Regulation
Energy Independence
Reviewed by George Leef

As part of the fall elections, candidates will claim to be vigorous supporters of “energy independence.” They will tell voters, “I’m the one who can best deliver America from the dangerous habit of relying on foreign oil.” And most voters will applaud enthusiastically because the notion that the United States needs to become energy independent has become a sacred cow. A political candidate might as well come out against motherhood as to question the need for energy independence.

That is too bad because energy independence is a stupendously foolish, costly, and ultimately impossible idea. So argues journalist Robert Bryce in his iconoclastic book Gusher of Lies. Bryce readily admits that until recently he was among those who worshipped in the Church of Energy Independence, but has now become a complete heretic. Instead of increased government meddling, he wants to see it get out of the energy market altogether because there is nothing it can do to improve on the free market and much that will be wasteful and even dangerous.

Bryce is neither a Democrat nor a Republican; he calls himself a member of the Disgusted Party. If you read his book, you will be disgusted too — disgusted over the fact that the leaders of both major parties have gone bonkers for an idea that makes for nice sound bites but is demonstrably ludicrous. Although politicians have been touting energy independence since the Nixon years, it was turned into the Holy Grail following the September 11 attacks. Bryce writes: [I]n the post-September 11 world, many Americans have been hypnotized by the conflation of two issues: oil and terrorism. America was attacked, goes this line of reasoning, because it has too high a profile in parts of the world
where oil and Islamic extremism are abundant. And buying oil from the countries of the Persian Gulf stuffs petrodollars straight into the pockets of terrorists.

Political consultants love simple logic like that. Terrorists are bad. Buying oil helps terrorists. Therefore we must stop buying oil. Disagree and you’re toast. Once the quest for energy independence started to move people, lobbyists for various energy alternatives began issuing press releases about how their fuel source was critical in the great drive for national energy
independence. Sure it needs big subsidies (oops – “investments”) but so what? Is that not better than helping the terrorists?

Bryce argues persuasively that this is all a tissue of fallacies. The indispensable core of the book is his identification of eight false beliefs regarding energy independence:

■ Energy independence will enable the U.S. military to pull out of the Persian Gulf.
■ Energy independence will reduce or eliminate terrorism.
■ We can attain energy independence through the development of renewable fuels.
■ If we become energy independent, we will not have to worry about another Arab oil embargo.
■ Energy independence will stop the flow of petrodollars to rogue governments.
■ The Islamic world will be forced to reform if we achieve energy independence.
■ Global oil prices will tumble once we become energy independent.
■ Energy independence means energy security.

Bryce methodically exposes the mistaken assumptions and bad logic in each of those ideas. For example, the notion that American energy independence will cripple the terrorists financially depends on the false assumptions that oil we don’t buy will go unsold and that the terrorists are helplessly dependent on oil money. Neither is true. Bryce is not content just to demonstrate that energy independence is a needless quest. He goes on to show the economic waste and political skullduggery that are tied up in it.

On the political front, Bryce pins the blame mainly on a neoconservative cabal that has relentlessly pushed the Bush administration into the war in Iraq and a host of alternative energy boondoggles. Their “Set America Free Manifesto” declares that attaining energy independence must be a top national priority. It has attracted support from not only the militaristic Right, but also from environmental groups and an array of special interests that are begging for federal subsidies. The coalition is an unholy alliance if ever there was one.

The author makes no effort to conceal his disdain for this crowd and its penchant for ignoring facts that do not fit into their agendas. He presents to the reader a strong set of arguments to prove that energy independence is impossible (unless we want to turn the clock way, way back) and that all of the proposed means for achieving it are certain to fall short of their over-hyped expectations.

FOOD FOR FUEL
Consider ethanol.

Bryce writes, “Ethanol isn’t motor fuel. It’s religion. And America is divided into two camps: the believers and the heretics.” Most of the believers are certain that by pushing ethanol, we will achieve two goals: energy independence and a healthier planet. They are certain about that because a bunch of rascals have foisted on them — as the book’s title says — a gusher of lies.

Even at the greatly increased level of ethanol production that Congress has mandated for the future, the amounts produced will not come close to replacing oil imports, Bryce shows. Nevertheless, politicians keep blathering away about our wonderful ethanol future. Bill Clinton, for example, likes to talk about how Brazil has achieved energy independence through its commitment to ethanol, and then he leaps to the conclusion that “We can do it too!” The people cheer, never realizing that Brazil has only a tiny fraction of the motor fuel needs of the United States, has a climate far more conducive to growing the crops used to produce ethanol (sugarcane), and that Brazil also uses a lot of oil that it produces from offshore wells. Telling people that the United States can become energy independent through increased ethanol production is flagrantly dishonest.

Bryce also makes the crucial point that ethanol production is exceedingly expensive. Farmers are subsidized to grow the corn and then the ethanol producers get huge subsidies to turn the grain into fuel. The interest groups that Wall Street Journal writer Holman Jenkins dubs “Cornistan” laugh all the way to the bank while Americans get a fuel that has only two-thirds of the energy of gasoline, can’t be transported by pipeline, and consumes about as much energy to produce as it delivers. Only through politics could such a monumental scam be kept going.

Will the situation change once it becomes possible to make ethanol from cellulose? We keep hearing that such a breakthrough is just around the corner, but even if it happens, Bryce argues that it will not make very much difference. That is because of “the tyranny of distance.” The cost of harvesting and hauling vast quantities of switchgrass, corn stubble, or other material to ethanol plants will keep it uneconomical. It is time to pull the plug on the subsidies.

Besides the economic waste involved in producing ethanol, it is also environmentally worse than gasoline. Tailpipe emissions are more harmful and producing it uses up much more water than oil refining does. Moreover, several research papers argue that increasing cultivation of crops for ethanol will produce more greenhouse gases than the hydrocarbons they replace. Nevertheless, General Motors, Ford, and Chrysler are all building a lot of vehicles that can run on E85, a gasoline–ethanol mix that is available at only a small number of stations. Why? The reason is that under the federal government’s Corporate Average Fuel Economy regulations, producing E85-capable vehicles allows the automakers to look more fuel efficient than they really are.

That is because when the companies do their mandatory CAFE calculations for a vehicle, they only have to include the amount of gasoline it could consume. So by making it possible for a vehicle to run on E85, the auto companies raise their CAFE numbers. Bryce is bothered by that bit of chicanery, writing that it “allows the Detroit automakers to pretend that they care about fuel economy and, at the same time, churn out fleets of trucks and suvs that get lousy gas mileage.” Apparently, he thinks that CAFE regulation is a good thing, but I have to quibble over that non-essential point. He fails to consider that those fleets of gas-guzzlers provide the capacity and added safety that many Americans want. Producing E85-capable vehicles distorts CAFE, but CAFE itself is a distortion in the auto market.

What about the other energy alternatives that have been promoted as routes to energy independence? Bryce gives us short chapters on coal-to-liquids, solar power, and wind power. He demonstrates that they are all too small and costly to matter, and they should not be subsidized.

WEAKNESSES
Although the book’s attack on the mindless insistence on “energy security” is right on target, Bryce makes some rather suspect assertions along the way. For one thing, he contends that the United States will have to maintain a military presence in the Persian Gulf regardless of the nation’s energy mix. That supposed imperative is nearly as questionable as the imperative of energy independence itself. Is it really inconceivable that we could go back to the time before massive military intervention by the United States, when the oil-producing countries, whatever their conflicts, were primarily interested in maximizing the profit from their oil sales? Bryce does not convince me otherwise.

For another, Bryce at times seems to forget his demand that we “get the government the hell out of the energy business.” He favors federal subsidies for nuclear energy, for example. The trouble is that with government subsidies of any kind, the free market’s discovery process is short-circuited. Nuclear power should no more be subsidized than wind power, solar power, or anything else. Only by going “cold turkey” will we shake off the ill effects of governmental meddling. It seems that Bryce, while generally extolling the free market, does not really believe in it fully. He should.

Summing up, Bryce writes, “Energy security means accepting energy interdependence.” That is a message that most Americans will reflexively reject. It runs contrary to everything politicians and special interest group pleaders have been telling us for years. Say something often and loud enough, and eventually no one will question it — the Big Lie technique has been at work here. The truth, however, is that the mania for energy independence is making us simultaneously poorer and less safe. In writing this honest if somewhat flawed book, Robert Bryce has performed a great national service.

Original text available here (in pdf, see p. 49 – 51): http://www.cato.org/pubs/regulation/regv31n2/v31n2-inreview.pdf#page=10