The Debate Over Energy Policy
From last night’s presidential debate transcript, both of the candidates sound off on energy policy. Comments from me are inserted into the text as [RR: comment].
Schieffer: Let’s go to — let’s go to a new topic. We’re running a little behind.
Let’s talk about energy and climate control. Every president since Nixon has said what both of you…
McCain: Climate change.
Schieffer: Climate change, yes — has said what both of you have said, and, that is, we must reduce our dependence on foreign oil.
When Nixon said it, we imported from 17 to 34 percent of our foreign oil. Now, we’re importing more than 60 percent. [RR: I predict over the next 4 years that this dependence will increase, unless we are in an extended recession/depression.]
Would each of you give us a number, a specific number of how much you believe we can reduce our foreign oil imports during your first term?
And I believe the first question goes to you, Sen. McCain.
McCain: I think we can, for all intents and purposes, eliminate our dependence on Middle Eastern oil and Venezuelan oil. Canadian oil is fine. [RR: In 2007, the U.S. imported 2.2 million barrels per day from the Middle East and 1.4 million barrels per day from Venezuela. That is greater than Canada's total oil production, and Canada uses 2/3rds of the oil they produce internally. Sources: U.S. Imports by Country of Origin and Canadian Oil Production]
By the way, when Sen. Obama said he would unilaterally renegotiate the North American Free Trade Agreement, the Canadians said, “Yes, and we’ll sell our oil to China.”
You don’t tell countries you’re going to unilaterally renegotiate agreements with them.
We can eliminate our dependence on foreign oil by building 45 new nuclear plants, power plants, right away. We can store and we can reprocess. [RR: While I agree with the need to build more nuclear plants, this will do little to reduce dependence on foreign oil. The vast majority of electricity in the U.S. is produced from coal, and only about 1% is generated from petroleum. New nuclear plants will probably end up satisfying new demand, and displacing old coal-fired plants. Source: Electric Power Monthly]
Sen. Obama will tell you, in the — as the extreme environmentalists do, it has to be safe.
Look, we’ve sailed Navy ships around the world for 60 years with nuclear power plants on them. We can store and reprocess spent nuclear fuel, Sen. Obama, no problem.
So the point is with nuclear power, with wind, tide, solar, natural gas, with development of flex fuel, hybrid, clean coal technology, clean coal technology is key in the heartland of America that’s hurting rather badly.
So I think we can easily, within seven, eight, ten years, if we put our minds to it, we can eliminate our dependence on the places in the world that harm our national security if we don’t achieve our independence. [RR: It could be done, but only by taking a big bite out of demand. If we reduced our per capita energy usage to European levels, we could cut our oil imports by about 70%. To become completely independent (assuming current supplies) would require a cut in our consumption of 75%.]
Schieffer: All right. Can we reduce our dependence on foreign oil and by how much in the first term, in four years?
Obama: I think that in ten years, we can reduce our dependence so that we no longer have to import oil from the Middle East or Venezuela. I think that’s about a realistic timeframe.
And this is the most important issue that our future economy is going to face. Obviously, we’ve got an immediate crisis right now. But nothing is more important than us no longer borrowing $700 billion or more from China and sending it to Saudi Arabia. It’s mortgaging our children’s future. [RR: Agree with that. We are enriching other countries and weakening the U.S. with our high level of dependence on foreign oil.]
Now, from the start of this campaign, I’ve identified this as one of my top priorities and here is what I think we have to do.
Number one, we do need to expand domestic production and that means, for example, telling the oil companies the 68 million acres that they currently have leased that they’re not drilling, use them or lose them. [RR: Pandering. There is already such a provision. Oil companies aren't out leasing land just to sit on it.]
And I think that we should look at offshore drilling and implement it in a way that allows us to get some additional oil. But understand, we only have three to four percent of the world’s oil reserves and we use 25 percent of the world’s oil, which means that we can’t drill our way out of the problem. [RR: True, we can't drill our way out. But it is extremely naive to think we can ramp up enough biofuel production in the next 10 years to displace very much petroleum - and we certainly couldn't do that without the risk of unintended consequences.]
That’s why I’ve focused on putting resources into solar, wind, biodiesel, geothermal. These have been priorities of mine since I got to the Senate, and it is absolutely critical that we develop a high fuel efficient car that’s built not in Japan and not in South Korea, but built here in the United States of America. [RR: As I have said before, the problem is not one of supply. There are plenty of fuel efficient cars to choose from now. The problem is getting people to demand them. We saw demand pick up sharply when gas prices rose set new records earlier this year, which is why I think a gas tax would go a long way toward addressing the issue of the fuel efficient car. If the demand is there, the cars will be built. If gas is expensive, demand will be there.]
We invented the auto industry and the fact that we have fallen so far behind is something that we have to work on.
Now I just want to make one last point because Sen. McCain mentioned NAFTA and the issue of trade and that actually bears on this issue. I believe in free trade. But I also believe that for far too long, certainly during the course of the Bush administration with the support of Sen. McCain, the attitude has been that any trade agreement is a good trade agreement. And NAFTA doesn’t have — did not have enforceable labor agreements and environmental agreements.
And what I said was we should include those and make them enforceable. In the same way that we should enforce rules against China manipulating its currency to make our exports more expensive and their exports to us cheaper.
And when it comes to South Korea, we’ve got a trade agreement up right now, they are sending hundreds of thousands of South Korean cars into the United States. That’s all good. We can only get 4,000 to 5,000 into South Korea. That is not free trade. We’ve got to have a president who is going to be advocating on behalf of American businesses and American workers and I make no apology for that.
McCain: Well, you know, I admire so much Sen. Obama’s eloquence. And you really have to pay attention to words. He said, we will look at offshore drilling. Did you get that? Look at. We can offshore drill now. We’ve got to do it now. We will reduce the cost of a barrel of oil because we show the world that we have a supply of our own. It’s doable. The technology is there and we have to drill now.
Senator Obama didn’t reiterate his call for a windfall profits tax as part of his energy policy plan. But you can see that provision on the web page describing his energy plan: Barack Obama’s New Energy Plan. You know, I think I could support that if he has a provision to cut tax rates if oil prices fall. But I don’t see that happening.
For balance, here is Senator McCain’s energy plan: John McCain’s Lexington Project. And while McCain doesn’t support a windfall profits tax, the irony is that as Alaska’s governor his running mate pushed one through. (You can read a pretty balanced account of that story here).