Moving Toward Energy Independence

A Commentary by Wilson Center President and Director Lee H. Hamilton

Nov 16, 2006

One of the key issues that drew more and more attention on the campaign trail this fall is achieving energy independence. Most Americans favor it, and many politicians are responding to that interest.

Nearly everybody that you talk to recognizes the problems with what President Bush called our "addiction to oil." No, the world is not going to run out of oil tomorrow. But the U.S. – and global – energy economy is headed down an unsustainable path. We face soaring demand for oil and gas, both in the U.S. and around the world, particularly as countries like China and India seek more energy. Meanwhile, America is dependent on insecure, unstable and even hostile countries for our energy, constraining our foreign policy and even funding our enemies. To top it off, we are doing grave damage to the environment through the burning of fossil fuels.

Given this bleak outlook, the incoming Congress has pledged to make energy a priority, and it will likely be a prominent issue in the 2008 presidential campaign. Yet so much of the talk on energy independence is just that – talk. It's time to get answers to the key questions: What are the prospects for making America less dependent on foreign oil and gas? What can we do to get there?

A starting point should be recognizing that there is no immediate solution. In the near-term, oil prices will likely remain high, and we will retain some dependence on resource-rich countries like Saudi Arabia. An ad hoc or incremental approach is not going to get us to energy independence: neither more drilling for oil nor more conservation alone is going to fix the problem. We need to pay sustained and comprehensive attention to managing our dependence, and transitioning to an economy that relies less and less on foreign oil and gas.

First, we have to slow – and eventually reverse – the growth in our consumption, and take steps to encourage conservation. Increasing the fuel economy of passenger cars would represent an important step forward. But we should also look at more dramatic solutions like tradable gas permits that would provide a cap on consumption for the country. Meanwhile, economic and policy experts agree that a tax on gasoline would represent the most effective way to break our addiction. With gas prices high this will be politically tough – if not impossible, but a little pain at the pump in the short-term could save us all in dollars, security, and environmental sustainability over the long-term.

Second, we need to seek new sources of energy. We should continue maximizing our own oil and gas reserves through production from existing wells, and support for new exploration on both the east and west coasts, in the Gulf of Mexico, and in parts of Alaska. We should also support research and development into hybrid vehicles and alternative technologies that can replace oil and gas. In particular, we need aggressive efforts to convert biomass to energy, including the development of renewable hydrogen and diesel power to fuel vehicles. And we need to take another look at nuclear energy.

Third, energy markets need to be enhanced to encourage innovation and discourage dependence. Government should offer incentives to companies developing new, alternative energy technologies. And subsidies that constrain access to new innovations or resources should be lifted. Removing tariffs on ethanol from overseas would be a good first step, alleviating supply shortages and reducing our dependence on oil and gas.

Finally, we have to reduce the vulnerability of our own energy infrastructure. We know that terrorists have targeted pipelines and oil wells in other countries; there is no reason to believe they won't attack similar targets in the United States. Similarly, natural disasters like Hurricane Katrina have proven even more dangerous to America's energy economy. The protection of our energy infrastructure must be a homeland security priority. And the National Security Council should coordinate all of the relevant agencies of the U.S. government in focusing on energy security – at home and abroad.

Energy dependence is vexing. For decades we have decried the problem, but we have also ignored clear solutions because they are politically difficult to implement. Now, it's time to move forward on all fronts – including those on the supply and demand side – to make our economy, our country, and our environment more secure.

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