Energy Wars -- Foreign and Domestic

"My party, the Republican party, is too deep in bed with the coal, oil and electric utility industries to remember its free market principles."

- Jim Rubens, RE Insider

I am a Republican who backs the war in Iraq because a genocidal tyrant was toppled. However, few will secretly disagree that oil explains why the United States intervened in Iraq, but unleashed only rhetoric against genocide in Rwanda. Oil is why we prop up Saudi princes even as they fund thousands of Madrasas -- Islamic schools which teach hatred of America and a rising generation of terrorists. Saudi Arabia has the world's largest proven oil reserves; Iraq is number two; Rwanda has zero.

In 1972, the year before the first Arab oil embargo, oil imports were 28 percent of our consumption. Last year we sent $122 billion overseas to import 62 percent of our oil. The Persian Gulf region now has 65 percent of world's oil reserves, a number that has increased over the past three decades. Gulf 65 percent, North America 7 percent and declining. Our economy and way of life are utterly dependent upon energy imports from unstable nations whose populations are overtly hostile.

The fossil fuels - oil, natural gas and coal - sully far more than our moral clarity. America obtains 86 percent of its energy from these sources. Our abject dependence on fossil fuels harms our economy, exports our jobs, pollutes our air and each year prematurely kills over 100,000 Americans. To preserve this irrational and dangerous addiction, we provide at least $250 billion dollars each year in dollar and non-dollar subsidies for fossil fuels.

Direct and tax subsidies. The watchdog group, Taxpayers for Common Sense, tabulates 16 of these special interest paybacks, at a total cost of $5 billion per year. The worst of these is the "synfuel" tax credit, costing taxpayers $1.3 billion each year. Originally intended to replace oil with abundant domestic coal, companies now finagle synfuel credits by spraying diesel fuel or corn starch on ordinary coal to qualify. Forbes quotes energy consultant Forrest Hill cackling, "A dog could walk by and raise his leg over a piece of coal and it would qualify."

Defense subsidy. American taxpayers subsidize the military protection of petroleum production and distribution from the Persian Gulf and Southwest Asia, money we would otherwise not spend if we and our close allies were not dependent upon these politically unstable regions. The National Defense Council Foundation estimates these incremental fossil fuel defense costs at $49 billion annually. The conservative Cato Institute places the cost at $30-$60 billion.

Uncompensated environmental and health costs. Economists call these hidden costs externalities. Fossil fuels' chief environmental and health costs result from atmospheric emissions of carbon dioxide, fine particulates, mercury, and the nitrogen and sulfur oxides. Depending upon pollutant, from 50 to 90 percent of human-caused air pollution results from production and combustion of fossil fuels.

The effects include reduced agricultural and forest productivity, acid rain, inedible fish, learning disorders, asthma, premature death, building deterioration, White Mountains haze and global warming. Summing this category of fossil fuel costs is complex and fraught with methodological and values disagreements. But using the most conservative data I can find anywhere, then rounding aggressively downward, environmental and health externalities are at the very least $100 billion annually.

Economic disruption cost. Our heavy dependency on oil and gas from hostile and unstable regions results in periodic supply disruptions, price shocks and OPEC oligopoly price-gouging. A U.S. Department of Energy study found that these economic disruptions have cost the American economy an average of at least $125 billion each year over the past 30 years. This is an intolerable annual penalty of 1 percent of our Gross Domestic Product.

Fortunately, we have a dramatically better option than fossil fuel dependency. We can accelerate economic growth and improve national security by terminating fossil fuel subsidies and establishing a free market system encouraging clean, domestically-produced, high-technology energy. Energy is a global $3 trillion growth industry, the world's largest. We have the capital and the inventiveness to lead its transformation.

Said no less an authority than Sheikh Zaki Yamani, the Saudi oil minister during the 1970s, "The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil."

Solar, wind and geothermal sources are each sufficiently abundant to supply all of current global energy demand. Technological obstacles are yet to be overcome, but thanks largely to American entrepreneurship, wind power is already competitive with natural gas. As governor of Texas, George Bush signed into law a state Renewable Electricity Standard that unleashed a wind power boom in his state. New Hampshire's own GT Equipment Technologies is the worldwide leader in solar photovoltaic manufacturing equipment - and has an R&D plan to make solar electricity price competitive within 10 years.

So why does Washington continue to shower the present dirty energy system with subsidies? Answer: my party, the Republican party, is too deep in bed with the coal, oil and electric utility industries to remember its free market principles. Democratic party hands are also unclean. Ted Kennedy stalled America's largest offshore wind energy project because he did not want to see distant windmills from his Cape Cod beach house. And except during price spikes, the media and the public fail to connect a new energy policy with job growth and national security.

Passing a national Renewable Electricity Standard and the McCain-Lieberman climate bill would make a modest start to making a bigger market for clean, domestic energy sources. Let's end the oil wars and declare fossil fuels the loser.

About the author...

Jim Rubens is a former state senator from Hanover, New Hampshire. He makes his living from technology and real estate investing. He is a consultant on energy policy for Washington-based Union of Concerned Scientists. The opinions here are his own.

-- Chris Jacobs, October 25, 2004

Mr. Rubens, Thank you for spelling out what is clearly obvious about our current circumstance to anyone who is brave enough to say it. How will you vote? I am deeply perplexed by the lack of leadership that will move us in the right direction. Is a wake up call needed for the Republican part leadership. A Republican Undecided Voter, Chris Jacobs

-- Rod Garrison, October 25, 2004

Regarding Jim's article: Jim is right on concerning the hidden costs of fossil fuels. However, I would take the higher rather than lower cost estimates. At the same time the greatest concern I have currently are the advancements other nations are making while our politicians fossilize on oil money. Alternatives are more than cost effective when the REAL COST of oil, natural gas and coal are factored in. Since working in Solar during the 80's, I obtained an MBA in Energy Resource Management from the Universigy of Denver.

-- J.W., October 25, 2004

Mr. Reubens, You hit the nail on the head! I don't want my TAX DOLLARS to be spent on future wars where the real purpose is to send our military to guard other people's oilfields lke they are now in the former Soviet Republic of Georgia. I figure by now the war in Iraq has costed me personally $4000 out my taxes and I am now paying $2.79/ gallon for gas to boot! Instaed of making oil supplies more secure, this war has and future wars will only make the supply LESS secure.

-- Scott Sklar, October 26, 2004

Mr. Reubens articulately expressed what many Republicans have been saying, "Why is the Bush/Cheney" Administration proposing the status quo while visionary Republicans, such as Governors Guinn (NV), Pataki (NY), and Schwartzenegger (CA) support renewable energy portfolio standards, renewable fuels standards, and mandated State procurement programs to lessen use of imported petroleum and natural gas?

-- Guest User, October 27, 2004

"Technological obstacles are yet to be overcome, but thanks largely to American entrepreneurship, wind power is already competitive with natural gas." Actually, you are dead wrong on that subject. It is true the first industrial windturbine models were US made, but your beloved Reagan killed all subliminal governement support that existed toward renewable energy, leading the windpower sector to crumble by lack of support from higher up, and obstacles put in their way all along the way by utilities and NYMBY's. Luckily for the USA, the Germans, Danes and Spaniard over there in Europe created a top down structured approach to help nurture and develop a vigorous industrial windturbine sector from scratch. Now the leading Windturbine manufactures globally are for 85% Europeans, and are all building manufacturing plants over here to compete with our sole industrial windturbine manufacturer left : GE. The europeans made windturbine technology competitive with fossil fuel sources, by creating industrial standards, technological requirements to be met for safety and generally speaking putting their money where their mouth is. The result ? 1980's USA-made 50kW Windturbines are now 2004's 5MW Euro-made windturbines. Quarterly dividend culture oblige, we don't bother to look long term, as long as the short term doesn't provide any problem. Only to scramble when energy becomes suddenly scarce......