# 549  

August 2006



Oil Addiction Fiction: Bush's "Addiction" May Be Rational Choice


by Dana Joel Gattuso

 

In spite of President Bush's dire warning in his State of the Union address that America is becoming "addicted to oil" - followed by "rehab" policies to include renewables, hybrids and now CAFE standards - most Americans do not wish to break the habit.

Far from it: Americans want their government to find new sources of oil to increase domestic supplies.

According to a recent Fox News' Opinion Dynamics poll, 68 percent of Americans support drilling for oil in the Gulf of Mexico, followed by 48 percent who support further drilling in Alaska.1

The desire of most Americans to continue feeding our fossil fuel "addiction" should come as no surprise.  Even with energy prices moving upward and Chicken Little-like speculations that we're tapping out supplies, oil is still abundant and relatively inexpensive compared to alternative sources of energy like ethanol, solar & wind and hydrogen technology. 

Take corn-based ethanol.  In the U.S., the industry currently produces 3.4 billion gallons, used mostly as an octane-boost additive in gasoline.2  Billions of dollars in annual federal subsidies doesn't change the fact we don't and - due to limitations on the amount of land, can't - grow nearly enough corn to meet our food and energy needs.3

Some experts question whether the production of ethanol even nets a positive amount of energy.  Scientists David Pimentel of Cornell University and Tad Patzek of University of California Berkley found after considering energy inputs to separate, ferment, distill and extrude the corn, that ethanol uses 29 percent more fossil fuel in its making than it yields for energy use.4  If the findings are true, it makes absolutely no sense for the government to spend billions of tax dollars subsidizing an entity that uses more energy than it gives off.

There might be more potential in "cellulosic biofuels" - fuel converted from plant fibers and waste material such as switchgrass and wood chips - which President Bush referred to in his State of the Union.  Compared to corn- and sugar-based ethanol, the process of breaking down non-starch plant material requires much less energy.

But these biofuels are prohibitively costly to produce, require massive amounts of land, and are still experimental.5  With conversion technology still in its infancy - including the promising but controversial genetic engineering approach to increase production per acre6 - how much more are we willing to spend in costly subsidies?  Already, President Bush is earmarking $150 million in 2007 for biomass, almost twice the funding two years ago.7

Wind and solar power have been the energy source of "the future" for over 40 years.  Unlike cellulose, technology for these renewables is well and fully developed.8  Yet in spite of years of generous federal and state subsidies and tax incentives, wind and solar have failed to make a dent in overall energy use.  As a recent report by Resources for the Future concludes, "renewables failed to meet prior expectations regarding trends in the volume of future generation."9

Wind power accounts for less than one percent of total electric power capacity.  Solar power generation, which can cost three to four times as much as natural gas, accounts for even less - one-tenth of one percent of all electric capacity.10  Yet, to cure us of our nasty oil habit, President Bush's budget for FY 2007 would increase solar energy R&D by 78 percent.11

Middle East instability and rising world oil prices may seem inextricably linked.  But that's only a small part of the picture.  Higher oil prices are due largely to increased world demand, mainly from industrial giants China and India, and inadequate investment in infrastructure to meet rising demand.12  Even if we did rein in our consumption of oil, it would do little to affect global demand and oil prices.

What would affect oil prices here at home is increasing production.  As Congress begins yet another debate on energy policy, furthering oil exploration and production should be the focus.  Where technology for renewables more or less has run out of steam, new, clean and cost-effective methods for tapping new sources of domestic oil are expanding daily.

Last month, the Energy Department announced that advanced technologies using carbon dioxide to recover oil could quadruple domestic reserves.  And tapping a small section of Alaska's Arctic National Wildlife Refuge, using new technology that makes a much smaller environmental footprint than conventional methods, would open 10.4 billion barrels of crude, roughly the same amount we've imported from Saudi Arabia for a quarter of a century.13

The majority of Americans are calling for more oil production here on our own turf, and someone should be listening.  President Bush might call it "addiction;" others call it "rational choice."


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Dana Joel Gattuso is a senior fellow at The National Center for Public Policy Research in Washington, D.C.  Comments may be sent to [email protected].

 



Footnotes:


1 Angus Reid Global Scan, Press Release, "Drilling for Oil Is Preferred Energy Policy in U.S.," March 6, 2006, at http://www.angus-reid.com/polls/index.cfm/fuseaction/viewItem/itemID/11116.

2 U.S. Department of Energy, Biomass Program, "Ethanol," last updated March 14, 2006, at http://eereweb.ee.doe.gov/biomass/printable_versions/ethanol.html.

3 See U.S. Department of Energy, Energy Information Administration (EIA), Annual Energy Outlook 2006 with Projections to 2030, "Issues in Focus," February 2006, p. 45.

4 David Pimental and Tad W. Patzek, "Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower," Natural Resources Research, Springer Netherlands, Vol. 14, No. 1, March 2005, pp. 65-76.

5 EIA, Annual Energy Outlook 2006 with Projections to 2030, pp. 45, 57.

6 For an interesting discussion, see Ronald Bailey, "Alcohol Saves the Planet: The Future of Booze-fueled Machines," reasononline, Reason Foundation, February 3, 2006, at http://www.reason.com/rb/rb020306.shtml.

7 U.S. Department of Energy, FY 2007 Congressional Budget Request: Budget Highlights, February 2006, p. 41.

8 Fred Sissine, "Renewable Energy: Tax Credit, Budget, and Electricity Production Issues," CRS Issue Brief for Congress, Congressional Research Service, Updated January 20, 2006, p. CRS-1.

9 Joel Darmstadter and Karen Palmer, "Renewable Sources of Electricity: Safe Bet or Tilting at Windmills?" Resources, Resources for the Future, Winter 2005, p. 26.

10 U.S. Energy Information Administration 2005, as cited in Joel Darmstadter and Karen Palmer, "Renewable Sources of Electricity," Resources for the Future, Winter 2005, p. 27.

11 U.S. Department of Energy, FY 2007 Congressional Budget Request: Budget Highlights, op. cit., p. 41.

12 See U.S. Department of Energy, Energy Information Administration (EIA), Annual Energy Outlook 2006 with Projections to 2030, "Overview," p. 2.

13 See Coalition Letter to Reps. Dennis Hastert, John Boehner, and Sen. Bill Frist, "Joint Letter to House and Senate Leadership on Opening ANWR to Energy Exploration," March 8, 2006, at http://www.cei.org/gencon/032,05180.cfm. Also, see U.S. Department of Energy, Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology, October 5, 1999; and Ben Lieberman, "Correcting Mistakes of the 1990s Should Top the Energy Agenda for 2006," Backgrounder #1921, March 20, 2006.




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