There are few topics where simple labels are less useful in characterizing an issue than in a discussion of our “Energy Problem.”

America does not have an energy problem.  America has sufficient reserves of fossil fuels—oil, coal and natural gas—to last us for at least a hundred years. 

We do, however, have energy related economic problems.  We rely on foreign oil.  We send billions of dollars a year to the countries of the Middle East, and elsewhere.  We are at the mercy of those who can effectively set world oil prices.   The money we spend on foreign oil upsets our trade balance and weakens the American dollar. 

We also have energy related environmental problems.  Burning oil and coal produce enormous amounts of carbon dioxide and other gases and chemical by-products that pollute the atmosphere and contribute to health problems and global warming. 

We also have energy related foreign policy.  Our dependence on foreign oil, particularly oil from the Middle East, vastly complicates our foreign policy by causing us to be embroiled in conflicts throughout the region. 

Our “energy problem” is also, in many ways, the consequence of past actions taken to placate special interests across the political spectrum.  For example, demands that we protect every aspect of our natural environment have prevented us from exploiting our vast reserves of fossil fuels (including shale oil) and have forced energy companies to rely on sources that are the most expensive to access—such as deep-water drilling for off-shore oil reserve.

Our concern for the environment—as reflected in licensing requirements associated with environmental impact studies--has also dramatically limited the expansion of our capacity to refine petroleum.  As a result, we are nearing our maximum capacity to meet the nation’s need for fuel products--and when demand exceeds supply, prices go up.

None of these concerns are insignificant.  All of them have merit, and tension between the various groups that have an interest in the energy debate is unavoidable.  Even within interest groups there are significant differences based on different perceptions of the problem—and of the consequences of alternative solutions. Consider, for example:

Many people suggest that we could dramatically reduce the carbon emissions of our electricity generating facilities if homes were all heated with natural gas instead of electricity.  However, many parts of the country do not have the infrastructure to provide natural gas to all homes—and building the infrastructure needed to do so may be prohibitively expensive.

In urban centers, there is a great demand for light rail systems as a means of reducing traffic and pollution and conserving energy.  But these systems have little value in other parts of the country.

Many environmentalists opposed any offshore drilling for oil because of the potential for consequences of an oil spill for sea life and shorelines.  But other environmentalists recognize the value of oil rigs in creating valuable habitats for marine life.

Offshore winds represent one of the most dependable sources of wind-generated electricity.  But building and servicing off-shore turbines and connecting them to the power grid is opposed by many beachfront communities and environmentalists who are concerned about possible damage to shoreline wetlands.

We have the technology to recover our natural resources while protecting our sensitive environment.    We have the opportunity, and the intellectual capacity, to formulate an energy policy that accommodates all concerns.  But we also have powerful interests groups who hold absolutist positions

The facts about  the economic and environmental benefits of alternative sources of power are well documented and do not need to be repeated here.  What is less frequently discussed are the consequences of alternative policies and the economic and social costs associated with them.

There is a tendency in all of us to “jump on the bandwagon” and advocate for solutions that address whatever aspect of a problem seems most important.  And Congress is no different.  But before we act, we need to consider all aspects of the relevant problem and the consequences of all alternative solutions.

Formulating a comprehensive energy policy requires that we consider much more than just where our energy comes from and how we use it.  While these are certainly core considerations, formulating a comprehensive energy policy requires that we include consideration of (a) energy conservation policies and practices, (b) alternative transportation systems, (c) the relationship between energy policy economic policy [including international trade and tariff policy] and many other aspect of government action. 

I have as many concerns about the “Energy Problem” as anyone else.  But there are others who will lead the charge on this issue.  On the “Energy Problem,” I believe that my greatest contribution can be made in assuring that the debate—both public and legislative—includes an examination of all the dimensions of the problem—and the consequences of alternative solutions. With this perspective in mind, I offer the following observations regarding some aspects of the energy debate that are often overlooked.--and how I might address them.

Vehicle Fuels:

Bio-diesel, natural gas and hydrogen powered vehicles, electric and hybrid vehicles are all good ideas and all possible solutions.  But all having problems of implementation.

“Fill ‘er Up”:  All of the alternative means of powering vehicles have one thing in common.  The vehicles require refueling.   But making a variety of alternative fuels available to consumers poses many problems.  

Bio-fuels and petroleum-based fuels are not interchangeable and cannot be stored together.  Even different bio-fuel cannot be mixed or stored in the same kind of tank.  The same is true for hydrogen and natural gas, which also have different storage requirements.  Also, the storage of different fuels pose different safety risks, and the requirements for the storage of different fuels are subject to different local, state and federal regulations. 

The capital investments in storage facilities required to make a wide variety of fuels available to the public at a single location are prohibitive.  Fuel stations located In high population urban areas, may not even have the space to add storage facilities; and the safety considerations associated with the storage of liquefied natural gas or the high-pressure storage of hydrogen are likely to generate such protests that it may be impossible to make it available in many neighborhoods. 

These considerations suggest that, at least with respect to the transportation aspect of our energy policy, we should pick a fuel and focus on it.  Whatever that fuel is, we should direct all federal money to research on the efficient production and transportation of that fuel and the development of engines to use that fuel in the most efficient way.  Relevant aspects of tax policy should promote the production, and purchase, of a vehicles using that fuel.  Our federal  investment in infrastructure should focus on that fuel. 

Bio-Fuels:  Bio-fuels are relatively cleaner burning, renewable and readily available. What the Middle East is to oil, America can be to bio-fuel.  We have a greater capacity to produce the crops needed to produce bio-fuels than any other nation on earth.  But bio-fuels have their limits.

Bio-fuels do not represent a complete substitute for petro-fuels.  Rather, bio-fuels used in vehicles are commonly blended with petroleum, with a maximum of 20% of the fuels being bio-fuel.  [Most cars on the road today can run on blends of up to 10% ethanol.] Pure bio-diesel is possible, but requires engine modifications.

As a practical matter, bio-fuels need to be produced in plants located near the fuel source.  The transportation costs of raw materials [agricultural crops, etc,] is simply too high to pursue any alternative.  The construction and operation of these facilities will certainly produce economic benefits in local communities.  However, they will also have environmental consequences that must be weighed.

The development of bio-fuels as an alternative energy source is also limited by the cost of transporting the fuels.  As noted above, bio-fuels will most likely be produced in the agricultural areas of the Midwest.  But we have no pipelines to delivery the fuel to the eastern states.  Obviously, building such a pipeline would be extremely expensive.

One solution might be for the United States to import more Brazilian ethanol to blend on East Coast, where transportation costs significantly raise the price of Midwest ethanol. That would, however, require the politically difficult step of ending the protective tariffs on Brazilian ethanol that now shelters the U.S. agricultural industry.

Electricity:

The demand for electricity is seldom constant over time. Many renewable resources — wind and solar power, for example — are intermittent, i.e., they are not available all of the time. We need to invest in research to develop efficient electricity storage technologies.  This is an appropriate investment to be made by the federal government because it benefits all power companies and, indirectly, all consumers.  It is also an appropriate government investment because, as regulated utilities, power company rates are limited by public agencies.  Therefore, a government investment that benefits all citizens is in the public interest.

The generation of power from alternative sources should be left to private industry.  Government should invest in the things that make it possible.  For example, I believe that

Government should expedite the expansion of the power grid by investing in the infrastructure needed to connect wind farms, solar farms and to the national electric power grid—and lease the grid it builds to the power companies.

Rather than subsidize energy producers, government should, in the interest of all utilities, invest in research and development of means of storing energy from alternative sources--and lease the technology to industry.

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