Air Date: Week of September 14, 2007

The Financial Time’s Gernot Wagner thinks not. The U.S. needs energy security, achieved by diversifying our energy sources.

Transcript

CURWOOD: Rudy Guiliani is not the only one talking about energy independence. It seems to be the mantra of just about all the presidential candidates, not to mention other politicians in Washington. For some, the goal is lower gas prices. For others, it’s concern that oil-rich regimes hold sway over foreign policy. But commentator Gernot Wagner argues either way, energy independence gets us nowhere.

WAGNER: Talk of energy independence misses the point. The goal must be energy security. This is most often achieved by diversifying dependence, not by calling for independence.

President Richard Nixon started the craze with Project Independence in 1973. It has been a losing battle from the start. At the launch of the project, the U.S. imported a third of its oil. Now it imports over 60 percent.

Without draconian measures, energy independence is unachievable. The cheapest available oil, at the moment, is from the Arabian Peninsula. Meeting all need for oil domestically would come with a hefty price tag.

And those willing to pay a higher price in order to extricate foreign policy from perceived oil grip would do well to remember that the regimes they seek distance from will be enriched by that higher price. The market for oil is global. That makes it pointless to try to wean ourselves off particular suppliers.

The U.S. can declare today that it will not import any oil from Saudi Arabia. There is enough oil on the market to avoid shipping directly from Saudi to American ports. Someone else will gladly take the shipments from Saudi Arabia. But as long as there is no universal boycott of Saudi oil, we will be dependent on it – and we will still have U.S. tanks in the Middle East, if not U.S. tankers.

It is even more dangerous to link energy independence with environmental goals. We need to get away from oil and promote alternatives, but decreasing pollution is not the same as decreasing energy imports. Ethanol, for example, can deal with pollution but, for the most part, should not be used to address independence.

At the moment, the best source for ethanol is sugar cane. On environmental grounds, cane beats born by a long shot. The most sensible environmental policy would be to drop all ethanol tariffs.

But slashing tariffs on ethanol increases our reliance on foreign fuels. Ethanol production shifts to Brazil, which could, at some point, replace Saudi Arabia as the lowest cost producer of the world’s fuel of choice. Energy independence would decline. At the same time, energy security would go up. A democratic Brazil is clearly a better energy supplier than an autocratic Middle East. Even so, relying too heavily on Brazil could undermine supply security just as well. The goal should be to diversify.

Calls for energy independence undermine what really matters. The distinction with energy security is subtle, but important. Not only is energy independence unachievable, it is not even desirable.