Jul 7, 2006

Energy Independence: A Dry Hole?

Experts Across Political Spectrum
Challenge 'Emotionally Compelling' Slogan

July 5, 2006; Page A4

WASHINGTON -- The U.S. may be addicted to oil, but many of its politicians are addicted to "energy independence" -- which may be among the least realistic political slogans in American history.

Recently, Massachusetts Sen. John Kerry, perhaps warming up for another presidential campaign, gave a speech calling for energy independence and invoking the Fourth of July. "For the second time in our history, let's declare and win our independence," he said. Separately, 43 Democratic senators, including Mr. Kerry, launched a program to "Put America on the road to energy independence by 2020."

President Bush, meanwhile, has been talking for three years about setting a goal "to promote energy independence for our country." That is in line with Republican tradition: After the Arab oil embargo in 1973, President Nixon trotted out "Project Independence," a list of synthetic-fuel programs that would meet America's energy needs within 10 years. It failed within two.

Now, energy experts across the political spectrum are criticizing politicians' calls for "energy independence," saying the goal falls somewhere between pipe dream and economic impossibility.

"Energy independence is an emotionally compelling concept," says Jason Grumet, executive director of the National Commission on Energy Policy, a bipartisan, nonprofit group financed by private foundations, "but it's a vestige of a world that no longer exists."

Indeed, the U.S. is moving rapidly away from energy independence: Oil imports made up 35% of the nation's petroleum supplies in 1973 and 59% in the first four months of 2006, according to the Department of Energy. Moreover, 66% of the oil consumed in the U.S. is used in the transportation sector, where Americans, with their penchant for hefty cars with big engines, are by far the planet's biggest consumers of oil.

The allure of energy independence is easy to see. It reinforces the belief that Americans can control their own economic destiny and appeals to a "deep-seated cultural feeling that we are Fortress America and we will not be vulnerable to unstable regimes," says David Jhirad, a former Clinton administration energy official who is vice president at World Resources Institute, an environmental-research group.

In fact, experts say, America's energy fortunes are inextricably linked to those of other countries. Global oil markets are interconnected, with oil prices set internationally. That means supply disruptions anywhere in the world will continue to have an almost instantaneous effect on the pump price of gasoline in the U.S.

"The real metric on this is not imported oil, but how much oil we use, period," says Jerry Taylor, senior fellow at the libertarian Cato Institute who dismisses calls for energy independence as "rhetorical nonsense that transcends party affiliation."

Mr. Grumet's energy commission is trying to get experts to agree that the term "energy independence" should be dropped. He wants policy makers to focus on curbing oil consumption -- specifically the amount to produce each $1,000 of gross domestic product. The nation already is making some headway on that goal, he says, and the idea, while it may not fit on a bumper sticker, is beginning to resonate.

Others say that achieving "energy independence" -- even if it were possible -- would be far more expensive than has been estimated and wouldn't eliminate threats to the nation's economic security. Finding replacements for U.S. oil imports may be impossible considering the country's vast distances and relatively poor public transportation systems, compared with Europe's. Even if the U.S. managed to end its reliance on oil from the Middle East, security problems posed by nations there will remain, says David Sandalow, who heads environment and energy projects at the Brookings Institution, a Washington think tank. "We haven't imported a drop of oil from Iran in over 20 years, but that doesn't prevent Iran from being able to play the oil card," he says, referring to Iran's ability to disrupt supplies and drive up world prices for oil.

C. Fred Bergsten, an economist and director of the Institute for International Economics, says energy independence is "ridiculous," in part because it implies that "price doesn't matter, that you'll pay any amount to decrease your reliance on imports -- and that would be crazy." He says the U.S. should work toward healthy "interdependence" by curbing its energy demands while forging alliances with more oil-consuming nations.

For example, he says, the U.S. and China should be looking for ways to work together. "We're natural allies; we're both among the world's least efficient users of energy, and we're both big consumers," he says. "We should be on the same side of the table" when dealing with the Organization of Petroleum Exporting Countries.

Judith Kipper, a Middle East specialist for the Council on Foreign Relations, says it was counterproductive when lawmakers and others bashed big oil companies and Arab oil producers during the recent jump in prices. "These people are selling us something we want and need," she says. "We refuse to come to terms with our own lack of policy."

Some lawmakers defend a long-term goal of "energy independence." Sen. Joseph Biden of Delaware, the senior Democrat on the Senate Foreign Relations Committee, says such goals may be "grandiose," but it is important to have goals for long-range planning.

He says he thinks regulations that increased the fuel efficiency of the U.S. vehicle fleet, a measure that has been almost stagnant since 1981, would generate the quickest economic payoff. Europe, Japan, China, Australia and Canada all have adopted standards that are higher than the U.S. If Congress raised the standard, Sen. Biden asserts, "it would help us in our balance of payments and give us a little bit more flexibility in fuel demand that we don't have now."

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