Earlier today President Barack Obama held a press conference where he addressed the nation on the rapid increase in gas prices caused most immediately by unrest in Northern Africa and more generally as a result of the world slowly emerging from the Great Recession. After detailing a number of efforts to boost domestic oil production, including encouraging companies to pursue leased lands that are idle and possible new development efforts onshore and off-shore in Alaska, the President explained, “All of these actions can increase domestic oil production in the short and medium term, but let’s be clear: it is not a long term solution. Even if we started drilling new wells tomorrow, that oil isn’t coming online over night. Even if we tap every single reserve available to us we can’t escape the fact that we only control 2% of the world’s oil, but we consume over a quarter of the world’s oil.” President Obama even quoted T. Boone Pickens,saying: “This is one emergency we can’t drill our way out of.”
Let’s put aside discussion of the veracity of whether or not the United States controls only 2% of the world’s oil reserves. The U.S. has enormous amounts of oil shale. In fact, the accessible oil shale in the U.S. is estimated at three-times the proven oil reserves of Saudi Arabia. Of course, converting that oil shale into usable product hasn’t yet been economically figured out, and environmental concerns are real because of concern related to groundwater contamination. Thus, given today’s technologies the President’s statement about the U.S. having only 2% of the world’s oil resources certainly seems accurate enough in any relevant near-term.
Notwithstanding, the true and undeniable fact is that even if we start drilling today oil will not be produced in any short-term time frame. As true and inarguable as that is, this fact is exactly why we should have been following an all-of-the-above strategy and doing whatever we could to produce American oil prior to now. When oil and gas prices spiked in 2008 that should have been a wake-up signal. Truthfully spikes in the 1970s should have sent the same wake-up signal. Instead the most recent spike in oil prices, like all other spikes and supply interruptions, was nothing more than an inconvenience. The sad truth is we have wasted time that could have been put to good use.
I don’t personally know anyone who thinks that the long term strategy for American energy needs is domestically produced oil. In fact, I don’t know anyone who seriously thinks that the world’s long term energy needs can or will be satisfied by oil period. Technology and innovation is the solution, but we are no where near the place and time where we can ween ourselves off of oil. That means political unrest, interruptions in supply and natural disasters can and will cause wild swings in oil prices that filter down to virtually every commodity in the economy. Given the fragile state of our economy we need action today.
In a continued effort to pursue alternative and renewable energy solutions the Department of Commerce recently announced the opening of a $12 million i6 Green Challenge in partnership with the U.S. Departments of Agriculture, Energy, the U.S. Environmental Protection Agency, the National Science Foundation, and Commerce’s National Institute of Standards and Technology and U.S. Patent and Trademark Office. ? Commerce Department’s Economic Development Administration (EDA) will award up to $1 million to each of six teams around the country with the most innovative ideas to drive technology commercialization and entrepreneurship in support of a green innovation economy, increased U.S. competitiveness and new jobs. Its partner agencies will award more than $6 million in additional funding to i6 Green winners. What a great idea, right? Right up until you read the part of the press release that says: “The deadline to submit an application is May 26, 2011. Funding is contingent upon Congressional approval of the administration’s 2011 budget.” So much for that initiative. There seems little realistic chance that the President’s 2011 budget will go anywhere in Congress. We will likely fund the government throughout the remainder of 2011 on a series of Continuing Resolutions.
But surely there are some substantial efforts underway relative to domestic production of energy solutions? Indeed there are, or — sort of are. Just the other day the United States Chamber of Commerce issued a report that was the result of a year of research on a variety of energy related projects. Unfortunately, there are 351 projects stalled or canceled for a host of reasons, including regulatory barriers, lawsuits and threats of legal action. These projects include 140 renewable energy projects, of which 89 projects are wind related, 4 are wave related, 10 are solar energy related, 7 are related to hydropower, 29 related to ethanol/biomass and 1 geothermal project.
The highlights of this depressing research study by the Chamber of Commerce disclose the possible economic these projects could have, including:
- Planning and construction of the projects would generate $577 billion in direct investment.
- The indirect and induced effects would generate an approximate $1.1 trillion increase in U.S. Gross Domestic Product (GDP), including $352 billion in employment earnings over an average construction period of seven years.
- As many as 1.9 million jobs would be required during each year of construction if these projects were pursued.
- The operation of the projects, including multiplier effects, would yield $145 billion in increased GDP, $35 billion in employment earnings and an average 791,200 jobs per year of operation.
- The total potential economic and employment benefits of the subject projects, if constructed and operated for twenty years, would be approximately $3.4 trillion in GDP, including $1.4 trillion in employment earnings.
We are not only not aggressively pursuing domestic oil production to get us over the hump and through to whatever alternative and renewable energy future we will have, but we are not pursuing an alternative and renewable energy future thanks to regulatory burdens and legal obstacles. On top of that, at a time when we desperately need jobs we are basically watching as those jobs that cannot be outsourced are hung up in legal and regulatory limbo. Talk about not having a coherent national energy strategy! In fact, it seems we have no national energy strategy.
The United States Patent and Trademark Office has pursued green initiatives, particularly acceleration of patent applications for those technologies that relate to green technologies. See USPTO Extends Green Technology Pilot Program. These initiatives seek to foster innovators to develop solutions, so whether the technology produces clean energy or whether the technology reduces energy consumption, there are a host of solutions that when combined can have at least some impact. We just need to continue to push the envelope in incremental ways, that is how we are going to get to where we need to be. Little impacts cascading together can have a large impact, but for the time being we need to realize that the technology is not where it needs to be to leverage alternative and renewable energy in an impactful way. That doesn’t mean we shouldn’t try, but it does mean we need to be perfectly honest with ourselves and realize that a silver-bullet green technology is unlikely. In the meantime as we incentivize innovators we need an all-of-the-above series of solutions.
Eliminating back-breaking regulatory burdens and pushing past legal obstacles to jump start at least some of the 351 projects identified by the Chamber of Commerce seems absolutely essential. Encouraging innovators and entrepreneurs to pursue alternative and renewable energy technologies and continually improve seems obvious. Starting to drill oil wells in a safe, responsible way to produce American oil just makes common sense.
And for goodness sake, can we please come up with the $12 million needed for the i6 Green Challenge? Perhaps we shouldn’t have spent $30 million for new spring training facilities for the Arizona Diamondbacks and Colorado Rockies, or $77 million to renovate 5 seldom-used ports of entry on the U.S.-Canada border in Montana. See Waste 102. It is all about priorities, and if we have a national energy crisis, which we do, and a technology solution is likely decades away, which it is, then we need to do whatever we can.