When President Bush asserted that the United States was “addicted to oil” in his most recent State of the Union speech, it took many by surprise. Given the fact that he was a former oil company executive, had close ties to the energy industry, and essentially ignored energy policy during the first term of his presidency, it was notable that he would frame the policy issue in the lexicon of “addiciton”–a characterization more in line with environmental critics.
Today, the Wall Street Journal discusses the status of Bush’s energy policymaking more than 6 months later. In the weeks after his State of the Union remarks, Bush trumpeted the possibility of the bio-fuel, ethanol, as being an alternative to oil. The article does a good job dicussing the numerous challenges in such an approach: lagging distribution systems, and the relative poor efficiency of ethanol as compared to gasoline. There are other challenges, as well, with ethanol, particularly the large governmental subsidies that currently go to agribusinesses that produce the base material for the fuel.
Similarly, there is a crucial contradiction relating to ethanol in our national energy policy: if it is such an attractive replacement, why do we continue to levy tariffs on imports from our allies and trading partners who want to export the fuel to the United States?
The New York Times has a story today on the social impact of current energy policies that serves as a good companion to the WSJ piece. The article discusses how people are coping with rising gas prices. Generally when prices rise for a good, it is expected that demand drops. A poll conducted by the Pew Research Center indicated that people lower income groups have reported changing their behavior in the face of rising gas prices by carpooling, making fewer trips, taking public transit, etc.. But, overall, there has been a rise in consumption.
This suggests that individuals and businesses that are more prosperous may be in a better position to withstand price fluctuations. It will be interesting to see how this progresses in the wake of the closure of BP’s Prudhoe Bay pipeline which will decrease the amount of domestic oil produced in Alaska.