T. Boone Pickens has broadcast his way right into the middle of a presidential election debate about United States energy policy. Americans are upset about $4-a-gallon gasoline, and the iconoclastic oilman has bought a lot of airtime to tell us what he thinks about the situation. Pickens' views have injected some fresh air into the public dialogue, and most of his ideas stand up pretty well to the scrutiny of serious energy analysis. But we must be careful not to replace one set of problems with another.
Time for an Oil Change
His ads and website warn about the money sucked out of the American economy by its negative balance of trade in energy. Pickens has identified a problem as least as big as high prices at the pump: The energy trade deficit is larger than our trade imbalance with China and far more costly than the war in Iraq. Moreover, much of the money ends up in the hands of America's enemies. Though some laissez-faire economists find this situation acceptable, it's hard to argue that our dependence on foreign oil can be sustained at current levels over the long haul without further damage to the dollar and the general U.S. economy.
A vigorous American Petroleum Institute advertising campaign, President Bush and presidential candidate John McCain imply we can drill our way out of our dependence on foreign oil. Pickens disagrees. Again, score one for the man living in our television screens. Offshore oil drilling is expensive and unlikely to lower oil prices or have a dramatic impact on the world oil market. We shouldn't rule out some carefully monitored expansion of lands available for exploration and development. But opening up more offshore areas in a country that has been drilling away since 1859 won't be a game-changer in an expanding world oil market.
A New National Standard
Pickens emphasizes renewable energy, particularly wind power, as a solution to our energy predicament. Wind supplies a significant share of energy in some European countries and is growing here. We should expand the role it plays in electric generation. But overemphasis on wind can distract attention from solar power and biofuels (not derived from food products), which offer greater potential for further technical development.
The idea that we should use government subsidies to get wind and other renewables into the market overlooks a big problem. The amount of fuel we consume is so large that subsidies will have unacceptable budget...