| Energy policy U.S. needs to balance the business of Btu 04/13/2001 Face it, we Americans are a spoiled lot. While gasping at gargantuan home heating bills and piquing at pricey petrol, we still build bigger houses and buy gas-guzzling sport utility vehicles. And the reality is that in terms of constant dollars per energy unit, residential electricity, gas and heating oil as well as motor fuel are all well below their previous peaks. As a result, Americans continue to consume one-quarter of the world's energy.
That's just one reason the energy policy emerging from the Bush administration should be retooled before it even goes into production.
Granted, the vice president's National Energy Policy Development Group remains at work crafting the full energy policy. However, what is being revealed – in the president's budget proposal and in statements – is a national policy that focuses on traditional energy supplies and not enough on demand management and alternative renewable sources. The president and Congress need to take a more balanced approach to energy policy.
• Conservation should be a major policy emphasis, with increased incentives for efficiency as well as additional regulations in some areas.
The president's budget deserves praise for putting more funds into helping weatherize the homes of low-income families. However, it does this at the expense of long-lasting conservation programs, such as a research program into industries of the future.
To truly conserve energy, new technologies must be supported. Fuel efficiency standards for new vehicles must be increased. And new appliance efficiency standards must not be rolled back.
• Even with good conservation, more domestic energy supplies are needed to secure U.S. economic growth.
Mr. Bush has advocated tapping energy supplies in the Arctic National Wildlife Refuge. He now wisely realizes this is not politically feasible. Some places should be set aside as pristine environments.
If one accepts limited intrusions in places, the cost-benefit analysis on Western lands differs from that applied to the Arctic National Wildlife Refuge. For one, some Western areas already have leased some oil and gas sites. For another, natural gas, a cleaner burning fuel, is the likely reward. And last, the costs of exploration and production are cheaper than in Alaska and would require shorter pipelines.
Some existing sources could provide added supplies in the shorter term. A gas pipeline from current Alaskan oil production sites deserves support. Also, federal support makes sense for smaller producers who operate marginal wells, an issue Mr. Bush worked on as governor. Sen. Kay Bailey Hutchison, R-Texas, has noted that marginal wells close when oil prices tumble, and producers never reopen them. Since they could provide an important cushion to U.S. supplies in hard times, marginal wells should be supported when oil prices fall below the break-even point for producers. They have the capacity to produce 20 percent of America's oil.
• Emphasize cleaner energy sources.
The president's proposed budget slashes by more than one-third the Energy Department's budget for research and development of renewable energy resources. Proposed cuts in solar, wind and hydropower research average 50 percent. This is wrong policy. America should become a leader in the field of renewable energy technology – not only to secure domestic energy supplies with less environmental degradation but also to ensure the U.S. position in what will certainly become an important new global industry.
Other cleaner energy sources need close consideration. Coal is abundant, and investment in cleaner coal technology can help. But it makes sense to pursue alternatives. Nuclear power currently accounts for 20 percent of domestic electricity generation, but nuclear power is costly and hampered by nuclear waste disposal considerations. These two sources belong in an energy plan, but Washington needs to supplement them with alternatives.
• If demand is high, and supply is low, let energy prices rise.
Ultimately, Americans will conserve more when prices are higher. Trying to maintain prices as low as we have today may not be wise. Holding down prices contributed to California's energy problems. Gradual price increases do not lead to hyperinflation. Also, "differentially pricing" energy to encourage greater use of cleaner fuels makes sense.
The House and Senate energy committees will resume hearings on energy policies after Congress' Easter recess. The administration's full policy statement is expected in the upcoming weeks. As these efforts proceed, the White House and Congress must have the vision to develop a balanced policy. The nation's energy strategy should focus more heavily on conservation and alternative energy sources than on traditional supplies. Over the long run, that approach will benefit the United States.
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