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Energy Policy in America


Energy Policy in America

Well it appears that we are at another critical crossroad with economic policy in America. Our President has decided that moving America to alternate green fuels is worth the potential economic downturn that could result from this short term strategy.

America definitely needs to diversify its energy use. No one on either side of the aisle would argue that point, however, the process and timing of such a diversification are critical to our economic recovery.

We must do 2 things over the next decade with our energy policy if we are to maintain a position as the leading economy in the world. One we must become less dependent on foreign resources and two we must diversify our energy use. It seems apparent that we have tremendous oil and coal resources in our country that we are not utilizing. I feel this is a starting point. How much energy utilization can we switch from foreign oil to our own resources over what period of time? At the same time what shift can we make in that utilization from oil to other resources? Implicit in this discussion has to be what the American consumer and industry can or are willing to do? The Federal government can’t dictate this or we will suffer the economic impact, if it is unpalatable to Americans.

For argument sake let’s say the primary energy sources we are going to pursue are petroleum, coal, solar, wind, nuclear and hydro. The starting point is to decide how we want to shift the mix from one to another and over what period of time. Intrinsic to this decision is a complete analysis of dependency, supplies, costs, foreign or domestic resources and more. Once this analysis is done then we need to look at timing and strategy to reach our new energy goals.

Our President has made some alarming promises in many areas that have not even been close to reality and based on that track record there should be concern that we can establish significant milestones in his energy policy in the short term. That aside the question is, has this type of analysis been done and more importantly has it been vetted with the American people? The answer seems to be - no!

We need to look at timing in relation to the other points made above. Shifting energy dependency is not an easy task and has a significant economic ripple effect in the entire country. For example simply mandating that we become less petroleum dependent does not address the economic fallout. If we have gas prices above $6 per gallon what impact will that have on the US economy? Can it survive given the other current economic issues we face?

Our economy is currently very fragile  – high unemployment, weak investment, declining savings rates, outrageous debt, unbalanced budgets/deficit spending, a massive housing crisis, a very expensive and pointless war, a very questionable healthcare policy shift, great competition from emerging economic nations (China and India) and continuing concerns about the European economic stability. I assume a 10th grader could tell you that doing anything radical with energy policy at this juncture could create a massive economic downturn. Actually several leading economist are predicting just this as recently as last week.

Let’s take stock of where we are economically and balance that against a new energy policy. We are seeing the highest gas prices in the US for winter in recorded history. Since summer prices historically escalate significantly above winter prices, many are predicting gas prices this summer at over $5 a gallon. What impact will that have on our economic recovery? Will this have a trickle -down effect that will end the anemic recovery or will it actually drive us back into a full blown recession/depression? The answer is hard to ascertain with complete certainty but what can be said with 100% certainty is it will have a negative effect. So in light of that and all the other economic factors outlined above, is this right time to implement an energy policy that will surely drive up these summer prices? I think not.

We have to stop pandering to special interest groups and do what is best for the entire country. Is drilling the only or complete answer – no! However, it is the short term economic stimulus we must have to drive our recovery and it is part of a much more comprehensive energy policy developed as outlined above. Our President is right energy policy change will take time but we must do certain things in the short term to keep America going and stop prostituting regulation for votes. With over 300 years of oil and coal resources on our own soil some additional drilling now is not only prudent but critical.

Energy is so pervasive in our society that it is a very powerful economic tool, perhaps one of the most powerful. Accordingly we must use it in critical times such as these to help our country. There is no shame in that. Yes we will spoil the view for some coastal residents, we will make extinct a few non critical species, and we may displace others but in the long run we will be better off. Low energy costs can drive a very rampant economic recovery. Imagine if we had consistent gas prices under $2 a gallon. We would see a decrease in the CPI, we would drive manufacturing, we would spur investment, we would increase travel, we would increase car sales and ultimately we would increase employment, solve the housing crisis, perhaps balance the budget and hold our position as a world leader. Sound to go to be true? Not really. Just look carefully at the trickle-down effect of lower energy costs in history and you will see this is not far- fetched if we have the right leadership and policy.
It is time to stop the political bickering and do the right thing. Food for thought!

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