Energy Policy, Corn Tortillas and Beer

A professor-friend of mine tells me that he is offering a course this semester on energy policy. What makes that noteworthy is that such courses were dropped from the curricula of most universities long ago because of lack of student interest. Oil gluts might produce angst in producing countries, but low prices and ample supplies produce joy and complacency in consuming countries.

Now, energy producers are in the driver’s seat. Western Europe is hungry for Russia’s natural gas, and so is willing to turn a blind eye to Vladimir Putin’s stifling of opposition at home. America needs a continued flow of oil to fuel its cars and heat its homes, and so cosies up to the odious Saudi Arabian theocracy, even though the Saudis fund potential terrorists teaching their special brand of Islam in madrasas around the world.

What my professor-friend tells his students is this: energy policy has three aspects. It is an important component of economic policy; it is inextricably intertwined with environmental policy; and it an equally important influence on any nation’s foreign policy. This complexity might explain why the proposals coming out of Westminster, Washington and other capitals are a mixture of sense and nonsense.

Start with the sense. Reducing dependence on unstable regimes for energy supplies is a good idea. Reducing the output of CO2 emissions is a good idea.
Diversifying sources of oil and gas supplies is a good idea.
Building up strategic reserves of crude oil is a good idea.
Clearing bureaucratic obstacles to the construction of nuclear plants is a good idea.

But then the nonsense starts. Nonsense number one: America’s politicians have been promising us independence from imported oil since the days of Richard Nixon. Since President Nixon first set out that goal, reliance on foreign oil has increased from about 35% of US supplies to about 60%. Nonsense number two: The world’s politicians pretend that the merely signing on to the Kyoto Treaty will somehow reduce the world output of greenhouse gasses, but worldwide production of those gasses has increased steadily. Nonsense number three: Politicians in America and Britain think that they can persuade private investors to sink billions in nuclear plants without significant subsidies, and that new nukes will magically reduce reliance on oil, which they won’t so long as cars are powered by petrol-consuming engines.

And now we have corn, hops and biofuels. Led by President Bush, politicians have hit on a new idea -- produce fuel for mobile uses from corn and other agricultural products. The result has been such a run-up in corn prices that poor Mexicans can no longer afford tortillas, and countries are being deforested to make room for corn plantings. Beer drinkers will be faced with price rises as hops end up in their engines rather than in their beer.

Problem: fuels produced from corn deliver only 1.3 times the energy consumed in refining and transporting them.

Meanwhile, environmentalists, enthused by watching Al Gore’s “An Inconvenient Truth”, are encouraging governments to take steps to end global warming, just a decade or so since they were pressing governments to fight global cooling.

But don’t despair. Recent heightened concern and, even more important, high petrol prices, are producing sensible proposals: more efficient vehicles, road pricing, schemes to allow businesses to trade carbon permits, plans to bring India and China into the emissions-fighting battle. With a bit of luck, the hot debates over policy will result in measures that teen-agers dub “cool.”
 

Comments

[Joe Noory]

Since the days of Nixon another set of elements has been dependably true: domestic production vice importation of oil and gas are entirely dependent on the cost of oil. Too low, and domestic exploration and production aren't worth ones' while.
The other unescapable fact is that even after a rise in prices, the prospect (pardon the pun) is frustrated by incessant hectoring and lawsuits by a certain sector of society that protest the use of energy, but still seems to be as "addicted" to it as everyone else.
Willy-nilly, they oppose - and never cooperate with even the most limited projects regardless of the oft stated "multi-hued energy picture" many of the same will pitch.
Not only has this opposition led to dangerous conditions in the remaining refining facilities, but it exhausts the population to the notion that these NGOs whose personnel eran a tidy sum from a broad range of benefactors show VERY LITTLE of that "stakeholding" spirit when it comes to their fellow citizens.

In short they live off of the productive work of others,. and don't deserve to be taken with the seriousness that they do.