Friday, June 29, 2007

What We Don't Know

Our energy problems would be sufficiently challenging, if a majority of Americans weren't laboring under a set of unhelpful misconceptions about the structure and functioning of the energy industry. If that sounds like a paranoid statement, check out the poll that was just conducted on behalf of the API, the trade association representing most US oil and gas companies, gauging the country's "Energy IQ." Before looking at the results, you might want to take the quiz yourself. While the answers shouldn't surprise many of my readers, I hope you will be as dismayed as I am at the general lack of knowledge about this key sector, with crucial policy decisions imminent. We will only make good decisions about energy, personally and nationally, if we know the facts.

Consider the distorted view of energy that the typical responses reflect. If the poll is representative, most people apparently see the US as being much more reliant on a handful of unstable foreign governments than we actually are, but at the same time, they greatly inflate the importance of US companies in a global industry increasingly dominated by large, national players--as was just demonstrated in Venezuela, where the top US firms just lost billions of dollars of assets to Sr. Chavez's Bolivarian Revolution. Without diminishing the importance of energy security, the fact that most Americans mistakenly think we get more oil from the Middle East than from our NAFTA partners, combined with a belief that alternative energy will soon supply a large fraction of our needs, might explain the current appeal of the unrealistic notion of energy independence, despite its elusiveness for three decades. Reality is more complicated, and as the head of the API suggested during Wednesday's blogger conference call on the survey, "There is room for all fuel sources to be part of the energy equation."

Without excusing anyone for not being better informed, I think I understand how we got to this point. If oil companies were ever widely trusted, it was in the period when they were personified by polite, uniformed service station attendants who cleaned your windows and checked your oil, while your tank filled with 30 ¢ gas. Throughout my adult life, oil companies have been viewed with disdain or hostility, depending on the current price at the pump. Their credibility has suffered from a historical lack of responsiveness and transparency and from the identification of their products and processes with pollution, compounded by the misdeeds of firms like Enron. When the people who arguably know the most about a subject are among the least likely to be believed, the resulting void looks like the Internet: a sprinkling of fact surrounded by opinion, rumor, and deliberate misinformation.

There might be some avoidance of cognitive dissonance here, as well. If oil companies are just doing their job as large businesses, in the same way as the companies that produce our food, deliver our packages, or make our iPods, then maybe they're not to blame for the high prices at the gas pump. Perhaps we bear some of that responsibility, either through the aggregation of all our consumption choices, or through our support for policies restricting access to natural resources and the construction of energy infrastructure. That insight could either empower or paralyze us.

The point of all this is not to hold a pity party for the oil industry, which is doing quite well and will likely continue to prosper in spite of--and sometimes because of--the regulations we throw their way. Many of the misconceptions highlighted by the API's poll are not harmless, however, and the interests at stake are not just the industry's, but the country's. We face complex problems, and our attempted solutions will be more successful if they are grounded in reality, not distortion. It will be interesting to see whether blogs like this one can help to close that gap over time, by sharing informed but independent perspectives on energy.

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