Energy and the Sinking Economy

Last Thursday, former Vice President Al Gore joined the many voices that have been calling for a crash program-a "moon-shot"

Last Thursday, former Vice President Al Gore joined the many voices that have been calling for a crash program-a "moon-shot" national effort to get us off of fossil fuels. Senator Obama applauded the speech saying "For decades, Al Gore has challenged the skeptics in Washington on climate change and awakened the conscience of a nation to the urgency of this threat."

At the moment, neither Senator Obama nor Senator McCain are taking as aggressive a position as Gore is taking. The energy industry doesn’t know how to deal with this newest energy crisis. At the heart of the discussion is the impact of our current energy practices on our economic well-being and on national security.

Even a casual examination of the data tells us that our current energy path is not sustainable. Global warming from the use of fossil fuels has already arrived. Fossil fuels damage our environment and require importation from some parts of the world we would like to be less dependent on. While there is lots of fossil fuel left, it is a finite resource that will eventually be depleted. This is the moment to begin to move our economy away from fossil fuels. While some fear the costs of this transfer, I believe it is an opportunity that could strengthen the American economy.

Last Friday, the Texas state government approved a nearly $5 billion dollar project to build electrical transmission lines that would bring wind power generated in the western part of the state to Dallas, Houston and other major Texas towns.

This past Saturday the New York Times business columnist Joe Nocera wrote a piece on the commercialization of the electric car. He posed the central question: Are these cars "costly toys or a new era for drivers"?

Interestingly, the original cars were in fact little more than expensive toys when they were first developed. Then a manufacturing genius named Henry Ford figured out how to mass produce a relatively affordable car called the Model T-and the rest, as they say, is history. Nocera reports that battery technology now allows electric cars to go 200 miles between charges. Most people drive less than 50 miles a day. With gasoline approaching $5 a gallon, and the possibility that we could charge our cars from fossil fuel free power plants, perhaps there is a way to kick our relentless addiction to the internal combustion engine and the oil that fuels it.

Energy is at the heart of the environmental problem. It is also at the center of our suddenly collapsing economy. While oil alone did not cause the war in Iraq, no one can deny the connection between energy and our Mid-East policy. The war in Iraq has caused deficits which weakened our economy. Our need for foreign oil has fueled our trade deficit (excuse the pun). Solve the energy crisis and we no longer need OPEC’s oil. Then we can stop sending our soldiers and our dollars to the Mid-East.

Everyone worries that the capital costs of transferring our energy infrastructure from oil, gas and coal to solar, geothermal and wind will simply cost too much. While it will redistribute economic power from old companies to new ones, it will almost certainly ensure that energy will cost less in the future than it does today. Lower cost energy can make our economy more productive and more competitive. Chaper energy allows higher priced labor to compete with lower priced labor.

The factor left out of the cost equation we often see is technological innovation. Our current energy system is getting old in a hurry. We need to stimulate rapid technological change. Computing power provides a useful example of rapid technological change. Think of the laptop you owned three years ago. Your current computer is faster, does more, and is probably no more expensive then that one. The cost of communication and information continues to come down. With investment, focus and ingenuity, we can create a new energy industry that would help our economy, protect our environment and create an incredibly powerful export industry. What do we need to do?

  • Invest in university-based basic energy science and engineering
  • Provide tax incentives for the private sector to innovate in non-fossil, non-nuclear energy technology
  • Re-open the nation to immigration of scientists, experts and skilled workers
  • Provide a regulatory environment that encourages sustainable development and environmental protection. In other words, get serious once again about government protecting the environment.

Many of us have been calling for a "moon-shot" type project to develop non-fossil fuel technology. But none of us are Nobel Prize winning former Vice Presidents who received more popular votes for President than anyone else did in the 2000 election. Al Gore once again has demonstrated bold and visionary leadership and deserves our admiration for giving public voice and attention to this critical issue.

Energy and the Sinking Economy