American Energy Policy

Abstract

With less than 2.5 percent of the world's discovered oil reserves, the United States has climbed to third place among oil-producing countries, after Saudi Arabia and the Russian Federation.1 The US consumes 24 percent of the world's oil production, at a rate of 20.7 million barrels per day. In 2007, the US imported close to 14 mb/d, more than 66 percent of its oil consumption. This dependency, one that all recent American presidents have denounced in vain, could increase even more in the future. Under these conditions, Washington presents itself with only two choices: reduce consumption or increase domestic production. American production has been on the decline for several decades, however, and Washington has made substantial efforts to obtain everything it can from abroad. Consumption, meanwhile, is both a function of the country's economic growth and of its motorized population.TWO DIFFERENT APPROACHESUS consumption of primary energy resources has risen along with its resort to combustible fossil fuels, the latter a major source of pollution. The fundamental problem that the United States (as well as the rest of the world) must solve is the pursuit of economic development while instituting efficient practices in reducing greenhouse gas emissions. The difficult nature of such economic and ecologic questions led the two presidential candidates to take different positions in the November 2008 election, thus making energy policy and energy independence key issues in the campaign.The Republican candidate, Arizona Senator John McCain, distanced himself from the positions taken by the incumbent Republican president, especially with regard to the question of climate change. But in general, McCain supported the traditional Republican credo: reducing the country's energy dependence, opening the continental shelf and the Arctic (apart from a limited protected zone) to exploration and the exploitation of hydrocarbons, and intervening as little as possible in the free market (i.e., not supporting subsidies or fiscal policies towards the development of renewable energy). Barack Obama, on the other hand, proposed government intervention for the development of renewable energy and the prudent development of nuclear energy. Above all else, the Democratic candidate pledged to better integrate energy and environmental protection policies.TWO DISTINCT PHILOSOPHIES?That said, two distinct opposing economic philosophies present themselves here. The Democratic party has always put forward a policy of clear state intervention that seeks to orient the government's actions in favour of welldefined social priorities and environmentally friendly industrial policies. The Democrats also encourage industries to reorient themselves towards greater energy efficiency and to reduce their dependence on combustible fossil fuels. On the other hand, the Republican party has been and remains a strong ally of economic growth in the domain of big business and a tenacious defender of the free market, or the invisible hand, which is seen to be capable of regulating supply and demand in the markets without government intervention.THE TWO MOST IMPORTANT ENERGY LAWSIn the past two decades, two important laws made their mark on the evolution of American energy policy: the energy policy acts of 1992 and 2005.2 It is ironic to note that these two energy laws were passed by Republican presidents, George H.W. Bush and George W. Bush. What is more is that in the case of the former, both houses of congress were controlled by the Democrats. If, during the 70s and 80s, the US centred itself on economic and energy security, the debate transformed little by little into one about energy and the environment in the 90s. The 1990s also brought about discussions on energy efficiency and the development of renewable energy.As Paul L. Joskow argues, the 1992 energy act formed the basis of the Clinton administration's energy policy, which was also influenced by the Democratic administration's concern for the environment, as reflected in its emphasis on energy efficiency and renewable energies and its stated intentions to move away from coal and nuclear energy. …