In his State of the Union address, George W. Bush said the unsayable: America is addicted to foreign oil, and we must wean ourselves from it. Coming from an oil man, it was a surprising admission. How serious Bush is remains to be seen. In his speech, the president failed to lay out the true scope of the problem, and offered only timid, unrealistic alternatives for ending a dependency that threatens the nation’s security as well as its economy and environment.
One assumes that Bush knows a good deal about oil. For example, he should know that the real culprit is not the Middle Eastern potentates he pointed to but America’s ever-expanding appetite for fossil fuels. Our love of large gas-guzzling cars, aversion to higher taxes, and resistance to environmental regulation fuel the escalating demand for oil.
The president should also know that not buying Arab oil is no solution. If we do not scale back consumption, we will only have to buy oil from someone else. And as long as the worldwide demand for oil, now at a thirty-year high, remains strong, the emirs will continue to line their pockets. As the world’s largest economy and its largest oil consumer, the United States uses one-quarter of total world output, nearly half of which goes to power our cars and trucks. There is little sign that will change unless dramatic action is taken. Two days after the president’s speech, the Wall Street Journal reported on a government forecast that America will import more, not less, oil and oil-related products from the Middle East in twenty years: a jump from 21 percent to 35 percent. No wonder the Saudi ambassador to Washington expressed confusion at the president’s remarks, while most environmentalists simply dismissed them.
Despite the president’s newfound interest in conservation, his previous policies and actions have already made lessening our dependence on Middle Eastern oil harder to achieve. Consider the most problematic area: transportation. In 2004, fuel efficiency fell to its lowest level in twenty years. Since 2002, federal dollars for energy efficiency have declined 14 percent. In the energy bill the president signed last year, no attention was given to improving gas mileage. Furthermore, next year the Environmental Protection Agency, using more accurate readings, will lower its miles-per-gallon figures for most models, including gas-electric hybrids.
To overcome these setbacks, the president now proposes the use of ethanol-propelled vehicles, more hybrids, and eventually hydrogen-powered cars. Mass transit, light-rail networks, and greater incentives for carpooling-all take a back seat. Nor did the president allude to the hidden costs, both economic and environmental, of his wish list. At present, it takes the equivalent of two-fifths of a gallon of some other fuel (generally expensive natural gas) to produce a gallon of ethanol, not counting the energy needed to get the ethanol to a distribution point. Furthermore, while ethanol reduces carbon-monoxide emissions, it tends to increase smog. Brazil has nearly achieved self-sufficiency by relying on ethanol, and it would like to export ethanol here. But our government taxes Brazilian exporters fifty-four cents a gallon-to protect U.S. corn growers. Meanwhile, the same administration refuses to tax incoming OPEC oil.
For the United States to reach a significant degree of energy self-sufficiency in a timely fashion, consumer demand must be reduced. That won’t be easy, either politically or economically. There are two possible ways in which consumption can be brought under control. If energy becomes so expensive that people can’t afford it, then market forces will compel the development of new technologies (such as those trumpeted in the president’s speech). Another way would be for the government to take a more proactive stance. In this regard, the president’s new budget is a bust. To increase fuel efficiency, it proposes only $150 million for research. Last year, the Economist (August 27), no advocate of government interventions, wrote that government nevertheless must play a critical role in taming the world’s appetite for oil. “The best long-term solution-for America as well as for the world economy-would be for higher petrol taxes in the United States. Alas,” the Economist concluded, “there’s little prospect of that happening.”
A higher permanent gas tax would be the simplest, most efficient way to change consumer behavior and to create a market for energy-efficient vehicles quickly. Such a tax, business columnist David Leonhardt writes in the New York Times (February 8), could be factored into an overall tax bill to distribute the burden of higher gasoline prices more equitably. As Leonhardt points out, “we need big incentives to change our behavior.” This president, however, still believes that raising taxes is a greater threat to the nation than our addiction to oil. He’s wrong.