Independence or Security?

One of the trends I've been following this year has been the reemergence of energy security and energy independence as major topics of public debate and discourse. Credit the "Geo-Greens" with putting the "strange bedfellows" approach to this on the map. Now to the various national security/environmentalist combinations we must add a new group, the Energy Security Leadership Council, an alignment of business and retired military leaders that has received favorable press, including a fascinating article on the front page of today's Wall Street Journal, concerning the military dimension of energy security. I believe this trend will grow, as the new Congress seeks to put its stamp on energy, and as long as oil and gas prices remain well above historical levels. At the same time, we should differentiate between strategies that will require decades to implement fully, those that can begin to make a difference right away, and those that must be held in reserve in case of a near-term disruption in supplies.

The WSJ article, in particular, describes the urgent need to redefine energy security in the context of today's highly complex, multi-risk global situation. Although not specifically mentioned, that ought to include a serious review of the 1970s institutions that were established to deal with earlier manifestations of energy risk, in a bi-polar world dominated by the US/USSR rivalry and Arab/Israeli conflicts. The outdated system of national strategic petroleum reserves--with China currently engaged in building its own SPR--may not be adequate to handle a sustained, coordinated assault on energy infrastructure in both exporting and importing countries.

Any substantial reduction in our import requirements, as contemplated by many energy security/energy independence-focused groups, will entail significant time lags, about which I've written at length. (I will re-run one of those postings next week.) Rigorous analysis of these constraints leads to the inescapable conclusion that energy independence, as most of us would define it, is simply not possible soon enough to extricate us from our current global challenges. Furthermore, it is out of step with the increasing inter-connection of the rest of the global economy, reflecting in many ways a resurgence of the old populist-isolationist strain of American politics.

Energy security and energy independence are distinctly different notions, and this is not hair-splitting. Reducing our reliance on unstable suppliers and making much better use of the energy we do import is prudent and desirable; thinking we can or ought to be autonomous is not. In fact, we haven't been energy independent since the 1950s, when the US economy and population were much smaller, and domestic oil production had yet to peak.

The missing ingredient in many of these discussions, however, is realistic contingency planning for the energy crises that might occur within five to ten years, before the long-term elements of energy security can contribute meaningfully. I regard this as particularly urgent, given the post-Katrina response of the Congress to the way that a free market regulates demand and distribution through higher prices, defined by far too many as "gouging." If higher prices and no gas lines is an incompatible combination in our political culture, then we'd better have something else waiting in the wings, such as an updated World War II-style rationing system, perhaps based on debit card technology. Simply freezing fuel prices in a crisis, with 120% more cars on the road than in 1970 and a much greater reliance on interstate trucking of freight, would produce outages and gas lines that would make those of 1973-79 look trivial.

Whether we call it energy security or energy independence, a national debate on this topic is long overdue. We need to weigh the relative merits of all our energy options and prioritize among biofuels, unconventional hydrocarbons (e.g., oil sands and shale,) renewable electricity and nuclear power. Out of this, we must create an energy plan that targets a new energy mix for 2030 and describes the details of the transition from the current mix. Once that's in place, we can explain to the public--and our suppliers--how the global energy equation will gradually shift back in favor of consuming countries. I can't imagine a better project on which to cooperate with the EU and China, which face the same challenges.