State of Energy
Last night's State of the Union address to Congress was dominated by Social Security reform and the war in Iraq, but also included the following remarks on energy:

"To keep our economy growing, we also need reliable supplies of affordable, environmentally responsible energy. Nearly four years ago, I submitted a comprehensive energy strategy that encourages conservation, alternative sources, a modernized electricity grid, and more production here at home -- including safe, clean nuclear energy. My Clear Skies legislation will cut power plant pollution and improve the health of our citizens. And my budget provides strong funding for leading-edge technology -- from hydrogen-fueled cars, to clean coal, to renewable sources such as ethanol. Four years of debate is enough: I urge Congress to pass legislation that makes America more secure and less dependent on foreign energy."

Now, one can argue about priorities and the proper balance to strike between conservation, R&D, and new production of current energy sources, but it is high time we brought this to closure. Although it wasn't specifically mentioned, the deadlock over the Alaska National Wildlife Refuge (ANWR) is central to the impasse on energy policy and reflective of the competing philosophies involved. The potential now exists for a grand compromise involving tightly controlled drilling in places like ANWR, in exchange for something of comparable value to environmental concerns--something facing comparable opposition from conservatives.

If the gloomier scenarios concerning oil markets are correct, we face a long period of volatile and high prices, due to strong demand growth from the developing world and inadequate additions to reserves and production. Against this backdrop, it is hard to imagine that ANWR's oil will not eventually be exploited. If that is so, does it now make sense to concede on this issue, in return for increased corporate average fuel economy standards, limits on carbon dioxide emissions, or dramatically increased investment in renewable energy?

Our last real oil crisis was resolved through a combination of market efficiency, significant new discoveries in the North Sea and West Africa, and greater reliance on stable suppliers close to home, such as Canada, Mexico and Venezuela. The world is changing again, as China and India compete with traditional markets, as non-OPEC oil production matures and declines, and as some of those regional suppliers begin to look less reliable. The balance of power is shifting back toward OPEC. With or without ANWR, we require clear national priorities on energy, and they will be much more durable if they can be set in a bipartisan way. We can't afford to wait another four years.