Perhaps the greatest concern in any debate regarding a national energy policy has been and continues to be our dependence on foreign oil. Obviously, our reliance has a direct effect on foreign policy and strategic thinking that has, at times, hampered or ability to formulate a coherent, consistent and principled foreign policy, especially in the Middle East. Also, as emerging economic powers like India and China, two energy-intensive economies, vie to the oil we import, the economic strains will be evident here in the United States as spikes in prices become evident in the oil markets.
Imagine the situation if the United States was more reliant upon oil from Egypt. Assume Hosni Mubarek exported a greater share of Egyptian oil to the U.S. Would the United States have been more accepting of change in Egypt? What if the street uprisings that marked the downfall of his regime occurred in Saudi Arabia, a regime that exports way more oil to the US than did Mubarek? Imagine the surge in prices if the regime in Riyadh was threatened. Our policies towards the many countries in the Middle East differ dependent upon the amount of oil they export to the United States. In effect, do we craft a foreign policy that supports democracy in the Middle East, or one that centers around oil?
I don't think that anyone can deny that we have, at times, climbed into bed with some nefarious foreign leaders because of our reliance on foreign oil. To break the dependence, we must adopt an "all of the above" response. That includes not only the use of cost-effective alternative energy sources, but greater use of nuclear energy and exploitation of domestic reserves of fossil fuels. Every little bit helps, some more than others. However, this must be achieved through free market mechanisms, not the heavy hand of government regulation and certainly not through the empty purse of the federal treasury. Harnessing the energy of the sun has been possible for decades, yet billions of dollars of research and subsidies has made us any more reliant on solar energy, nor is the basic photovoltaic cell any more efficient than it was 50 years ago. The same goes for wind energy. Granted, on a small scale alternative energy solutions make greater sense. It falls under the "every little bit helps" with heavy emphasis on teh word "little."
Look at the case of wind power. T. Boone Pickens- a man who made billions in fossil fuels- proposed a huge wind farm in Texas. However, his plan fell apart for two reasons. First, some exposes by newspapers indicated that the real motive behind the wind farm was to gain water rights. More importantly, when the price of natural gas increased, Pickens' sudden "green epiphany" vanished and he saw the "green" of dollar bills. He then began touting the "green" advantages of drilling for natural gas. His hypocrisy was revealed because in the end, drilling for and selling natural gas is more economically feasible than building a wind farm. That is the free market at work.
General Electric advertises their "green" credentials and Jeffrey Immelt is proud of his company's achievements in this area when not sticking his nose further up Obama's butt. And he should since GE has a monopoly on the production of wind generated turbines in the United States. Of course he is going to support Obama's green energy agenda since it directs federal dollars to General Electric. It is the same as the insurance industry supporting the individual mandate in health care reform. If the idea cannot stand without government subsidies, is it really worth it?
The greens will trot out historical figures that illustrate other emerging energy systems received huge governmental subsidies. In fact, from 1950 to 1999, nuclear energy accounted for 96% of all federal subsidies. Yes, and from 1917 to 1950, fossil fuels probably accounted for 90% of all subsidies. And at the rate Obama is going, renewable forms of energy may soon account for 90% of all subsidies. But, here is the problem with that line of thinking- capacity factors. The capacity factor is the amount of energy produced from a given unit. When coal and oil began receiving subsidies in 1917, we knew, as we know today, the capacity factor for coal is 85% and 87% for oil. When we began subsidizing the nuclear sector, we know, as we know today, the capacity factor is 90%. As as we know today and probably 50 years from now, the capacity factor of wind energy averages 36.8% and solar averages 27%.
Based upon these facts, we should be deriving most of our energy needs from nuclear with natural gas and coal coming in second and third. We sit on 237.7 TRILLION cubic feet of natural gas reserves ranking us 5th in the world. We possess 22.6% of the world's known coal reserves and rank #1 in terms of recoverable coal. To put in perspective, Russia, the next closest country, has less than half our coal reserves. With uranium, we rank 9th in the world in known reserves. However, Australia, one of our staunchest allies, has over 33% of the world's uranium reserves- AND THEY DON'T HAVE A NUCLEAR ENERGY PROGRAM. And Canada, another ally, has 10% of the uranium reserves. Taken together, in terms of the three most cost effective means of producing energy, the United States and two of its closest allies have direct access to greater than 50% of our energy needs. From a strictly strategic standpoint, wouldn't it make much more sense to exploit these resources rather than rely on foreign oil from the Middle East or elsewhere?
But here is the real problem: the majority of our energy needs are not really met by oil- domestic or imported. Most of that oil is refined into gasoline and other products. In part 2, I will try to explain how government interference in the name of environmentalism and conservation have created the problems they now say they are trying to address. But make no mistake, the energy that lights your home is not derived from oil in the overwhelming majority of cases.