An institutionalist critique of the Bush administration's energy policy.

Author:Reardon, Jack

The purpose of this paper is to critique the Bush energy policy from an institutionalist perspective. The first section will sketch current energy usage in the United States; the second section will discuss the central elements of the Bush energy policy. The final section will critique this policy from an institutionalist perspective.

Current Energy Usage in the United States

Table 1 lists current U.S. energy production and consumption and compares this with 1960, the year the Organization of Petroleum Exporting Countries (OPEC) was founded. (1) A salient observation is that today, forty-four years after the founding of OPEC, the United States relies on fossil fuels for 80 percent of energy production and 86 percent of consumption. Coal is the only fossil fuel to enjoy a resurgence since 1960 and currently accounts for 31.9 percent of U.S. energy production and 22.7 percent of energy consumption. (2) Approximately 90 percent of coal is used by electrical utilities, and utilities in turn, rely on coal for 52.3 percent of their electricity--more than oil, natural gas, and nuclear power combined. (3)

The United States possesses one-fourth of global coal reserves, which given current annual production of 1.1 billion tons (second to China's 1.2 billion tons) should last approximately 260 years. This supply advantage, however, is outweighed by coal's deleterious effects on the environment. Coal combustion produces sulfur dioxide, a preponderant factor in acid rain; nitrogen oxides, a preponderant factor in ozone; mercury, a contaminant of fish and wildlife; and carbon dioxide (C[O.sub.2]), a preponderant greenhouse gas. China and the United States, the world's largest coal producers, are also the top C[O.sub.2] emitters, accounting for 37 percent of global emissions. It is estimated that emissions from coal-fired plants kill almost 30,000 Americans annually, and in China where coal accounts for 70 percent of its energy needs (4)--about the same as the United States in 1910--coal emissions cause 1 million deaths annually. (5)

Today oil accounts for 17.2 of energy production and 39.8 percent of consumption. U.S. domestic oil production peaked in 1971 at 11.3 million barrels per day (bpd) and is currently 9.0 million bpd, third behind Russia and Saudi Arabia. In 1994 for the first rime, imported oil exceeded U.S. domestically produced oil, a difference that has since widened. Not surprisingly, the United States is currently the world's largest oil importer at 9 million bpd, more than Japan, Germany, and South Korea combined. The United States consumes 19.6 million bpd, which is more than Japan, China, Germany, Russia, and South Korea combined. The preponderant use for oil is transportation, accounting for 64 percent of total production.

Natural gas accounts for 27.6 percent of U.S. energy production and 23.7 percent of U.S. consumption. The preponderant use of gas is home heating; approximately 60 million homes are heated with natural gas. Natural gas is the cleanest burning fossil fuel--it contributes 50 percent less C[O.sub.2] emissions than coal; however, the United States possesses only 3 percent of the world's natural gas reserves. Russia possesses 29 percent of world reserves, followed by Iran (15.8 percent) and Qatar (12.8 percent).

Nuclear energy accounts for 11.5 percent of U.S. energy production and 8.3 percent of U.S. energy consumption. The United States has 104 nuclear reactors, none constructed since the 1970s. Nuclear power's main disadvantage is radioactive waste which must be stored underground. Given high profile disasters at Three Mile Island and Chernobyl, the United States has been reluctant to build additional reactors. Nuclear energy is more prevalent in Europe, particularly France, which relies on nuclear power for 78 percent of its energy. Of the thirty-one nuclear reactors currently under construction worldwide, eight are in India, three in China, and three in Japan, which relies on nuclear power for 42 percent of its energy.

Currently, renewable energy accounts for only 8.3 percent of U.S. energy production and 6 percent of consumption. While renewables have increased as a percentage of U.S. energy production, they have declined as a percentage of energy consumption. Hydropower, wood, waste, and alcohol fuels currently account for 93 percent of renewable production and consumption, while wind and solar account for less than 2 percent.

In 1973, net imports as a share of total oil consumption was 34.8 percent; this share peaked in 1977 at 46.5 percent and then fell to a record low of 27.3 percent in 1985. It has since increased to a record high of 53.4 percent in 2002. The United States, while not curbing its oil appetite, has diversified its source of imports. In 1973, OPEC imports as a percentage of total imports was 47.8 percent; this percentage peaked in 1977 at 70.3 percent and after decreasing during the 1980s currently is 39.9 percent. The United States obtains 30 percent of its petroleum imports from Canada and Mexico and 13 percent from Saudi Arabia. Canada and Mexico, however, collectively account for only 7 percent of global oil reserves. Fifty-four percent of the world's oil reserves reside in the Persian Gulf nations of Saudi Arabia, Iraq, Kuwait, United Arab Emirates, and Iran. Saudi Arabia alone possesses one-fourth of the global oil reserves, whereas the...

To continue reading