Bush Energy Plan Raises the Right Issues

The president gave an ill-advised press conference last night, and the less said about it the better. His nodding acquaintance with the American version of the English language (even faux Texan) is a matter of record, and little could be achieved by reminding the world that he is inarticulate. Far better to focus on his announced energy policy, which is the first serious thing his second administration has tackled with anything resembling thoughtfulness.

Mr. Bush has proposed a slew of initiatives that actually measure up well enough to be called a policy on energy. Speaking (from a script) he told a conference at the Small Business Administration, "Do we want to continue to grow more dependent on other nations to meet our energy needs? Or do we need to do what is necessary to achieve greater control of our economic destiny?" There's a policy objective if Washington ever heard one -- reduced dependence on foreign energy. Trouble with that is that it was first enunciated by presidents preceding Mr. Reagan.

Among the proposals is the idea of building refineries on the military bases that are closed or closing in the US. Greater refinery capacity will help increase the supply of petroleum distillates. This means that when crude prices drop due to normal market fluctuations, the prices for refined petroleum products are more likely to fall. And building them on military bases will overcome the "not-in-my-backyard" attitude so many Americans have. The problem here is that refinery profits aren't very great, so there is not likely to be much interest in this by private capital. It would be cheaper, many say, to expand the capacity of existing refineries. Still, the idea merits serious consideration, even if the new construction takes the customary five years.

Other proposals include renewing tax incentives for hybrid cars and creating new ones for "clean diesel" trucks and cars (using the tax code in this way is probably a bad idea in the long run because market forces will take care of this without the extra push). Mr. Bush wants to give federal regulators the power to overrule local authorities when determining where liquefied natural gas terminals go -- and probably should given the national security nature of the terminals. They are targets for terrorists. And Mr. Bush wants to provide federal risk insurance to make it easier to build a nuclear power plant, and if he were to put IAEA inspectors in them, he'd win a huge PR victory over Iran and North Korea. Nuclear plants remain problematic for environmental reasons (waste storage is a millennia long issue), but the world must revisit them as an option now that global warming from fossil fuels is better understood than in the 1970s. And the failed oilman wants more drilling in Alaska (no prescription is perfect).

The critics of the Bush proposals have focused on the fact that they don't reduce oil prices in the short-term. As Mr. Bush noted, though, "This problem did not develop overnight, and it's not going to be fixed overnight." Even increasing the fuel efficiency of the American vehicle fleet by 4 miles per gallon, which would make oil imports unnecessary, couldn't happen before months had passed. The real question that they beg is whether oil should be as cheap as it is. Any economist knows that cheap energy means profligate use of energy. Gas may well break $3 a gallon this summer, but in a nation that pays more than that for a 20 ounce cup of coffee at Starbucks, the policy Mr. Bush has set (that of becoming less dependent on foreign supplies rather than getting the short-term price down) has much to recommend it.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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