U.S. Energy Policy: New Mindset Needed (‘energy security’ narrative must go)

“Government energy programs have been arrogant and, in many respects, irrational as well. Policymakers have often assumed that technological breakthroughs would occur simply because a law said they would happen. Of course, in reality, presidents, members of Congress, bureaucrats in the Department of Energy, or the EPA could not and cannot legislate, mandate, or decree technological advance.”

The U.S. will never have useful energy policies unless and until it abandons a 40-year-old half-truth: We consume more energy (particularly oil) than we produce and thus are “dangerously” dependent on world markets.

The story—what I call the U.S. energy narrative—was created in the 1970s, and was widely accepted because it superficially explained the energy crises.

In the story, the U.S. was the victim of big oil companies who wanted our money and Arab oil sheikhs who not only wanted our money but also sought to use oil as a weapon to affect a change in our international policies. Our standard of living, way of life, and national security were all at stake. But the energy narrative had a potentially happy ending; if dependency was the problem, independence was the answer.

Of course, the story wasn’t just simple; it was simplistic. True, we have bought petroleum on an international market, but that fact does not threaten our national security, our standard of living, or our way of life. Indeed, this was never true.

The dependency fear grew largely out of a misunderstanding of what caused the gasoline lines in the 1970s. It wasn’t the Arab oil embargo, but rather price and allocation controls in the U.S. The embargo was a complete failure as far as the Arabs were concerned.

“Energy Dependence”

Nevertheless, the narrative lives on, and energy independence remains the ultimate end of policy. But what exactly does energy independence mean? From 1973, when Richard Nixon announced Project Independence, the idea itself has had multiple meanings (I’ve counted at least a dozen) or rather no real meaning since it means what anyone wants it to mean.

“Energy independence” has in fact become a catch phrase for politicians from both parties. From 2001 to 2012, for example, members of Congress uttered the words “energy independence” about 2,500 times in speeches and debates; every president and presidential candidate since Nixon has bought into the dependency story and advocated something or other labeled energy independence; forty years on, confusion and failure notwithstanding, the narrative and its solution remain.

But so far from providing guidance for energy policy, the narrative is a barrier to any kind of useful energy policies. It is impossible to create a coherent policy when policymakers have a different definition of the goal, and energy policy in the United States has been notable for its incoherence. What we get, in fact, are programs that are economically illiterate, poorly defined, unmeasurable, and often grandiose to the point of absurdity. They might sound good, but waste billions of dollars and produce nothing of value.

Policy has typically reflected the narrative: To break our dependency, we’ve been told of the need for alternative (domestic) energy technologies. According to policymakers, the U.S. obviously can’t rely on markets since they seem not to have noticed that domestic fossil fuel resources are limited (and lately, also bad for the planet) and that we are being held hostage by the Organization of Petroleum Exporting Countries (OPEC).

Of course, a switch from fossil fuels to new technologies would change so many facets of daily life that it would mean a social as well as technological transformation. Synfuels, breeder reactors, ethanol, fusion, wind, solar: all have been touted over the decades as panaceas that would solve America’s energy “problem,” as they defined it, and at the same time would alter the way we think and live. [1]

Government energy programs have been arrogant and, in many respects, irrational as well. Policymakers have often assumed that technological breakthroughs would occur simply because a law said they would happen. Of course, in reality, presidents, members of Congress, bureaucrats in the Department of Energy or the EPA could not and cannot legislate, mandate, or decree technological advance.

Changing the Narrative

As long as officials think energy policy must change the world, failure and waste will continue. Energy policymaking needs a different mind-set.

Policy requires modesty – modesty in understanding of what can actually be accomplished. Modesty is perhaps a foreign idea among elected officials. But a modest approach is the only way to develop policies related to energy resources and technologies that have a real chance to do some good.

No more panaceas, no more transformations of American life: those inevitably take us nowhere.

In subsequent posts I’ll sketch out what modest energy policies would mean.

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[1] Even the expansion of natural gas production, certainly good news in itself, has morphed for some policymakers into the latest panacea that with the “right” government programs will provide endless, cheap American energy and make us, of course, energy independent.

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Dr. Peter Grossman, professor of economics at Butler University, is author of the just-released U.S. Energy Policy and the Pursuit of Failure. His previous post, “Ignorant Arrogance: Energy ‘Market Failure’ Revisited,” was published on May 2, 2013.