Energy Policy Moves Front and Center

It's crunch time on the energy policy front, and the big guns are in play, preparing the ground for the administration's much-heralded comprehensive energy strategy. Vice President Dick Cheney has been putting in a series of media appearances lately, supporting energy development in the Arctic National Wildlife Refuge (ANWR), and a task force of energy experts has published a report calling on the nation to make some hard choices or face "more Californias in America's future."

"The country's got to make a decision. Folks like driving big SUVs and having adequate supplies of cheap gasoline and fuel. If we're going to do that, we've got to be able to develop resources" in the Arctic and elsewhere, Cheney said during an interview on National Public Radio last Wednesday. His remarks echoed those he made on political talk TV shows the previous Sunday. "The other choice, of course, is don't develop those resources. That makes us even more dependent on foreign sources and more subject to these wide swings in fuel prices."

Responding to the concerns of environmentalists, Cheney noted that "the technology's gotten so good in this business that we only need to disturb about 2,000 out of the 19 million acres [in ANWR] to develop" the oil and gas resources. The drilling can be carried out "without [any] major disturbances to the surface."

The ANWR issue is just one part of a worldwide problem, according to the report being issued by an independent task force of 51 energy experts. The U.S. will not be able to continue making up its energy deficits with cheap imports. "The world is dangerously close to using all its available global oil production capacity. If an accident or other disruption in production occurred --- whether on the Alaskan oil pipeline, in the Mideast or elsewhere --- the world might be on the brink of the worst international oil crisis in three decades," the report states. And the oil market situation is "compounded by shortages of other forms of readily available, clean energy in the U.S., including natural gas and electricity in certain localities."

"The situation is, by analogy, like traveling in a car with broken shock absorbers at very high speeds, such as 90 miles per hour," the report says. As long as the pavement is perfectly smooth, there's no problem. The false economy of the decisions not to have the shocks fixed or of traveling at such high speeds only becomes evident if [the car] hits a bump. Then "the injury to the driver could be quite severe."

The report, compiled under the auspices of the James A. Baker III Institute for Public Policy of Rice University in Houston and the Council on Foreign Relations in Washington, calls on the Bush administration to start educating the public to the hard choices ahead, including "whether Americans are willing to compromise their hunger for cheap energy to achieve their increasing demand for cleaner energy and a cleaner environment.

And the problem is not confined to the U.S. " Lack of an overall energy policy for a number of years, coupled with economic boom times, has brought the world perilously close to an energy crisis. Supply constraints have emerged across the energy spectrum, not only in the United States but around the world." The report suggests that "alliances, effective diplomacy, freer trade, and innovative multilateral trade and investment frameworks will all be tools for securing reliable energy supplies in the 21st century. The energy problems we face today are complex, and our response to them must range from a review of our domestic environmental, tax, and regulatory structures to a reassessment of the role of energy in American foreign policy." The independent task force includes the CEOs of major energy companies, as well as a broad range of academic energy experts.

On the domestic front environmental and regulatory measures have restricted development of natural gas delivery systems, new power generation facilities and oil refining capacity. Expanding energy resources will require backing off some of the restrictions. "When it comes to energy, the American people cannot achieve both a painless present and a secure future."

The Bush administration favors opening more federal lands and offshore areas --- both in Alaska and the lower 48 --- to oil and gas drilling and pipeline construction. These initiatives and efforts to site new pipelines and power plants have run into heavy opposition from environmentalists.

It's estimated the country will need to build 65-90 500 MW power generation facilities over the next 20 years to meet electric demand, Cheney said. Most of the plans call for these new plants to be gas-fired, even though gas currently is in "relatively short supply" and the price "has gone way up," he noted.

"If we're going to do [this], we've got to go out and find the gas, and then build pipelines to deliver it to the plant," the vice president noted. "If we don't use gas, we can build with coal," which currently supplies about one-half of the power today. "If we don't use either one of those, then about the only other option is nuclear."

Cheney indicated Wednesday that he favors increasing the country's dependence on nuclear power, but he declined to say by how much. "We haven't decided on a particular recommendation yet" on the nuclear power issue. Cheney and the interagency task force are developing a series of recommendations to address the energy supply and infrastructure problems facing the nation. "We'll have a set of recommendations to the president in about a month."

The full report of the independent task force is available at www.cfr.org.

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