US energy policy directions in the short and long term

National leaders debate plans to free US from foreign oil dependence. Verdict: We can do it.

By Marvin Cetron
Pres, Forecasting Intl

Democratic Party Presidential Candidate Sen Barack Obama (D-IL) and Republican Party Presidential Candidate Sen John McCain (R-AZ).

It's an old joke, but one that's as true today as when someone-possibly one of the Wright brothers-first said it: "It's not aerodynamics that keeps airplanes in the sky-it's money." And, lately, a lot of that money goes for fuel. US voters will soon make a decision that will help to determine the price of gas, oil, and Jet A over the next 4 years.

No US president will be able to ensure that energy prices decline to more comfortable levels-or remain there if they do. However, ill-chosen policies could make our energy future much harder to endure.

No one really expects the candidates to live up to their campaign promises, if only because circumstances change and policies offered before the election may not fit conditions months later. (Some degree of cynicism based on experience might also be involved.)

Yet the candidates' platforms are the best available indicator of what to expect in the way of policy from the coming presidential term. In this election, we are uncommonly well supplied with platforms to examine.

Candidates Barack Obama and John McCain have both made extensive statements about their energy plans. Texas oil magnate T Boone Pickens has also presented some well publicized recommendations for managing the future economy.

And, of course, former US Vice President Al Gore has presented an ambitious plan for the "greening" of American energy. This article will examine all these schemes and compare their merits with Forecasting Intl's own analysis.

Sen Barack Obama

In an early-August speech in Lansing MI, Democratic Party candidate Barack Obama officially rolled out his energy policy. Key points in the plan included:

• A tax credit of $500 per person or $1000 per working family to offset the high cost of gasoline and heating oil

• Leasing more of the National Petroleum Reserve in Alaska for oil and gas production

• Working with the Canadian government to build the Alaska Natural Gas Pipeline In his speech Obama also reversed 2 previous positions. First, he called for the release of 70 billion barrels of oil from the Strategic Petroleum Reserve in an attempt to cut the cost of oil in the short term. Second, he said that he would accept some new offshore drilling if it was necessary to pass a comprehensive energy plan.

Democratic Party VP Candidate Sen Joe Biden (D-DE): "Expand alternative fuels and improve vehicle efficiency. We can do this. We can absolutely do this."

All that was the short-term plan. For the long term, the candidate had several more proposals:

• A mandate that 10% of the energy produced in the US come from renewable sources by the end of his first term

• A 15% reduction of demand for electricity by 2020 through efficiency programs

• A goal of putting 1 million 150-mpg plug-in electrics and hybrids on the road by 2015 Obama predicts that adopting all these goals will yield enough renewable energy to replace all the oil imported from the Middle East within 10 years. On his campaign website Obama offers a much expanded version of his energy plan. Additional measures include:

• Curbs on "excessive" speculation in the energy futures markets

• A windfall profits tax on large oil companies

• A measure forcing oil companies to drill on the 68 million acres of leases they have never developed • A "cap-and-trade" plan to cut carbon emissions by 80% by 2050

• $15 billion a year for 10 years to fund clean energy R&D

• Jobs programs for workers displaced by the energy transition and for disadvantaged young people seeking a career in energy

• Programs to develop cellulosic ethanol, with 36 billion gallons in the national fuel supply by 2022

• A national low-carbon fuel standard that requires suppliers to reduce carbon emissions from their fuel by 10% by 2020

• Several measures intended to improve energy efficiency by 50% by 2030

Sen John McCain

Republican Party candidate John McCain made his first major speech about energy last July in Houston TX. It was long on background material and broad goals and relatively short on specific programs. However, McCain did announce several clear policies, or resurrected them from his primary campaign, and further details have emerged since then.

Three proposals form the centerpiece of the Republicans' energy plan, which McCain calls the Lexington Project:

• A gas tax moratorium to provide consumers with some relief at the pumps

• Drilling for oil and gas in the Arctic National Wildlife Reserve (ANWR) and the coastal waters off California, Florida and other states where drilling is now banned

• Construction of 45 new nuclear powerplants by 2030 to provide electricity without creating greenhouse gases-a total of 100 reactors would be built eventually

Republican Party VP Candidate Alaska Gov Sarah Palin: "We have so much oil we are just sitting on. We need to tap into it and produce for the US."

Other measures include $2 billion per year to support research into clean coal technologies, a $300-million prize for development of cheaper batteries for plug-in hybrids and fully electric autos, a cap-and-trade system to reduce greenhouse gas emissions, and a tax credit for businesses that spend money on R&D.

Although the tax credit is presented as supporting work on clean energy, it seems to apply to all R&D-not just energy-related spending. Many of the statements on McCain's campaign website offer moral support for policies and goals without actually making a commitment to do anything about them. The candidate "believes in promoting and expanding the use of our domestic supplies of natural gas."

He "supports flex-fuel vehicles (FFVs) and believes they should play a greater role in our transportation sector." He "believes alcohol-based fuels hold great promise" and "believes that the US must become a leader in a new international green economy."

McCain "will make greening the federal government a priority of his administration." He "believes we must understand the role speculation is playing in our soaring energy prices." How these philosophical statements translate into specific policies and programs, if they do, remains to be seen.


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