The Energy Follies

by: Matt Cooper

Is everyone else finding this energy debate as depressing as I am?

In a tit-for-tat that now involves Paris Hilton, John McCain and Barack Obama have been going at each other over drilling and tire gauges. Meanwhile, the House Republicans are staging a '60s-style sit-in demanding that Speaker Nancy Pelosi reconvene the chamber so they can vote on more offshore drilling and a larger energy package. It's totally amusing, especially since oil prices are coming back down to earth. The whole debate has the feeling of a conversation that's coming too late, like you're at a dinner party and long after the discussion has moved from kids to care, you pipe up about little Johnny's school.

It's not that the energy problem is solving itself as prices come down. They're still high. We need a more coherent policy about our consumption of energy and it should be done in the context of climate change. But in some sense the problem has been self-correcting. Oil prices spiked through some combination of higher demand, speculation, and the like, and consequently demand, which was once considered inelastic, really did fall. People bought smaller cars, took the train, and otherwise adjusted to the new reality with greater haste than their political leaders.

Let's start with the Democrats. I'm not sure why they are demonizing drilling and oil, like it's disgusting, repulsive, and vile. I'm all for moving off of fossil fuels, which contribute to climate change, but for the time being we are kind of stuck using them and they do seem to, well, work, which is more than can be said of hydrogen cars. We import about 10 million barrels a day, and so it makes some sense to try and get more of our own. Is oil less disgusting if it comes from pals like Mexico and Scotland, or from petrodictatorships like Venezuela, Russia, and Saudi Arabia, than if it's drilled off the coast of New Jersey?

Drilling has environmental risk, of course, but so does shipping large amounts of oil across the oceans. In fact, drilling rigs have a better environmental record than tankers. Obviously, new drilling needs to be done in a responsible way, but I can't see the Democrats' knee-jerk need to demonize a simple commodity.

In general, the McCain "all-of-the-above" approach makes more sense. He's basically for everything and unlike many in his party, actually recognizes climate change and favors regulating greenhouse gases. So he's for nuclear power, which has its obvious flaws, but it's carbon-friendly, produces lots of reliable power and has an impressive track record in France, which has come to rely on it for more than 70 percent of its power. Nuclear-waste storage is a real issue, but it's one that can be kicked down the road for decades or centuries when, I would bet, we will have figured out how to deal with its half-life. We need more of solar and wind, but we shouldn't pretend that lining the country with windmills is without an aesthetic or environmental cost either.

There's no form of energy that doesn't have some attendant risk and problem, so we might as well diversify as best we can as if it were a portfolio. I don't particularly want to live next to a nuke plant, but I don't particularly want to live next to a windmill either. I do like using my computer, running the air-conditioning on full blast, charging my cell and iPod, and living like a citizen of the 21st century. So maybe we should go for it all, as McCain advocates, including conserving where we can and, yes, keeping our tires inflated. If the Democrats look bizarre demonizing oil, the Republicans look idiotic passing out Barack Obama tire gauges after the soon-to-be-Democratic nominee called on folks to keep their tires fully inflated—something that Nascar and others have called for as well. There's no single answer here.

Meanwhile, the policy toward the oil companies seems ludicrous. It's nuts to want to give them additional tax breaks, but the Obama plan of hiking their taxes and giving away $1,000 per family seems like a ludicrous pander. Oil company stocks have come way down in recent weeks, and they're going to continue to fall. They get enough breaks as it is; they don't need more. But I don't see why a windfall profits tax makes more sense on them than say, a windfall profits tax on Apple. That's the change we need?