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Brooks Wilson's Economics Blog: The Obama Energy Plan

Thursday, April 1, 2010

The Obama Energy Plan

The last few days have had interesting news regarding climate change and the regulation of carbon dioxide.  I will start with President Obama's new energy plan.  Yesterday, the president announced his administration's new energy program that potentially could increase drilling for offshore oil.  He explains that limited drilling is a bridge to the future as new energy sources are developed.  It is a Goldilocks plan that allows or restricts drilling in areas depending on environmental sensitivity.  He claims the plan walks a nonpartisan, science driven line toward energy independence while chiding critics from the left and right who are apparently neither nonpartisan or scientific.  A few paragraphs from President Obama's speech are provided below.  The full transcript is found in "Obama’s Remarks on Offshore Drilling" provided by the New York Times.
There will be those who strongly disagree with this decision, including those who say we should not open any new areas to drilling. But what I want to emphasize is that this announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy. And the only way this transition will succeed is if it strengthens our economy in the short term and the long run. To fail to recognize this reality would be a mistake.

On the other side, there are going to be some who argue that we don't go nearly far enough; who suggest we should open all our waters to energy exploration without any restriction or regard for the broader environmental and economic impact. And to those folks I've got to say this: We have less than 2 percent of the world's oil reserves; we consume more than 20 percent of the world's oil. And what that means is that drilling alone can't come close to meeting our long-term energy needs. And for the sake of our planet and our energy independence, we need to begin the transition to cleaner fuels now.

So the answer is not drilling everywhere all the time. But the answer is not, also, for us to ignore the fact that we are going to need vital energy sources to maintain our economic growth and our security. Ultimately, we need to move beyond the tired debates of the left and the right, between business leaders and environmentalists, between those who would claim drilling is a cure all and those who would claim it has no place. Because this issue is just too important to allow our progress to languish while we fight the same old battles over and over again.

For decades we've talked about how our dependence on foreign oil threatens our economy -– yet our will to act rises and falls with the price of a barrel of oil. When gas gets expensive at the pump, suddenly everybody is an energy expert. And when it goes back down, everybody is back to their old habits.

The speech seemed condescending and relied on a demagogic call for energy independence.  Despite decades of subsidies for "clean" energy, it isn't expanding as a percentage of our total energy production.  Subsidizing "clean" energy is a bridge to nowhere, not to a brighter future.  I for one don't want "clean" energy if it is more expensive when factoring in environmental costs and this is the rub.  My guess is that a great many environmentalists believe that carbon emission is a bigger environmental danger than spills from drilling and shipping oil.  The IPCC, Nobel laureate Al Gore, and Obama administration officials have warned of catastrophic economic consequences of environmental inaction. 

From the right, critics claim that increased carbon emissions are not harmful, that data has been compromised, misused and tortured.  The evidence of higher concentrations of carbon dioxide leading to catastrophic warming are unquestionably less robust than six months ago (For an example of data problems see Christopher Horner, "Climategate: Three of the Four Temperature Datasets Now Irrevocably Tainted," Pajamas Media).  If being an environmentalist means that you are concerned with having a healthy and beautiful environment, I am one, but I believe that in the United States we should focus on reducing traditional pollutants and better forest management. 

The production of "clean" energy ignores an important fact.  Every type of energy production pollutes.  I don't like the land intensive nature of ethanol production and wind turbine electrical power.  I am not sure that we have good enough data to monetize our tastes. 


  1. Maybe some thoughts from Europe: while everyone would associate Portugal, Spain or Greece with best places for solar energy use it is actually Ireland that has the highest overall solar energy input, that is, direct & indirect solar inputs combined. While photovoltaic solar panels only use 20%, actually a lot less, of that energy and produce very expensive and unreliable electricity to boot, it can be proven by a simple rule of three that were all inhabited built-over areas (houses, garages, factory halls etc.) equipped with (flat!) THERMAL solar panels which cost nothing if hey were constructed as to REPLACE the roof (instead of being added on top) in new buildings then the amount of heat for heating, washing, etc. would equal about the same amount as is currently cosumed UNDER these "roofs" anyhow. Nothing else, nothing, would be rquired to solve mankind's energy problems and it would do away with the resaons for probably 80% of all modern wars too. By and by older buildings would be retrofitted when refurbishing time arrives and if governments want to speed up the process - here is at last ONE area where they could sink all thse countless billions with not doing more harm than good.

  2. Maybe I should add: this works in cold Alaska or Russia as well as the sun in winter still produces hot water to scorch one's skin ...