Red Flags as Washington Gears Up to Remake Energy Policy


Obama's pick for energy secretary has argued for regulation and higher prices to rein in energy consumption -- precisely what Washington has been avoiding for 30 years.

President-elect Barack Obama's pick for energy secretary, Dr. Steven Chu, is a Nobel Prize-winning scientist who's on the record calling coal a "nightmare" and advocating raising U.S. gas taxes to European levels to promote conservation. (Here's video of the speech; the "nightmare" quote comes 28 minutes in.)

Mr. Obama himself has so far dismissed the idea of raising gas taxes, and worked hard during his campaign to reassure the utility and coal industries that he didn't plan radical steps to slash the use of coal in power generation.

This apparent difference of opinion between Mr. Obama and his likely nominee is just one of the many red flags waving as Washington gears up for the most ambitious effort to remake America's energy policy since Jimmy Carter slipped on a cardigan.

If you think Washington's debate over whether to bail out General Motors Corp. and Chrysler LLC is acrimonious, wait until the debates over energy and climate change policy start. The auto bailout debate has become a proxy for the coming clashes over energy strategy. Some green-conscious Democrats argued that Detroit's car makers should be compelled to use federal subsidies to accelerate improvements in mileage. Others from both parties questioned how companies that have mostly lost money on small cars and hybrids will suddenly find ways to make them profitable. With the collapse of the proposal last week, the specifics may be moot. But the underlying argument about Washington's role in guiding industry's behavior on energy issues is just getting started.

There are areas of American economic life that aren't affected by energy costs. It's just hard to think of many. Detroit's woes are directly linked to energy costs. When oil prices go up, Detroit goes down.

Energy affects far more than sales of Ford F-150 pickup trucks. Consider the coming debate over Mr. Obama's proposal to launch the biggest campaign of infrastructure spending since President Eisenhower built the interstates.

If your national priority is reducing energy consumption, you might consider putting more than 20% of the billions such an initiative will require toward mass transit and other projects designed to take people out of their cars.

But since the Reagan era, Congress has allocated 80% of the money raised by federal gas taxes toward road construction and repair. The inertia opposing change in how Washington spends highway money is considerable -- in part because the projects that state transportation officials have ready to go tend to be road-building jobs -- and the object is to create jobs now, not years in the future.

The bigger controversy -- signaled by the arguments over the auto industry -- will be over how to change consumer and business behavior when it comes to energy consumption.

Dr. Chu, director of the Lawrence Berkeley National Laboratory, has suggested in talks and presentations available at his Web site that it takes a combination of regulation and higher prices to reduce energy consumption. He cites as examples the difference in fuel economy between the U.S. -- where gas prices have historically been relatively low and fuel-efficiency standards relatively lax -- and Europe and Japan, where gas prices are high and the average car is roughly 60% more fuel-efficient than the average vehicle sold in the U.S.

Advocates of bold action to reduce consumption of petroleum and coal -- including Mr. Obama's expected chioce to oversee national energy policy, former Environmental Protection Agency head Carol Browner -- have called for using the Clean Air Act to put limits on emissions of carbon dioxide, and for creation of carbon caps that would effectively put a price on burning coal or consuming gasoline.

But in the more than 30 years since the oil embargoes of the 1970s put energy prices and energy security on Washington's agenda, Congress and successive presidents from both parties have worked toward one common goal: keeping U.S. energy prices low.

Dr. Chu may succeed where many others, including President Carter, have failed, and convinced Congress and the public that if Americans want high-tech, high-mileage cars and power plants that don't warm the planet, they should be prepared to pay for them. But the track record suggests he may discover that the biggest mistake you can make in Washington is telling people what you really think.

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