Fueling the energy debate

Charles Krauthammer:

Is there anything more depressing than yet another promise of energy independence in yet another State of the Union address? By my count, 24 of the 34 State of the Union addresses since the 1973 oil embargo have proposed solutions to our energy problem.

The result? In 1973 we imported 34.8 percent of our oil. Today we import 60.3 percent.

And what does this president propose? Another great technological fix. For Jimmy Carter, it was the magic of synfuels. For George Bush, it's the wonders of ethanol. Our fuel will grow on trees. Well, stalks, with even fancier higher-tech variants to come from cellulose and other (literal) rubbish.

It is very American to believe that chemists are going to discover the cure for geopolitical weakness. It is even more American to imagine that it can be done painlessly. Ethanol for everyone. Farmers get a huge cash crop. Consumers get more supply. And the country ends up more secure.

This is nonsense. As my colleague Robert Samuelson demonstrates, biofuels will barely keep up with the increase in gasoline demand over time. They are a huge government bet with goals and mandates and subsidies that will not cure our oil dependence or even make a significant dent in it.

Even worse, the happy talk displaces any discussion about here-and-now measures that would have a rapid and revolutionary effect on oil consumption and dependence. No one talks about them because they have unhidden costs. Politicians hate unhidden costs.

There are three serious things we can do now: Tax gas. Drill in the Arctic. Go nuclear.

First, tax gas. The president ostentatiously rolled out his 20-in-10 plan: reducing gasoline consumption by 20 percent in 10 years. This with Rube Goldberg regulation — fuel-efficiency standards, artificially mandated levels of "renewable and alternative fuels in 2017" and various bribes (er, incentives) for government-favored technologies — of the kind we have been trying for three decades.

Good grief. I can give you a 20-in-2: tax gas to $4 a gallon. With oil prices having fallen to $55 a barrel, now is the time. The effect of a gas-tax hike will be seen in less than two years, and you don't even have to go back to the 1970s and the subsequent radical reduction in consumption to see how. Just look at last summer. Gas prices spike to $3 — with the premium going to Vladimir Putin, Hugo Chavez and assorted sheiks, rather than the U.S. Treasury — and, presto, SUV sales plunge, the Prius is cool and car ads once again begin featuring miles per gallon ratings.

No regulator, no fuel-efficiency standards, no presidential exhortations, no grand experiments with switchgrass. Raise the price and people change their habits. It's the essence of capitalism.

Second, immediate drilling to recover oil that is under U.S. control, namely in the Arctic and on the Outer Continental Shelf. No one pretends that this fixes everything. But a million barrels a day from the Arctic National Wildlife Refuge is 5 percent of our consumption. In tight markets, that makes a crucial difference.

I don't agree with his tax proposal, but the rest makes a lot of sense. We are dependent on foreign sources of fuel because the environmental wackos on the left want to starve this nation of energy. They oppose drilling in Alaska and off shore. They oppose nuclear facilities. They oppose wind energy that spoils their view. Eventually they will oppose ethanol. They will find a way to keep starving us of energy. Their long term goal is to make so difficult that they can impose their control freak solution of austerity and top down controls on all production of and enterprise.

Krauthammer lives in a big city that relies to a significant extent on subsidized public transportation so he is not as aware as he should be of the effect his fuel tax would have not only on regular commuters but trucking and distribution systems. These people already pay significant fuel taxes.

In a recent comparison of a hybrid electric-hydrogen fuel vehicle, the taxes that conventional autos pay was left out of the equation. When running on its electric batteries the vehicle costs per mile was three cents a gallon. Of course prorating the battery costs was left out of that calculation as was any tax for road use. The comparison was to a gas powered auto that costs about 10 cents a mile for fuel. Not mentioned was that up to 50 percent of that cost per mile is the tax on the fuel. Comparing apples to apples the electric vehicle cost more to operate.


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