Once again, it’s time to get serious about energy
With gasoline prices rapidly climbing back to the $4-a-gallon level, it is time once again to plead with our representatives in Washington to show much-needed leadership on energy policy.In the just-completed election cycle, there was far too little attention paid to this critical economic and national security issue. As recent events have shown, we have left our economy hostage to the old boom/bust cycle of the petroleum markets. At the same time, we have allowed ourselves to become hyper-dependent on events in the Middle East and a number of other (usually highly unstable) underdeveloped countries around the world.The cost and risks of finding new oil are going up every day. We had a very dramatic display of this last year with the Deepwater Horizon disaster in the Gulf of Mexico. That well, which caused at least $20 billion worth of damage, was in waters “only” one mile deep. Other rigs are currently drilling “ultra-deep water” wells that go several miles down.We are clearly having to take bigger and bigger risks to get to additional reserves, and those risks will surely come back to haunt us, just as we are seeing today. It seems we have already forgotten the lessons of that terrible experience.It is not that we do not have other options – we certainly do. But they require that we adopt new ways of thinking about energy and conducting our consumption habits. Nor is it that these options require radical changes – they do not. We merely need to undertake measures that are different. Understandably, the habits built up over the course of the last 150 years are hard to change. But change we must.For one thing, America is in effect the “Saudi Arabia” of natural gas. The United States has what probably amounts to the world’s greatest gas reserves – to the point where we are already exporting gas to Asia. Indeed, new facilities are being constructed to dramatically ramp up those exports. Instead of making a big fuss over hybrid cars (which do have their place), why don’t we start to convert all of our vehicles over to natural gas as the common source of fuel? It is cheap, plentiful, clean and easy to use.A good number of countries have already started this process and have found it very workable.It is also time to dramatically step up our research into clean energy. Technology companies routinely spend between 5 percent and 10 percent of their revenue on research. Energy companies are currently spending less than one-quarter of 1 percent on such research. At the same time, the federal government is spending less than $3 billion a year on energy research as compared with $25 billion on health research.Part of the problem has been the boom/bust history of the oil industry. With oil prices fluctuating so wildly, it has been very hard for energy entrepreneurs to commit to research and development efforts. Just when they start investing money for various research projects, the price of oil collapses, taking with it any potential for the much-needed return on investment.But the federal government can certainly help out in this area by rebalancing the tax code – without raising taxes.Most of the industrial countries of the world, even countries like China and India, are moving to less reliance on oil and a greater reliance on clean energy, such as gas. We can and must do so as well, even as their growing economies consume ever-increasing amounts of oil. The longer we wait, the harder it will be to make the needed changes.Oil is already in short supply, and the instability in the Middle East has only just begun.Let’s get going!Bob Bestani, a businessman and economist who has spent 25 years in the energy industry, was a candidate for the Republican Party’s 2008 1st Congressional District nomination.