doctrine. GOP doctrine for this is obsolete, since Teapot Dome, has been been corrupt even when not obsolete. Democratic doctrine is non-existent.
Democrats deficiencies are part of our abject deference to the GOP in all things military -- unilateral bi-partisanship. This is a very bad idea now that the GOP is in extremist hands.
To be sure, during the Cold War, Jimmy Carter and James Schlesinger provided a reasonable example of how such defense-related bi-partisanship might work. But, both parties' perpetual incumbents long ago repudiated both of them.
Today, Congressional Democrats signal only thier cowardice and indiscipline on defense and foreign policy. Unless there are lobbies for Committee Cardinals and Barons to broker deals between, they have no clue what to do.
So, of course, many people turn to John McCain who they would like to believe is some sort of moderate or maverick, as distinct from just another perpetual office-seeker. They would be wrong, but where are the bold alternatives? Who can speak clearly and concretely on anything?
We have nuclear-powered warships and do not need global "coaling stations" or "naval reserves" to support even our Anglo-American version of Edwardian navalism. Will Britain, France, or Turkey support US naval operations against Russia in the Crimea or Georgia over oil, or democracy, or movie royalties, or any other strategic pretext? Are they helping us restore the Sykes-Picot or Hashemite visions of the Levant or Mesopotamia? So, who will mock the President's and the Secretary of State's absurd posturing?
Nobody. What are we thinking? Where does this lunacy come from? The University of Chicago, Yale, the USC film school?
We could use the strategic petroleum reserve to stabilize exchage rates much as we use the gold stock. But, then, the Chairman, the Secretary, and the President could also use gold and oil in perfect secrecy to generate short-term pump-price and stock-price relief for the GOP candidate. Why they probably are!
So, would Democratic Speaker Hoyer or Majority Leader Lieberman know or care? I doubt it. At least, this is better than using blood and iron to entertain the chattering classes as in 2004.
Here is a real energy plan -- The Texas Plan -- that would result in energy independence, meaning some international freedom of action -- not global domination -- and domestic stability, meaning full employment at a decent wage -- not autarky.
But, there is no lobby for infant industries, for common carriage regulation of improvident utilities, or for a strategic industrial policy run by patriots, not by bond-lawyers, paper-hangers, and land-speculators.
Energy policy takes a popular and patriotic political party. We do not have even one of those, just an Anglo-American system of bi-partisan concession-tending and incumbent protection.
Corrected
Energy Independence is an economic war-frighting doctrine. GOP doctrine for this is obsolete and, since Teapot Dome, has been been corrupt even when not obsolete. Democratic doctrine is non-existent.
Democrats deficiencies are part of our abject deference to the GOP in all things military -- unilateral bi-partisanship. This is a very bad idea now that the GOP is in extremist hands.
To be sure, during the Cold War, Jimmy Carter and James Schlesinger provided a reasonable example of how such defense-related bi-partisanship might work. But, both parties' perpetual incumbents long ago repudiated both of them.
Today, Congressional Democrats signal only their cowardice and indiscipline on defense and foreign policy. So, unless there are lobbies for the Committee Cardinals and Barons to broker deals between, they have no clue what to do.
Of course many people turn to John McCain then. They would like to believe he is some sort of moderate or maverick, as distinct from just another perpetual office-seeker. They would be wrong, but where are the bold alternatives from Barack Obama? Who can articulate anything between the vague generalities of a sound-bite or the legalistic fine-print of the pathetic Democratic Platform?
We have nuclear-powered warships and do not need global "coaling stations" or "naval reserves" to support even our Anglo-American version of Edwardian navalism. Will Britain, France, or Turkey support US naval operations against Russia in the Crimea or Georgia over oil, or democracy, or movie royalties, or any other strategic pretext?
Are they helping us restore the Sykes-Picot or Hashemite visions of the Levant or Mesopotamia? So, who will mock the President's and the Secretary of State's absurd posturing rather than just trying to one-up them with even more huff-and-puff absurdity?
Nobody. So, what are we thinking? Where does this lunacy come from? The University of Chicago, Yale, the USC film school?
We could use the strategic petroleum reserve to stabilize exchange rates much as we use the gold stock. That would help sustain technology-driven development. but, then, the Fed Chairman, the Treasury Secretary, and the President could also use gold and oil in near-perfect secrecy to just generate short-term pump-price and stock-price relief for the GOP candidate. Why they probably are!
So, would Democratic Speaker Hoyer or Majority Leader Lieberman know or care? I doubt it. At least, this is better than using blood and iron to entertain the chattering classes, as in 2004. The Joint Chiefs are withdrawing from Iraq, even as the Commander-in-Chief withdraws to the Brazos Valley. No Admiral is in a hurry to force the Bosporus.
And, here is a real energy plan -- The Texas Plan -- that would result in energy independence, meaning some international freedom of action -- not global domination -- and domestic stability, meaning full employment at a decent wage -- not autarky.
But, there is no lobby for infant industries, for common carriage regulation of improvident utilities, or for a strategic industrial policy run by patriots, not by bond-lawyers, paper-hangers, and land-speculators.
Energy policy takes a popular and patriotic political party. We do not have even one of those, just an Anglo-American system of bi-partisan concession-tending and incumbent protection.
John Behrman,
I'm not an economist and not able to put together things as eloquently and cogently as you did. But I've been thinking about like Teapot Dome involving WY and oil reserves, DOD and military-industrial-Congressional-academic complex, Carter being right about what needed to be done about energy 30 years ago, need to get to total nuclear disarmament,etc.
I clicked on link for your name---and I guess I have only one question: Are you and James Galbraith serving as economic advisors to Obama? And if not, why not?
Thank you for your post Mr. Behrman. Why haven't I been exposed to this kind of thinking regularly?
If they allow offshore drilling to new levels, then pump prices should not reflect start up costs for wells not produing.
They're witholding actual on line wells to claim less supply and artificially stimulate prices. If a well isn't producing within certain constraints it should pay a penalty tax.
You'd suddenly find a lot more supply thanw as being claimed. It would be a windfall profits on the front side of the exschange model so the pricing would benefit.
We allowed new drilling for oil on land at protected federal wildlife regions and the price shot dramatically up, indicating the fact that start up costs are being inserted into supply sided pricing.
If those wells were not producing by now they'd be offline permantly already. That isn't the case.
There's some serious Enron style book cooking going on in our own market.
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