Out of Gas
During George W. Bush's first months in office in 2001, before 9/11 swept all else aside, his top policy objective was to overcome the ongoing energy crisis, triggered by oil shortages, high gasoline prices and an overtaxed infrastructure. "The nation has got a real problem when it comes to energy," he declared in March of that year. "We need more sources of energy." To tackle this problem, Bush ordered Vice President Cheney to devise a new national energy strategy. The resulting blueprint, announced with great fanfare on May 17, 2001, called for a host of initiatives aimed at boosting the nation's energy supply. Today this strategy, like so much else touched by Hurricane Katrina, lies in ruins.
Signs of the wreckage abound. There are, first of all, the high gasoline prices caused by damage to the Gulf Coast's drilling wells and refineries. Working-class commuters in rural areas will be particularly hard-hit, as Sasha Abramsky points out in this issue. Rising fuel prices will also add to the cost of other products, including food. Home heating costs are expected to skyrocket, producing misery and illness--even death--for those on fixed incomes who cannot afford the inflated prices. Many workers in the airline and tourist industries will lose their jobs as high fuel costs eat into profits and discourage personal travel. All but the very rich will be affected in one way or another.
These effects are not merely the product of natural disaster. True, Katrina inflicted considerable damage on key oil and gas facilities, significantly adding to the nation's energy woes. But it only exacerbated a situation that was already becoming dire before August 29. What makes Katrina so significant is not its short-term consequences, which can be overcome, but the massive flaws it exposed in the larger edifice of Administration policy.
These flaws derive from the driving thrust of the Cheney plan: to perpetuate the nation's addiction to cheap petroleum for another few decades, thereby preserving the power and profits of Big Oil (from which so many of the Bushies emerged) and postponing the costly and disruptive--but ultimately inevitable--transition to a post-petroleum energy system. The Cheney plan paid lip service to the need for conservation, but the emphasis was on increasing the supply rather than curbing the demand.
In pursuing its goals, however, the White House faced a monumental dilemma: The nation's appetite for cheap petroleum keeps growing, as more and more SUVs hit the road, while the amount available from domestic fields is in decline. To overcome this challenge, Cheney came up with two basic solutions: (1) boost output from offshore fields in America's coastal waters, most notably the Gulf of Mexico, and (2) increase imports from key foreign suppliers, particularly those in the Middle East, Africa and the Caspian Sea region. Progress in the first arena would be achieved through tax breaks, subsidies and environmental waivers for Big Oil; progress in the second would be promoted through diplomacy, economic incentives and--though this was not publicly acknowledged--"regime change."
The role of oil in precipitating the US invasion of Iraq is still widely disputed, but it is undeniable that White House officials were well aware of Iraq's potential as a giant filling station for the United States and were fully determined to replace Saddam Hussein with someone more amenable to this outcome. However, in their haste to topple Saddam, these officials did not pay heed to warnings about the deep ethno-religious schisms in Iraq, and were thus ill-prepared for the insurgency and sectarian conflict that have gripped the country since mid-2003. Among the many casualties of this violence is Iraq's oil output, which is lower now than before the US invasion. Nor has the United States succeeded in boosting the output of other foreign suppliers, many of which are also beset by ethnic and political disorders.
The one bright spot has been the Gulf of Mexico, which has accounted for the only significant increases in domestic oil output since Bush took office. Now, as a result of Katrina, and to a lesser extent Hurricane Rita, production in much of the Gulf has been halted, and it is unlikely that investors will deploy new $1 billion drilling rigs in the path of future hurricanes.
At this point, no amount of rubber bands and chewing gum can stick the Administration's energy plan back together. Energy supplies will remain tight for years, and the economy will suffer accordingly. There is no supply-side solution to our energy woes; as the Apollo Alliance (www.apolloalliance.org) points out in its "Ten-Point Plan for Good Jobs and Energy Independence," only a concerted drive for conservation, investment in efficient, clean factories and the development of petroleum alternatives can provide relief. This requires a significant increase in mandatory fuel-efficiency standards for cars and trucks and the redeployment of federal subsidies from traditional energy systems to renewables, biofuels, public transportation and, eventually, hydrogen fuel cells.
Bush/Cheney will never choose this path voluntarily. Indeed, even as Bush hypocritically called for Americans to drive less and conserve energy, his allies in Congress were pushing for relaxed environmental standards on coastal drilling and for drilling in the Arctic National Wildlife Refuge. Only vigorous public pressure from across the spectrum will produce the necessary reforms. Fortunately, the American people are primed for a progressive energy policy. Surveys show widespread suspicion that oil companies are price-gouging. They also show overwhelming support for a windfall-profits tax to be used to develop alternative sources of energy, lessening America's dependence on imported oil. It remains for politicians to heed the call, before we run out of gas.