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May 26, 2008

Opportunity Not Lost

Thomas Friedman in the New York Times:

"…More and more, I am convinced that the big foreign policy failure that will be pinned on this administration is not the failure to make Iraq work, as devastating as that has been. It will be one with much broader balance-of-power implications — the failure after 9/11 to put in place an effective energy policy.

"It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our "addiction to oil.

The failure of Mr. Bush to fully mobilize the most powerful innovation engine in the world — the U.S. economy — to produce a scalable alternative to oil has helped to fuel the rise of a collection of petro-authoritarian states — from Russia to Venezuela to Iran — that are reshaping global politics in their own image."

All with hindsight, of course: few of us were saying that national energy policy was the long term response to 9/11 back in 2001 but it clearly was. Again with lots of hindsight, it probably would have cost less money than the war in Iraq (not many people are arguing that we should've left the Taliban alone in Afghanistan) and certainly would've cost less lives. We were ready then for bold measures.

But who's to say we're not ready for bold measures now? Friedman's middle paragraph above is, unfortunately devoid of these. Demand from the quickly developing world has now done what a gas tax might have done sooner: we are driving slower; we are buying smaller cars; we are car pooling; etc. etc. Conservation is a good SHORT TERM approach to approach to mitigating some of the effect of higher prices; but what we save will quickly be consumed by the new Asian middleclass even if they all stick to motorcycles and hybrids.

Mobilizing "the most powerful innovation engine in the world" means more than driving slowly and carpooling: it means, I think, switching from imported fossil fuels completely and in a decade. Real innovation can mean that, within ten years (not thirty, not twenty, TEN) all new general purpose road vehicles for sale are primarily electric. Real innovation can mean that within five years no new homes are heated or cooled directly by burning fossil fuels and, within ten years, most old homes have been converted to electricity. If we don't think big, if we don't plan to act quickly, we'll be dangerously behind the energy curve both strategically and economically.

With energy prices already at a new level and in a new escalation, we don't have to spend our time worrying about how to tax ourselves into action. The necessary incentives for innovation are already in place; my guess is that our economy will respond if government restricts its own role in deciding what solutions are needed. Remember that corny ethanol has been the government's best bipartisan shot at an energy policy so far.

There is one huge role the government can and ought to play, however: using the leverage of its own purchasing policy. If the federal government (and hopefully many of the states) were to say that all new fleet vehicles purchased starting in 2011 (with tiny exceptions) would be partially electric and, starting in 2015, fully electric, manufacturers would have some clear targets to aim at. No new federal buildings should be directly heated with coal or oil. Then there would be a clear timetable for private efforts to build the infrastructure like recharging stations and a smarter electric grid that these changes will require.

There is huge opportunity in changing America and the world's sources of energy. The car industry is complaining about poor demand. Duh! Who wants to buy another gas guzzler? When that industry mobilizes to meet what we now know we want - cars that use little or no fossil fuel, all that can afford to will rush out and buy one and others will trade as soon as they can. Can the American car industry do that fast enough? If so, they and we will have a worldwide success; if not, we'll buy cars from abroad to avoid buying oil foreign oil. It's that simple.

Sure, it would've been better if we mobilized for energy independence in 2001. But we didn't. Shame on us if we don't do so now; high oil prices make the job a lot easier.



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