The revolutionary fervor sweeping the Middle East is both exciting and scary at the same time. There is hope for change that will bring more freedom and opportunity to people long oppressed. But there is fear that the lack of a tradition of democracy, rule of law and respect for human rights can also lead to chaos and exploitation by even more radical groups than those being forced out.
Our study of history also reminds us that revolution is a risky thing and it does not always work out well. One of the unintended consequences of revolutions in this part of the world is that oil prices spike as speculators and nations dependent upon oil to keep their economy lubricated scramble to protect their supply lines. Libya in particular is likely to causes such spikes.
My purpose here is not to pontificate about what theshould do in the Middle East. I’ve said before I believe the best thing America can do, generally, is to be America and live fully into our principles, ideals and aspirations which remain the envy of the world.
But here at home this is another signpost for us that we need to get our own domestic house in order so we can weather this uncertainty and take advantage of our strengths to mitigate our weaknesses.
Comprehensive energy policy is such a loaded term because the very notion of a policy framework turns into a Christmas tree larded with ornaments by every special interest group with an office on K Street. But there are things that Americans individually, through our corporations and businesses, and our governments at both the Federal, State and Local level can do to mitigate our economic unintended consequences from global energy market volatility.
1. Fleet Conversion to natural gas. The lessons that UPS and FedEx learned about energy savings from converting their fleet of trucks from diesel to compressed natural gas are worth repeating. Big savings from natural gas prices lower than diesel, fast payback from conversion, cleaner air, domestic sources, and hedging protection. Shaving the peak off oil demand is powerful protection against price volatility and supply disruptions.
2. Buy Gas/Hybrids Today not PHEVs Tomorrow. Waiting for PHEVs to come down in price to competitive levels should not become the enemy of an equally good solution in the current gas/electric hybrids like Prius. Improve mileage and reducing peak oil demand is a good thing and these proven hybrids help fill the gap and produce benefits NOW as a hedge against high gasoline prices near-term.
3. Smart Buildings Make Sense. The more we know about energy efficiency the better bargain it becomes for many applications. The biggest problem in relying on energy efficiency is the human interaction required to keep doing it. Building automation is a powerful and cost effective way to build in energy efficiency and manage it for sustainability. This is the lesson that Walmart and other big commercial energy users have taught us. The move toward dynamic pricing or peak day pricing as California will call it will add incentive for commercial and industrial customers to get automated. The Federal Government could help by adopting national energy efficiency codes similar to those in effect for the last twenty years in California which have dramatically reduced energy intensity to about 50% of the national average.
4. Unconventional Oil & Gas Domestic Production. If ever there was a time to drill, baby, drill it is now right here at home to take advantage of the tremendous potential of unconventional oil and natural gas made possible by American technologies in horizontal drilling, 3D seismic, and hydraulic fracturing to get the petrochemical gold out of the shales that hold it captive. This is a good news story that keeps getting better, but to realize its full potential we will need more pipeline construction to bring product to market, collaboration on how to balance the use of both liquids and dry gas to produce the best economics, and the technology, equipment and skilled workers to make it happen. Government policy should line up solidly behind a full court press to expand domestic oil and gas production as America’s energy security policy.
5. Renewable Energy and Electric Transmission. Wind and solar energy costs are falling rapidly and both are now mainstream power generation resources transforming our electric power system. What holds them back is the backbone electric transmission system needed to get these remotely produced resources to load centers where they are needed. The recent decision by the 9th Circuit Court of Appeals throwing out the National Interest Electric Transmission Corridor (NIETC) designations saying FERC lacks authority to promote, regulate and manage interstate electric transmission needs to be fixed by Congress. Our historic approach to transmission as a state-by-state matter is working against our national interests and subjecting new transmission projects the death of a thousand NIMBY cuts.
6. Build and Grow what America Needs Closer to Home. Our global trade, energy and environmental policies are misaligned. We consume far too much energy and pollute our environment by transporting raw materials and finished goods around the world often several times to “game” the global trade system. If the US fixed our tax code to make it possible to manufacture goods at home profitably we could save enormous amounts of energy, reduce emissions and create jobs at home where we want them.
We hope the people of the Middle East find their footing and their way to a peaceful, more democratic way of life. We should offer our help where we can, but it is a mistake to subjugate our own strategic national interests to the whims of tyrants and radicals. The best we can do is to protect our own strategic interests at home and abroad.
Sustainability means protecting our American way of life and the American dream just as much as it means minimizing our adverse impact on the environment. But to achieve that sustainability we have to supply our own energy, make our own goods, grow our own food and not drive away our own business and technology with onerous policies and taxes that make it unprofitable to stay home.
- Appeals Court Vacates NIETC (insightadvisor.wordpress.com)
- Energy Law Alert: Ninth Circuit Decision Further Dismantles an Already Weakened Federal Transmission Siting Authority (renewableenergyworld.com)
- Renewable Energy and the Middle East Revolutions (blogs.forbes.com)