Country's Economic Welfare Can't Take More Poor Energy Policy

August 17, 2012

Whatever the outcome of November's elections, our economic wellbeing requires that the dysfunctional relationship between the White House and Congress change. Governing needs to replace posturing, starting with energy policy, says William O'Keefe, the chief executive officer of the George C. Marshall Institute and president of Solutions Consulting Inc.

Energy is to the economy what oxygen is to human life. To do its job, it needs to be abundant and affordable. Low energy prices alone are necessary but not sufficient to get the economy moving on a stronger growth track. But as we have seen, high energy prices are a dead weight that slows economic growth.

  • The Energy Information Administration (EIA) in its annual Outlook forecasts that our energy budget in 2035 will continue to be dominated by oil, natural gas and coal, although coal's share will decline and natural gas' will increase.
  • Fossil energy will provide 73 percent of our energy, only slightly lower than today.
  • Renewables, mainly solar, wind and biofuels, experience rapid growth but at best will provide about 14 percent of our energy needs.

The policy message of the EIA's Outlook is that our nation should take advantage of our abundance of oil and natural gas resources. Our oil production recently reached a 14 year high and could extend even further. Every barrel that we produce here means a barrel that is not imported or a dollar sent overseas.

  • Increased domestic production can translate into much lower imports from unstable regions.
  • Advances in engine and emission technology mean increased fuel efficiency and continued improvements in air quality.

Alternative energy -- wind, solar, biofuels -- have fallen short of their promise. Rather than attempt to force them to market with mandates and subsidies, the national interest would be better served through incentives, like the research and development tax credit, to spur investments in technology, and through government research focused on creating new knowledge.

Now is the time for the White House and Congress to take a balanced, practical and realistic look at America's energy policy. As we have seen with recent oil and gas production, embracing energy realities can lead to job creation and increased domestic investment.

Source: William O'Keefe, "Country's Economic Welfare Can't Take More Poor Energy Policy," Investor's Business Daily, August 9, 2012.

 

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