Friday, August 29, 2024
By Steven L. Taylor

One of the specifics from last night’s speech that I did find outlandish was Obama’s statement about dependency on foreign oil:

And for the sake of our economy, our security, and the future of our planet, I will set a clear goal as president: In 10 years, we will finally end our dependence on oil from the Middle East.

While I think that we do need a national vision towards energy policy change, the bottom line is that such changes are going to come about because of the price of oil, not because of proclamations from politicians.

I don’t have the time to go into the issue in detail, but Megan McArdle already has:

Barack Obama just promised to end our dependance on oil from the Middle East. This is, not to put too fine a point on it, horse puckey.

It doesn’t matter what we do: drill, research alternative energy, raise CAFE standards . . . in 2024, we’ll still be using oil. Even if we discovered a magic source of clean renewable energy tomorrow, we’d still be using a lot of oil, because transitions of that magnitude take time. A lot of time. If a price competitive solar heating system came out tomorrow, would you run out and buy one? Or would you wait until the oil heater broke?

She goes on to detail a host of other issues (such as plastics, which no one seems to mention when petroleum is mentioned).

Further, the ten year time-horizon is wholly arbitrary and is hardly based on any known technological potential.1 Politicians like to pick nice, round numbers for their broader visions, and the ten-year time horizon is always somewhat amusing to me for any presidential candidate, given that the most years that they can serve in office is eight.

I am not stating that we aren’t at a juncture wherein serious consideration to energy policy isn’t at hand, I am just opposed to wild promises on the subject.

  1. As such, James Joyner’s description of the proposal as the “magic energy pony.” []
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6 Responses to “Obama and Foreign Oil”

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    1. Alex Knapp Says:

      There’s no doubt that the 10 year horizon is ludicrous, but on the other hand there’s something to be said for setting an overly aggressive goal–even if you don’t make it, you might have gotten further in the trying than you would have if you set a more realistic one.

    2. Ratoe Says:

      I am not stating that we aren’t at a juncture wherein serious consideration to energy policy isn’t at hand, I am just opposed to wild promises on the subject.

      The “wild promise” is setting a “goal” to reduce “dependence” from the Middle East.

      Only tendentious commentators like Joyner and McArdle are interpreting this as a pledge by Obama to stop importing oil.

      “Dependence” is, of course, an imprecise term–particularly in the context of global trade. Go to your grocery store: you can get wine from Chile, cheese from France, pasta from Italy. But you can also get all of these products from domestic manufacturers as well. Are we dependent on France for cheese, Chile for wine, etc…?

      If you look at our petroleum use and sources, according to the DOE, our “dependence on net petroleum imports” is around 60%. It depends on how you define “dependence,” but there are many, relatively easy federal policy interventions that could be initiated to get that figure below 50%. Simply pushing CAFE standards up to 42mpg–which has been advocated by Obama and independent groups like the Union of Concerned Scientists could knock a couple of percentage points off of consumption.

      Other investments in public transit and regional rail could also help.

      Of course, it would be nice if Obama defined “dependence,” but if you look at the policy proposals out there, it would be quite easy to get to a point where we produced domestically the bulk of our oil.

      It is also important to remember that Obama is wanting to reduce Middle East oil dependence. Of the top five sources of imports, only one country (Saudi) is Middle Eastern.

      We get the bulk of our oil top imports from friendly neighbors, Canada and Mexico.

      I think knee-jerk responses such as those coming from McArdle and Joyner are strangely equating a reduction of Middle East dependence with a mythical proclamation that we will stop all imports (and even the use of) oil.

    3. Buckland Says:

      Obama, and McCain to only a slightly lesser extent, have been sounding like old Soviet Kommissars on the subject of energy for some time. A ten year plan for energy independence, edicts to increase corn production for fuel, and giveaways for renewable energy companies whose only business plan is to succor from the governmental teat for as far as the eye can see are staples of both campaigns.

      Once upon a time in a galaxy far, far away people trusted the free market to find the correct method to fuel the economy. Unfortunately we’ve come the point where it’s a non starter for a candidate to say they trust the wisdom of thousands of entrepreneurs over that of a group of policy wonks who consider themselves experts because they read reports with professionally done graphs. Pricing signals from demand/supply imbalances are quaint artifacts from before the invention of PowerPoint.

      However the reality is that any candidate saying to let the market figure it out would find their remark on an opponent’s campaign commercial before dusk. It’s a shame when the best thing either candidate has said this year is that he doesn’t know much about the economy. I’m hoping that lack of knowledge will minimize the Soviet style 5 year plans. I’ll take the lack of knowledge over 5 year plans anytime.

    4. Dr. Steven Taylor Says:

      Point taken about Mexico and Canada (not to mention Venezuela and elsewhere).

      I, for one, am not concerned, per se, with our “dependence” on foreign anything (oil, wine or cheese), as I am not sure than in the current world economy that such dependence can be avoided, or that avoiding is an unvarnished good.

      I will say this, however, and in this way do find the Obama goal to be unrealistic: given the nature of petroleum markets (or really, any commodity market), the only way to end our dependence on Middle Eastern oil in any substantive way is to cease using oil in general. This ain’t gonna happen in 10 years, nor are we going to be in a position to ignore Middle Eastern oil in 10 years.

      Bottom line: the Middle East’s influence on the global economy will persist until we no longer use oil in large quantities, whether the US buys less of it from them directly or not.

      I agree with Alex insofar as I have no problem with visionary goals, but I still think this entire affair will be driven by market force (i.e., the price of oil and the ability for profits to be made with alternatives) than any proclamations from presidents of either party.

    5. Captain D Says:

      Obama’s energy independence goal is one of the easisest planks of his platform (as laid out in his speech last night) to assail. It’s unattainable and is a way the McCain campaign can paint him as being out of touch with reality. Obama made a bold claim with his posture on energy independence, but has no experience with energy. Niether does his running mate, Joe Biden.

      I know it hadn’t been posted yet, but Palin as VP on the McCain ticket makes a lot of sense in the context of thie issue of energy independence. I hashed out some of my thoughts on this in response to the Palin post, but the long and short is that while Alaska may be a small state in terms of population, it plays a critical role in our economy. Palin has experience dealing with energy exploration, oil companies, pipline infrastructure, and all of the other things that go along with the conversation about drilling for oil in the United States – whether it’s the Alaskan wilderness or an offshore rig in Florida. Domestic drilling will come up again and again when energy policy is debated, and governing Alaska lends specific experience in this area that I don’t think any other elected office could lend.

      Among other things, naming Palin as his VP candidate is laying the foundation for the McCain campaign to aggressively attack Obama’s energy policy as naive, unrealistic, and an empty promise. Having someone on the ticket with real-world experience governing a state that is on the frontier of energy exploration isn’t a trump card on the energy exploration debate, but it’s very close to it.

      As concerned as people are about oil and gas prices, and as solidly as most americans believe we should do more domestic exploration – it is not a small thing to have the governor of Alaska at your side when challenging Obama on oil and energy policy.

    6. Captain D Says:

      I just hashed some of these thoughts out under the Palin post, but think it bears further discussion here.

      If we are to think of the things Obama promised in his acceptance speech as planks of his political platform, one of the most easily assailable is his goal of energy independence by 2024.

      He made this claim because it is an issue near and dear to everyone’s heart and wallet; but it is not something that can be done in 10 years. Period.

      Palin as VP makes a lot of sense in the context of the energy independence debate. While Alaska may be a small state in terms of population, it performs an important role in our economy. The oil and gas reserves there are huge, and perhaps more than any other office, governing Alaska gives a person experience dealing not only with energy companies, but with energy exploration, oil transportation infrastructure, and environmental responsibility.

      Given that domestic drilling, be it in the Alaskan wilderness or coastal Florida, is something most americans support and view as an interim step to easing our dependence on foreign crude, Palin makes a lot of sense. Niether Obama nor Biden have a lick of experience in dealing with energy infrastructure or exploration. Palin does.

      Palin will be a part of a broader strategy by the Republican party to paint Obama as out of touch with reality, and as a person who is promising the impossible. They’ll do that by getting people who have real experience in the relevant fields onboard, and picking apart his promises in quantifiable ways. Palin is going to be a huge voice in the energy debate that is so important to so many people.

      It’s just something to think on.

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