Today, President Obama introduced something that I believe is the beginning of a good bipartisan effort to reduce American dependence on foreign oil. While I have not yet had an opportunity to read through his entire plan, my remarks here are based on what his comments at Georgetown today.
The plan rightly declares that our dependence on foreign oil is a dangerous one. The chart below shows that when the percentage of Persian Gulf oil as a share of America’s total crude oil imports reaches a peak, the United States tends to engage in a Middle Eastern conflict at that peak or several years after it. The good news is that the trend in the share of Persian Gulf oil in American imports is declining. The bad news is that it still tends to creep back up until the United States engages in another Middle Eastern conflict to protect America’s vital interests.
“The United States of America cannot afford to bet our long-term prosperity, our long-term security on a resource that will eventually run out, and even before it runs out will get more and more expensive to extract from the ground. We can’t afford it when the costs to our economy, our country, and our planet are so high. Not when your generation needs us to get this right. It’s time to do what we can to secure our energy future.”
I could not agree with the President more on this issue. We are now locked in a situation, in which whenever the global economy begins to heat up, oil prices spike and thereby help push the economy back into a recession or at least slow it down. The planet already saw one round of this phenomenon in 2008, and may see a second round in 2011.
While modest, the goal to cut American foreign oil imports by 1/3 in a little more than a decade from now, is better than doing nothing. More importantly, it seems to be bipartisan and rational. The plan rightly aims to achieve the 1/3 reduction through: 1) more domestic oil exploration and production, and 2) reducing overall fossil fuel dependence via clean energy substitutes and improved efficiency.
On this front, the President is righly working to expedite new drilling permits and pushing the oil industry to drill on land it has already leased. President Obama is even open to development in Alaska and the Mid- and South-Atlantic states. He even suggested further development of American natural gas resources.
For the left, the President touts efforts to replace oil with advanced biofuels. I agree in principle with this step, but I think having the government choosing individual companies is a bad way to accomplish it. He also tous investments in mass transit and high-speed rail. I do not have a strong opinion on these two areas so long as the government finds a way to run these two systems profitably (which I doubt it can).
The President also rightly used his leverage as an equity owner of General Motors last year to get American automakers to agree on increased fuel efficiency standards. Right now, the foreign competition is crushing American automotive companies on this front because the countries in which they operate have more stringent standards.
The later parts of President Obama’s speech focus on a broader clean energy policy. He even reaffirms his commitment to nuclear!
I don’t agree with everything in his policy, but I think it may serve as a good model for a national bipartisan energy policy going forward.
Of course, the devil is in the details, but this policy seems to be a good start.
Sean Patrick Hazlett ,
If you had listened to Krauthammer tonight you would have heard a different analysis . He basically said that Obama was full of crap . O bama is only talking about increasing domestic oil production . It is all about reelection . Obama and the Democrats will continue to block US production and then lie about it . It is what they do .
I did not follow exactly what Krauthammer meant about how Obama said he had cut America’s imported oil use . Kruathammer pointed out that Obama mislead us. The cut in consumption was due to the severe recession . It had to do with the dates Obama used to make his point .
Again, a lot of what Obama says is not technically lying, but when you mislead people, you are a liar .
We do not need any more brain dead bio- fuels like corn ethanol . Both parties use it to pay off the Iowa corn farmers .
If Obama is lying about this, then I would agree that this would be a terrible policy. His policy does have a lot of language that does give him a fair bit of leeway like “safely and responsibly” increasing domestic production. If he make safely and responsibly impossible hurdles, than it would be a bad policy.
We’ll see. Only time will tell.
You were right. I went through Obama’s more detailed policy last night and it turns out not to be so friendly to drilling after all. If the speech is Obama’s lipstick, his more detailed policy is his pig.
I wrote a Big Peace article on this topic that I will link here as soon as it is posted.
To be sure it does not matter so much where the US imports its oil from. The price of oil is set globally. So as long as America is not decoupled from the global oil market it should police the Middle East in order to keep the flow of Arab oil to the global market stable.
Sure. But if this is true, wouldn’t it have been more rational to have avoided the conflict altogether and let the conflict end a week ago with Qaddafi as victor? By intervening, the United States has likely artificially extended this conflict. Therefore, it is actually doing something that serves to increase the global price of oil for a longer period of time.
This policy is simply not well-thought out.
Libya is a disaster. It’s Obama’s Iraq. I was not commenting on this
Sorry for the confusion. I must have “Libya on the brain.”
I see your point now and I agree. Basically the only real way to reduce American dependence on foreign oil is to reduce its absolute dependence on oil. Increasing domestic extraction, however, will at least help increase global supply and thereby moderate price increases while the country transitions to oil substitutes.
Watch out. You will lose all your credibility with the Right by saying anything nice about Obama.
It turns out that the devil was really in the details. I will post on this later today or tomorrow, but suffice it to say, the policy is not as advertised.
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” To be sure it does not matter so much where the US imports its oil from. The price of oil is set globally. So as long as America is not decoupled from the global oil market it should police the Middle East in order to keep the flow of Arab oil to the global market stable. ”
I beg to differ. That used to be true . It is no longer true . Crude has been about $10 per barrel cheaper in North America than in Europe . I believe we can thank our good friends in Canada for that . They apparently are not nearly so brain dead as we are . That Alberta crude is saving us . I hear it is not against the law to produce oil in Canada like it is here .
There may be some regional variations in the price because of long term contracts and transportation costs considerations , but the market is moving at tandem. If for example the unrest spills into Saudi Arabia the prices will jump again everywhere. The Europeans would pay $150 per barrel, America $140. If the oil market becomes really stressed, Alberta will be selling its oil to the highest bidder outside North America. Or say, if the dollar tanks and cuts access to petroleum imports and Chinese goods for the US consumers. Alberta is not in the oil business for the sake of saving America or entertaining her oil addiction.